Tips To Get You Ready For Tax Time

Tips To Get You Ready For Tax Time

As we begin another financial year, it's wise to start thinking about how you'll prepare your taxes. Review and complete these tax tips from Sydney financial planners before June 30 for help with your 2021 tax time.

Organising paperwork ahead of time, prepaying some of your expenses, and creating your budget for the new financial year are great ways you can prepare.

Organising paperwork The more organised your paperwork is at tax time, the easier the process is going to be for you. This is also going to help you maximize your deductions. You'll want to have:  Records and receipts  Last year's tax return document

 Lists of any sales or acquisitions of shares, new businesses, or property  Health insurance documentation  Your spouse's details, if married  Your children's dates of birth and other details  List of income: payment summaries, any rental income, interests, dividends, and foreign income (if applicable)  List of expenses: all business-related expenses, charitable donations, self-education expenses, and accountant fees (if applicable)  Information for home office expense if you've worked from home for any part of the financial year  Due to COVID-19, the ATO has introduced a shortcut method which can be used when claiming deductions for the 2020-2021 financial years. With this method you can claim 80 cents per hour you worked from home, but you must have a timesheet, roster, or dairy recording the number of the hours worked from home.

Tax deductions you can take working from home include:  Cleaning costs (what you spend on cleaning office space in your home)  Office furniture (costs for purchasing and maintaining furniture required for you to work)  Your phone bill (get an itemized phone bill and track workrelated calls on both landline and mobile phones)

 Your home internet bill (You can claim the portion of your internet bill that you estimate is used for work purposes.)  Electricity bills (You can also claim the portion of your electricity bill that you estimate is used for work purposes.)  Occupancy expenses like rent, mortgage, and insurance (You can claim a portion if you are operating your business only from your home in a dedicated home office space.)

Please note: You want to be sure to claim your home office expenses correctly, with evidence for your calculations to justify your claims. A trained tax professional can do this for you.

Understanding what you can claim There are many job-related expenses that you may accumulate, but there are also expenses that cannot be claimed. Claiming incorrect expenses could result in a penalty from the ATO. Some expenses are pretty obvious, like a carpenter's tools or travel expenses. However, there are many that are unclear as well. For example, journalists could be eligible to claim pay TV costs. As long as costs are incurred in order to perform work, they can be deducted. There are a plethora of expenses that you may be able to claim as business expenses. You may be eligible for some of the following:  Tools and specific clothing that are required to perform your work, like scissors and aprons hairdressers use, tools an electrician uses, etc.  Safety items needed for protection when performing your work, like sun protection if you work outside  Computers and cell phones used for work purposes

 Training and conferences for self-education and certificates that are directly related to your job performance and will help you promote in your field We advise that you read more on claiming deduction in order to understand what you may or may not claim. There is a deductions app from the ATO that can help you track your tax deductions and records of income that will make it easy to do your taxes. Be sure to check that your records are complete and accurate.

It is essential to have an understanding of the records you must keep, and they always need to be both accurate and complete. Keep most records for five years, stored in a safe location, and make sure they are in English. Review the ATO's page on record keeping for more.

We also have a tool to evaluate your record keeping in order to help you review how well your business records have been kept so that you can improve them for the future. This tool can be found on the ATO's record keeping evaluation page.

Prepaying expenses in this financial year If you anticipate your income being lower next year, you can boost your tax refund for this financial year by prepaying future expenses

by June 30. Then, these expenses will be included in this year's taxes.

A prepayment is a payment made in a reporting period for items or services you won't receive until a future reporting period or that are received continuously over a longer time. This can be the case for expenses like subscriptions or insurance premiums that are spread over several months.

Examples of common prepayments include:  Rent  Airfares and accommodation  Subscription

 Contract payments  Insurance  Advertising  Booking for conferences, major events, etc.

Budget for the future To stay in control of your spending and make sure your financial plans come to fruition, set a budget for the coming year. A budget is a useful tool for financial planning that allows you decide in advance how much you will spend and save each month, and it helps you stay on track with your financial goals.

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