How to Be Ready for Your Tax Return?

Hi guys ,

Every year I panic the last minute to organise my tax return. I spend days finding returns and other things to lodge the tax return.

I’m sure there is a better way to be bit more organise than me when it comes to tax return.

What do you guys do to be organised when it’s tax return time or the year before?

Do you use a app through out the year for receipts and notes ?

Any tips and tricks to be bit more organised ? :)

Thank you kindly

Comments

  • +20 votes

    Don't leave it until the last minute

    • +2 votes

      I have submitted many returns at 11.xx pm 31st October
      Normally a short turnaround
      Been better at getting in earlier last couple of years though
      .

      •  

        Same

      •  

        if I need to pay, 31 Oct, they they owe me o
        money the next day everything is populated in my gov!

        •  

          I find some things take a week or so to populate
          .

        •  

          That is my target, well actually mine was end of July, and I usually take a holiday in July. You've inspired me to aim for tax return before holiday.

          However, unfortunately, removing etax broke my mojo and I haven't done a tax return since. Always due a refund, so ATO doesn't seem to care.
          My short term target: SMSF tax return by Easter (it was due last month), then last 4 years tax returns by July.

  • +11 votes

    Put everything tax related in a shoebox.

    July 1 - give shoebox to accountant.

    • +8 votes

      Then pay Accountant $150 an hour to go through shoebox

      •  

        Which is tax deductible next financial year

        • +9 votes

          deductible, not an offset.

          it is not free

          •  

            @deme: Does "deductible" mean you deduct that $150 on the taxable income you declare? Or in other words you only really save x% (whatever your tax % is) of $150? Bit new to this myself and want to make sure I understood correctly.

            Also is the $300 which people usually claim for work expenses a deductible expense or an offset (I assume an offset means effectively a full refund of that amount you claim)?

            • +1 vote

              @S2200: Yes tax deductions like work related expenses, home office all reduce taxable income. Private health insurance offset, etc offset the full amount against tax payable

            • +2 votes

              @S2200: They are both deductions off your taxable income.

  • +1 vote

    I just hang onto everything and once July 1 comes around that's when I start putting it all together and once I'm ready I'll get it sorted (usually a few months later).

  • +7 votes

    I spend days finding returns and other things to lodge the tax return.

    Why do you spend days on a tax return? Everything is prefilled. Just click 🆗, 🆗, 🆗 and done. Another year gone in 60 seconds.

    •  

      Deductions, finding receipts etc.

      • -8 votes

        OP doesn't need receipts to claim deductions when filing a tax return.

        Receipts are used for audits.

        • +4 votes

          You should probably make sure you have the receipts when filing the return in case you get audited though.

          • -1 vote

            @dust: "Sorry, the invoices were lost in a break-in. However, there are digital bank statements."

            • +2 votes

              @whooah1979: Thanks for paying extra tax in the form of penalties and interest.

              Bank statements won’t show if you spent the $200 at Harvey Norman on PS games or home office furniture ok. If you can’t prove it, you can’t claim it. Pretty simples.

              • +1 vote

                @cloudy: https://www.onlinetaxaustralia.com.au/tax-deductions-without...

                When Do You Need a Receipt to Claim a Tax Deduction?
                You are required to provide written evidence to claim a tax deduction if your total expense claims exceed $300. If your total expense claims total less than $300 the provision of receipts is not required at all.

                https://quickbooks.intuit.com/au/resources/self-employment-t...

                Well, the good news is that the Australian Taxation Office (ATO) makes allowances for receipt-free deductions for some items. In fact, you can claim up to $300 for these expenses.

              • +1 vote

                @cloudy: One thing they're missing with all that is that sure, you can claim up to $300 without evidence. But I'd rather keep evidence for expenses and then be able to claim more than $300, rather than just the $300 "evidence-free".

                And it's not just "I can claim up to $300 and don't have to substantiate it".

                It's "I can claim up to $300 and don't need to provide written evidence" (i.e. receipts) - you still have to substantiate the claim and that it was work-related.

                Claims of $300 or less

                Your client doesn't need written evidence but we may ask your client to tell us how the claim was worked out and explain why the claim is reasonable, based on the requirements of your client's occupation.

                (from the link whooah1979 provided themselves)

            • +2 votes

              @whooah1979:

              However, there are digital bank statements.

              I would hope if the ATO is auditing you that your bank statements are not sufficient evidence.

              Bank statement proves you spent X amount at store, not what was purchased.

              • -2 votes

                @Chandler: https://www.ato.gov.au/Tax-professionals/Your-practice/Tax-a...

                Claims of $300 or less
                Your client doesn't need written evidence but we may ask your client to tell us how the claim was worked out and explain why the claim is reasonable, based on the requirements of your client's occupation.

                Exclusions from record-keeping requirements
                Specific exclusions from record-keeping or substantiation requirements are available for certain work expenses. These include the following.

                Total work-related expense claims of $300 or less.
                Laundry ($150 or less).

                • +2 votes

                  @whooah1979:

                  https://www.ato.gov.au/Tax-professionals/Your-practice/Tax-a...

                  I wasn't talking about claiming under the evidence thresholds.

                  I was talking about providing evidence when being audited by the ATO because you've committed fraud ("Sorry, the invoices were lost in a break-in").

                  Also you really should have bolded the rest of the quote as it's quite relevant.

                  explain why the claim is reasonable, based on the requirements of your client's occupation.

                  • +1 vote

                    @Chandler: Whooah has prior. Making claims crypto gains need no declaration as ATO is too busy with big boys.

                    For anyone who wishes to risk it, it’s like speeding. You don’t always get caught speeding, but do it regularly enough and you should expect to be caught.

                    •  

                      @cloudy: The dude is cooked, I still can't tell if he's a wanna be gangster and not actually buying cryptocurrency or going to go to prison for tax evasion.

            •  

              @whooah1979: Don't know why you were down voted digital bank statements are indeed enough.

              https://www.ato.gov.au/tax-professionals/your-practice/tax-a...

              The documentation must be in English unless the expense was incurred outside Australia.

              The following constitute written evidence.

              A document from the supplier of the goods or services that shows the
              -name of the supplier
              -amount of the expense
              -nature of the goods or services – if not shown, your client may write this on the document before they lodge their tax return.
              -(this means you can just write it in too)
              -date the expense was incurred
              -date of the document.

              Another document or combination of documents containing the information listed above, examples include
              -bank and other financial institution statements
              -credit card statements
              -BPAY reference numbers (may be called receipt or transaction numbers)
              -email receipts
              -income statement or PAYG payment summary (may show union fees)
              -paper or electronic copies of documents – must be a true and clear reproduction of the original.

              But also if you just take a photo of the receipt for all your work related expenses you're covered and its pretty damn easy to do.

  • +3 votes

    PANIC NOWWWWWWWWWWWWW

    its due 30 OCT

    too late to start now just PANIC

    • +5 votes

      Good sleuth work

    • +2 votes

      Plus

      Any tips and tricks to be bit more organised ?

      Transferring knowing to being able to actually do it, is a whole new ball game.

      PS: The time it took OP to post this, s/he could have filed a receipt away for the tax return ;)

  • +2 votes

    ATO App is pretty good for a government intitiative. Highly recommend.

  •  

    Have they given info on this year how to claim various expenses whilst working from home?

  • +9 votes

    Gmail Labels: "Receipts" + "Tax2021"

    • +2 votes

      Great idea btw :)

      However, there are people that buy diaries with good intentions, but the pages are empty at the end of the year. (sigh)

      • +2 votes

        :) if your diary is empty

        Gmail Search:

        after:2019/07/01 or before:2020/07/01 receipt

        This is probably why I like online purchases… no receipts go missing

  • +3 votes

    Try having to do a US tax return, you will come to understand how simple the process is in Aus

    • +2 votes

      When I try to think of doing a US tax return I just think of Homer bundling all his crap in sticky tape to the IRS…

  • +2 votes

    A large scotch is how i prepare for it

  • +1 vote

    file thing as they go

    each weekend I spend around 15 minutes data entry my investment and income for that week
    any invoice that comes that week I file them and scan them into a folder on to the cloud for that FY

    come tax time I run a tax reports that takes 5 minutes and then all the invoice and dividend statement all in correct folder ready to go.

    Easy as no hassle if you spend 15 minutes a week on it

    •  

      It’s more fun if you leave until the last week of October.

    •  

      i bought bit coin like 6 years ago, no idea how im gonna account for taxes.

      •  

        if you don't sell, there is no capital gain to be paid
        you only paid tax on income and realise capital gain, since bitcoin is all capital gain and no income it when you sell them that it matters

        having said that I got no bitcoin nor have any urge to own now or in the future

      •  

        People that own digital assets don't have to sell their assets to enjoy the gains. They could use the assets as collateral and take out a 50% (up to 80%) CDP.

        A CDP doesn't require a credit check and won't put a mark on their credit rating. They could use the loan to improve their lifestyle or invest in other markets.

  •  

    I submitted last years tax return in like February which is the latest I've ever done it, typically I do it in Dec-Jan but this time I got a reminder notice. So to answer your question, I'm never ready I just start the process on mygov in around October then complete it when I feel like it, oops.

  •  

    Lube 😔

  • +1 vote

    Not being too prepared can be an advantage. Lots of stuff pre-fills on the online system, but can be a bit slow, so waiting a couple of months after 30 June can save time in reducing the amount of not-prefilled things to chase up.

    Helps if you avoid overpaying tax during the year, so you are delaying a bill instead of delaying a refund. Not always possible but things like rental income you can often defer the interim payments that ATO encourage and just pay in a lump with the tax return.

    •  

      so you are delaying a bill instead

      due date is always the same, regardless of the date you submit.

      •  

        True, you are only delaying recieving the bill, not the due date.
        But if you are expecting a refund you will get it sooner if you submit sooner. ATO don't get enough credit for their generosity.

        • +1 vote

          It's not generosity when they're giving you back your money

  •  

    I leave it until the last minute.

    • +1 vote

      I leave it till the last second

      •  

        There's nothing like the feeling of euphoria you get when pressing that submit button at 23:59:59 every 31-Oct…

  • +2 votes

    I use a spreadsheet - my accountant asked/begged me to do this.

    Multiple tabs:

    • Income - inc tax paid/salary etc
    • Shares - dividends, dates, franking stuff etc (the same info you get on the statement)
    • Home office expenses - date, item, payee, amount, % claimed for tax purposes
    • Phone - amount, month, date etc
    • Internet - amount, month, date etc
    • Self education expenses - same as home office expenses
    • Motor vehicle (not applicable to me any more) - km travelled, km logged during logging period etc
    • Misc expenses - once again, payee, amount, date
    • Utilities - water/gas/electricity, date, period covered, amount (accountant works the % out for me based on home office rules)

    It makes it much easier for them - they don't need to see my receipts. In true OzB style, it also reduces the cost of my tax return. My accountant knows where to adjust the % claimed etc.

    Getting to that was painful and each fin year was stressful until I simplified it.

    From a workflow and paperwork perspective:

    • As I purchase something electronically, it goes into a "Purchases" folder in my email.
    • As I purchase something with a receipt, it goes into a tray in my home office. After I put it in the spreadsheet, it goes into a manilla folder of receipts for that year
    • Every now and then I clear out my tray and my e-mail. The e-mail part is becoming a bit of a pain but I don't tend to miss anything.
    • Receipts, spreadsheets for each year go into a folder on my NAS for the particular fin year.

    It sounds harder than it really is, but in reality it's fairly straightforward. I'm a procrastinator but I hate the last minute rush and the above workflow works really well for me. I took bits from David Allen's GTD methodology but made it a bit more practical to suit me.

    The only shortcoming in my system is the e-mail side of things as more and more purchases get made electronically - because it's not sitting in front of me, I sometimes put it off, so I usually reconcile at the end of each fin year against my bank statements and for the last 2 years I'm happy to say I missed nothing.

    I was audited by the ATO 2 years ago for my previous 7 years worth of tax returns and they found NOTHING - my system works - the good thing is, you don't have to action things straight away. By using "collection points" I know that everything will be in either my purchases folder in e-mail or in my in-tray, or in the spreadsheet.

    • +1 vote

      For phone I hope you're keeping the 4 week diary of every single incoming and outgoing call in order to find out the work related percentage of phone.

      For internet they want… another 4 week period diary with every time you used the internet for work/personal to find out the work related usage.

      oh and they say a "representative" 4 week period so if it seems to good to be true they will say it is not representative and ask for the full years breakdown.

      I hate their rules on substantiating mobile and internet usage

      •  

        I just do an estimate for phone and internet - it's never been an issue in the >20 years I've been claiming those expenses.

        My accountant stated that I didn't need to do a diary and that an estimate was acceptable. Motor vehicles on the other hand…!!!

        I was advised not to be a smart *rse and claim 100% and I'll be fine. The people I know who've been audited (other than myself) were audited because they were being silly and trying to claim 100% motor vehicle/home office/internet/phone expenses.

        • +1 vote

          Yeah I just get mad thinking about the number of times I have been asked for it by the ATO (not for myself).

          Such a ridiculous expectation for what generally amounts to a few hundred dollars

  •  

    If you're using the myTax thing online then you can add deductions to your account on an ongoing basis.. so you don't have to do them all at once.
    You'll still need to finalise the submission once all the pre-filled information is available however. But that should be easy if you've kept on top of deductions.

  •  

    Mine is fairly straightforward - employee with one or more PAYG, and small consulting business. My tips are:
    * Get as many invoices,receipts as possible by email, e.g. Office works, utilities, phone.

    • It can be helpful to put the period, for utilities,,subscriptons, etc. in the file name,so you don't need to open it when adding up fir the year.

    • Use apps for parking, other purchases, where you can download/export the data.

    • Save the emailed receipts in a folder marked with that tax year, inside another folder marked Tax.

    *All other small,incidental receipts go into a box to sort either every three or six months, depending on how many there are. Staple each type together or bag up with the total for that period.

    • If consulting and WFH are not huge, do a manual sort of physical receipts and total up, to enter into a basic spreadsheet which has percentages for each, i.e. WFH, business, professional expenses.

    So far so good.

  •  

    For those that have mentioned keeping receipts and dockets in a manilla foder, how do you go with them fading completely (literally nothing left on the piece of paper!) in 2 or 3 years?
    ATO audits can go back 5 years.

    • +2 votes

      There are many apps on your phone that can scan receipts (and even automatically process them into a clear black and white receipt) as well as organise them into special folders (work expenses, computer build parts, stationery, kitchen appliances etc) such that you no longer need the paper receipts. It's also easier to sift through months later and find the one you want.

      https://i.imgur.com/Q84Y0FO.jpg

      For the few items you might still want to keep (say a 5 year warranty), place them in a cool dark cupboard or drawer and they'll generally last.

      •  

        Yes. Just one more tedious necessary task!

  • +1 vote

    I just keep everything in a speadsheet

    •  

      Me too.

      I have a tray where I put receipts and once a month when I update my bas file , I enter it. Takes no time at all and gets you to do things like photocopy thermal receipts while you still can.

  • +1 vote

    I can't believe only one other person has mentioned the ATO app, which has a "myDeductions" section in it. It takes about 30 seconds to record anything deductable as soon as you buy it, including the ability to upload an invoice (unfortunately only an image, not a pdf which is probably my only gripe). This includes private vehicle use for work.
    Then it's about 2 taps to upload it to myTax after June 30. Wait for banks etc to prefill and boom, done.

    It takes me longer to record/check prefilled investment income etc, mainly because that comes from several different sources.