Getting Ready for Tax Season: Six Steps to Take Today

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It’s never too early to plan, especially for what can be a long and tricky tax return proces.

This financial year will finish in over a month, at the end of June, and Australians will have four months to lodge their tax returns — preparing for this early may save you time and money.

Masoud Habibian, an accountant and tax agent in Australia, said this may be a “good time to start” to “prepare and review” your tax lodgement.

Here are a few tips that may help you in preparing for your tax return:

Double-check your myGov account

First of all, make sure your information in your myGov account is updated, the account is linked to the Australian Taxation Office (ATO), and it is working.

“Make sure that all the data, like your bank details and personal information, is updated,” Habibian said.

“Make sure that you have a strong verification [system] in your myGov … If it is actually working, and it has been linked properly, [and] you’ve got access to it.

“Make sure that you’ve got a good and secure access to the personal information and documents within myGov.”

In addition, he advised that if you have forgotten your password, changed your phone number or are facing any other difficulties, it’s important to resolve them early, as the process may be significantly more time-consuming during tax time.

Find those old receipts

Preparing all those old receipts as proof for your work-related deductions can also save you time and money on your tax return.

According to Habibian, finding and keeping receipts of work-related purchases, like “tools, uniforms, equipment, computer, education expenses, car expenses, donations,” etc, are important.

“[Gathering] all the receipts and all the documents related to the income and expenses is very important,” he said.

“A common issue we see is missing receipts or documents, especially for work-related expenses. Make sure that you’re storing the receipts digitally.”

Prepare your work from home record

In general, there are two different methods you can use to claim your work from home-related deductions: First, gathering all the information about your expenses for the time you worked from home, and second, providing the total hours you worked remotely to the ATO.

Habibian suggests gathering this information as soon as possible.

“Sometimes it might be a bit time-consuming to find the detailed record of a daily log of the hours that you worked from home, and also evidence of the expenses like electricity, internet, and phone,” he said.

“This document actually takes more time to collect and provide to the tax agent.”

Separate your personal and business expenses

If you own a business and have not yet separated your personal and business expenses, this might be a great time to start, as it may take up a lot of your time.

“Separating your personal [expenses] from the business expenses would be highly important,” Habibian said.

“Most of the people have their personal and business expenses mixed, and it will take a huge amount of time to separate them.”

Generally, the distinction between personal and business expenses is straightforward.

Purchases intended for business use are deductible business expenses, while items bought for personal use are classified as personal expenses.

If you have an item that serves both business and personal purposes, like a laptop or a phone, you can only deduct the portion used for business.

Document your other sources of income

With only one source of income and a limited number of work-related expenses, the tax return process may not take much time.

However, if you have multiple income sources, Habibian said you should start your preparation sooner.

“If you have an investment property, you need to gather information,” he said.

“Make sure that you are focusing on the rental property claims as well … That would actually be a bit time-consuming. You need to have a chat with your real estate agent.

“You need to start from now.”

The same goes for other investments like cryptocurrencies.

“If you have crypto that is in the radar of the ATO, you need to gather information about it … If you are trading crypto, you must report it even if you have made a loss,” he said.

Don’t rush

Tax time starts on the first of July each year and finishes by the end of October.

By mid-July, once employers and banks have submitted more information to the ATO, the prefilled data will be available for your tax lodgement.

“Many people rush to lodge on the first of July … But you should avoid loading these documents too early.

“This reduces the errors and avoids later amendments.”

The information in this article is general in nature and is not intended as financial advice. You should consult with a licenced professional to make the decisions that are right for you.