Are you looking for extra deductions to increase that tax refund? Do you want to avoid common mistakes that may increase your tax payable?
Tax comes around like clock work and the tax man wants his slice of the pie! Every year the tax laws change and ‘you can claim this and can’t claim that’. No wonder people make mistakes and miss out on a number of possible deductions! So our Northern Beaches Accountants have outlined a few helpful tips that will help avoid tax issues and increase your tax refund:
- Always have proof of purchase by managing your receipts – Make sure that you have every single work related purchase receipt documented in some type of computer software. Then ensure the receipts are saved in a well organised file. This will also save headaches for you and your accountant, which will lead to cheaper accounting bills.
- Vroom Vroom…. Keep a log book – There is a common misconception among taxpayers that you can simply claim any motor vehicle expenses related to your work. It is important to keep a log book of all business related and non-business related vehicle trips over a continuous 12 week period. This means writing down EVERY trip you take, hence giving you a percentage of trips related to work. Subsequently, you can then claim all motor vehicle expenses you incur at this log book percentage rate. Note: a current log book lasts 5 years and if you believe you do not need a log book because your car is a commercial vehicle, it is recommended to keep one anyway.
- “It’s only $4.00, don’t worry about it.” No! Record it! – ANY work related expense, no matter how small, can help increase your tax refund. There are simply tools that can help you organise any of these small expenses. Pocketbook is just one example of an app that you can use to organise every expense and flag any tax deductions.
Mistakes to Avoid
- Never guess your income, deductions or tax paid – The ATO has access to various information which they can use to quality check your returns. Therefore, if any numbers are incorrect this can flag the ATO’s attention and cause you problems. The ATO also uses bench-marking in particular industries. As a result, if you claim deductions which are well outside the industry standard, you may find yourself under audit.
- Declare your foreign income, it will count – If you are an Australian resident for tax purposes, do you need to claim money made overseas? Yes. It is always a good idea to lodge a tax return even when you are overseas. There may also be double tax agreements between Australian and certain foreign countries if you lodge a tax return overseas. If you are unsure about your current circumstances, talk to a professional! For more information on overseas income click here
- Home office and what is off-limits – This is depended upon what your work circumstances are and the nature of your home office. So you need ask yourself the following questions: (a) Do you own the home you work out of? (b) What expenses do you want to claim? (c) Do you have a separate work office? There are different implications as a result of answering these questions. For more information on home office expenses click here
For more specific information in relation to your personal tax situation, contact one of our Northern Beaches Accountants here