It’s that time of year again – tax time! Like most Australians, you’ll be scrambling to get your paperwork together and submit your return on time. But don’t worry, we’ve got you covered. This blog post contains some top tips for making the process as smooth and stress-free as possible.
Tax time can be a bit daunting, but it doesn’t have to be with these top tips.
So whether you’re a first-time taxpayer or just looking for some helpful advice, read on for everything you need to know about lodging your tax return in Australia.Â
Are you distressed by all the changes in the last year? The tax return process doesn’t have to be stressful. Here are some tips to help make tax time a bit easier.
To submit their tax returns, Australian taxpayers have until October 31 2022, so there’s still plenty of time to get organised.Â
You can make the process straightforward and headache-free with a few simple steps. This blog post will share our top tips for making tax time as easy as possible. Keep reading for advice on maximising your deductions, organising your paperwork, and staying on top of deadlines.
Make sure to double-check everything before submitting it! Tax time can be stressful, but following these tips should help make things easier.
Let’s get started!
1. Observe The Three Golden Principles
When it comes to submitting a claim for a deduction that is work-related, there are three cardinal rules:
- You must have put the money out of your own pocket, as you were not compensated for it.
- The cost must have a direct bearing on the production of your income.
- You need to have a record to demonstrate this (usually a receipt).
2. The Temporary Shortcut Method For Claiming Working From Home Expenses Is Available For The Full Income Year
The year before, when the epidemic was at its height, the temporary shortcut method was developed as a response to the unexpected increase in the number of makeshift workspaces in people’s homes.
Many people in Australia have decided to keep working from home at least one day per week, despite the fact that many of their coworkers have returned to the office.
The temporary working from home shortcut approach enables claims to be made at an all-inclusive rate of 80 cents per work hour, rather than the requirement to undertake laborious computations for specific products. This method was introduced in 2005.
Multiplying the number of hours spent working from home by a rate of eighty cents per hour is an easy way to use. Your timesheet or another record of the number of hours you’ve put in while working from home is the only piece of evidence required.
The quick shortcut approach, in contrast to other ways, does not call for a designated working space and may be utilised by numerous persons at the same time who share the same living quarters.
The method that takes the quick path includes everything. If you choose to utilise this method, you will not be able to deduct individual expenses like the cost of a telephone or the internet, nor will you be able to deduct the value loss of brand new office furniture or a laptop.
3. Make No Standard Deductions
Before you send in your tax return, you need to be sure that you are aware of what deductions and credits you are qualified to claim and that you are not claiming more than you are eligible for.
As an illustration, some taxpayers are under the impression that they can claim a standard deduction in the amount of $300 without actually spending the money.
Even though you do not need receipts for claims up to $300, you must have spent the money personally, it must directly connect to producing your income, and you must be able to prove how you figured out your deduction if challenged. C
laims up to $300 do not require receipts.
4. Tax-Related Expenses You Probably Didn’t Know You Could Deduct
1. Sun protection
If your job requires you to work outside, you may be able to deduct the cost of sun protection products like sunscreen, sunglasses, and makeup that contains SPF.
2. Dogs
If you use dogs for farming or security purposes, the costs of purchasing, maintaining, and feeding them, as well as any veterinary expenditures, are tax deductible. Unfortunately, this does not include your Shih Tzu as a pet, unless you can provide evidence that Fluffy is the guardian of the premises where your company operates.
3. Clothes
If you have a work uniform or garments that are specific to your occupation, you might be eligible to deduct the cost of those items. This does not cover the ordinary clothes that you might purchase on your own and wear while you are working. The price of having your clothes laundered and dry cleaned are also deductible for these goods.
You are eligible to receive 50 cents per load of a combination of work and non-work clothes or one dollar per load of just work clothes. For claims that are more than $150, you will, however, be required to provide evidence, such as entries from a journal or receipts.
4. Gifts and donations
You may be eligible for a tax deduction for any gifts or contributions you make to organisations that have the status of “deductible gift recipient,” such as the registered charity of your choice. Claims can be made for any sum that is greater than $2. However, you are not allowed to deduct any sums for gifts or donations that offer you with a personal benefit, such as raffle tickets or meals held in support of a charitable cause.
5. Home office use
Things like energy and internet service are deductible business expenses if they are used in a home office. The deduction must be in proportion to the amount of time spent on both your business and your personal life, and differing regulations apply depending on whether or not you have a dedicated room or area for your work. T
he Australian Taxation Office (ATO) states that a fixed rate of 52 cents per hour of operational costs can be claimed as a tax deduction. This includes the cost of heating and cooling the space, as well as the cost of cleaning and the wear and tear on the furnishings.
6. Tax fees
It’s possible that some of you will be thrilled by the unexpected things you can claim, but for others, this will just be an additional source of frustration and more figures to calculate. If you are in the latter category, there is a good possibility that you will ask an accountant or tax expert to handle your tax return for you.
This is because of the complexity of the process. Fees paid to a licenced tax agent, barrister, or solicitor can, fortunately, be deducted from your taxable income. Also, you shouldn’t worry about it because they’ll figure that part out for you.
7. Television subscriptions, magazines, journals
Can you stream your favourite TV knowing that the government would pay for it, allowing you to sit back and relax? Not exactly, alas. If you work in the media or another industry that is relevant, you may be able to claim things like paid TV subscriptions, magazine and journal subscriptions, and the like, provided that you require them to keep current in your area.
8. Mobile phones
You are allowed to deduct the portion of your personal phone bill that is attributable to business use if you use it for work. Unfortunately, calls to your cousin in another country that last two hours and forty minutes do not count.
9. InsuranceÂ
Depending on the specifics of your situation, you might be able to get some of your insurance costs reimbursed.
- If you run your company out of your house, you may be eligible to receive a discount on your homeowner’s insurance premiums.
- You are eligible to deduct the costs of maintaining an insurance policy on your rental property during the time that it was rented or made available for rent.
- If you use your vehicle for work, business, or ride-sharing services, you may be able to deduct some or all of the cost of your auto insurance (where it relates to earning an income). You will be required to submit a claim for usage that is proportional if you use your vehicle for both work and business-related purposes.
You are allowed to take a deduction for the portion of your car insurance that is related to your employment if you use the log-book approach.
The cents-per-kilometre method, on the other hand, takes into account all costs; hence, if you use this method, you won’t be able to take a deduction for your auto insurance separately.
10. Salary sacrifice contributions
The majority of people under the age of 75 can deduct their personal contributions to their superannuation from the income that is left over after taxes.
The forms and the specifics of the process can be found on the ATO website. If you wish to make a claim for personally deductible donations on your tax return, you are required to fill out and submit form S290-170 before you may do so. In order to be eligible for the deduction, you will also need an acknowledgement from the trustee of the fund.
11. Education
Depending on when the costs were incurred and paid for, you may be able to claim a tax deduction for self-education expenses that are related to your income. This might include things like conferences, seminars, or even classes.
5. Tax Return Deadline
In most cases, the 31st of October is the cutoff date for submitting your return.
Due to the fact that October 31 falls on a Sunday this year, the deadline to register is November 1.
If you employ the services of a registered tax agent, they will typically have special lodgement schedules and can file returns for customers later than October 31. If you use these services, you will be able to take advantage of these benefits.
Because of this, you have until October 31st to hire a tax agent who is registered with the government if you intend to utilise one.
The Australian Taxation Office (ATO) recommends that you get in touch with them as soon as you can if you are having trouble completing your tax responsibilities or if you are unable to lodge by October 31.
If you file your tax return and it results in a tax bill, payment is needed by November 21, regardless of whether you filed your return before or after the deadline. This is the case even if you filed your return before the deadline.
6. Goods and Services Tax
Many of the things you buy in Australia are subject to a tax known as the Goods and Services Tax (GST). The goods and services tax (GST) is already factored into the price shown in Australian shops and online sites. It is not necessary to add it to the price that is being shown. When you make a transaction and are given a tax receipt, the amount that includes the GST will be displayed to you.
The goods and services tax (GST) is not applicable to the purchase of fresh food, education, or overseas flight.
7. Common Tax Mistakes
According to the Australian Taxation Office (ATO), the majority of errors made by Australians while filing their tax returns are either basic mistakes made by persons who file their taxes early or forget to list all of their income.
As of the end of July, information regarding a taxpayer’s job income, bank interest, share dividends, and health fund will be automatically included in myTax. As a result, taxpayers who try to submit their returns early are more likely to be compelled to go back and revise their claim.
The Australian Taxation Office has identified as big mistake-makers those people who make significant purchases at the end of the financial year sales period in the expectation of claiming the entire amount.
Deductions for things bought for work should be divided up according to the number of days worked in the current fiscal year.
Purchases that exceed the $300 threshold are subject to additional depreciation requirements spread out over a number of years (effective life).
8. What Will The ATO Be Focusing On In 2022 When Evaluating Tax Returns?
The Australian Taxation Office (ATO) has disclosed the goals it has set for the submission of individual tax returns in 2021.
A spokesman for the company claimed that they will be taking stricter action against:
- expenses incurred in the course of one’s employment (including the practise of “double-dipping” by claiming deductions for both legitimate and non-legitimate work-related costs)
- rental properties
- gains in value derived from cryptocurrencies, properties, and shares of stock
In the interest of your time and convenience, we have compiled a guide that will explain them in greater depth, so that you are aware of what to look out for.
9. How Do I Find My Tax File Number (TFN)?
Your personal reference number for Australia’s tax and superannuation systems is called a tax file number (sometimes abbreviated as TFN).
Your Australian TFN is unique. It is yours, and you do not have to reapply for it even if the conditions in which you find yourself alter.
Apply for a Tax File Number (TFN) if any of the following apply to you:
- wish to establish a financial presence in Australia
- are making money in Australia as a result of their employment or ownership of a business
- if you want to pay the least amount of tax possible on the money you generate, including salaries, interest, dividends, sales, and professional services, then you should
- have chosen to participate in a programme that lasts longer than six months.
There is only ever going to be one TFN assigned to you, regardless of whether you change jobs, residential addresses, or even your name; it is a crucial element of your tax records, and it is only ever going to be assigned to you once.
Finding your TFN can be done in a few different methods, including the following:
- If you have a myGov account that is linked to the ATO, you can see your personal details by logging in, going to “My Profile,” and then selecting “Personal details.”
- Take a look at papers such as the notice of assessment from the previous year, your most current super statement, and the payment summary from your employer.
- If you utilise a registered tax agent, you should question them about it.
- If you log in to the Business Portal as a company or organisation, you will be able to view the TFN of the entity displayed in the screen header of the majority of the portal’s panels.
- If you are still unable to locate it, you can contact the ATO at the toll-free number 13 28 61 between the hours of 8:00 am and 8:00 pm on weekdays and 10:00 am and 4:00 pm on weekends.
Apply for a tax file number
When you apply for a TFN by utilising the website of the Australian Taxation Office (ATO) or an official form provided by the ATO, you will not be required to pay a fee.
It is possible that you will require a valid passport or other appropriate travel documents in order to submit your application online if you are an international student.
A number of education brokers and third-party websites will ask you to pay a fee in order to submit your application. If someone is asking for a price to process your application, you should investigate what other services they provide in addition to the application.
10. The Second Job Tax Rate In Australia
Because you already have another work from which you are generating income and are claiming the tax-free level, the amount of tax that is withheld from your salary at second employment is typically higher than it is at first jobs.
The likelihood of having a tax liability at the end of the income year is decreased by increasing the percentage of money that is withheld from paychecks.
When you start a new employment, your employer will provide you with a TFN declaration form for you to fill out and submit.
If you apply for Centrelink’s payments, they will provide you with this form. Centrelink is another organisation that makes payments.
When you fill out this form, you will have the option to claim the tax-free threshold from your employer. You can also choose not to claim it.
If you:
- if you are still receiving compensation from your previous employer, even if it is through the JobKeeper Payment, you should not be eligible to claim the tax-free level for your second employment.
- if you are no longer receiving any money (even from paid leave), then you are eligible to claim the tax-free threshold from your second job and have a lower rate of tax withdrawn. this applies even if you had previously been earning income.
- Start collecting income from both employers; if you want to avoid owing money to the government at the end of the year, you can ask one of your companies to withhold taxes at a higher rate.
11. Lodge An Income Tax Return
For the purposes of taxes, if you are a resident of the country, you are required to file a return of income on or before the due date at the end of the tax year.
If you have a job, your employer is required to give you a payment summary that details the amount of money you earned as well as the amount of tax that was deducted from your paycheck and sent to the ATO.
Before the 14th of July, your company is obligated to provide you with a payment summary for the preceding tax year. For instance, if you worked for the company between the 1st of July 2018 and the 30th of June 2019, your employer is required to give you a payment summary no later than the 14th of July 2019.
Finish filing your tax return, including any payment summaries that are required. The ATO compares the amount that was withheld from your paycheck by your employer to the amount that you are required to pay by law. In the event that there is a disparity, you may be eligible for a tax refund, or the tax office may request that you pay an additional amount of tax.
You have the option of filing your tax return electronically.
12. Read The ATO Guide For Office Workers
Using the ATO occupation guide for office employees makes it more simpler than ever before to claim the costs of your work-related activities. You will also discover an excellent poster that you can print out and distribute to your coworkers. Visit the website ato.gov.au/officeworker21 to learn more about it.
There are also a variety of other occupation guidelines that can be found at ato.gov.au/occupations. These guides cover a wide variety of careers, from teaching to driving trucks.
13. How To Link Your MyGov Account To The ATO
Simply navigate to your myGov account, where you will find a list of services, and choose ATO from the drop-down menu. This will link your myGov account to the ATO.
Choose the “Questions specific to you” option for the quickest and easiest solution possible. You will need your Tax File Number in addition to two other essential pieces of information, such as the details of your bank account and superannuation membership. A comprehensive list can be found on this page.
The ATO advises that you choose the questions that you want to answer so that you can self-serve. In any other case, you are required to call.
14. Don’t Rush
As people rush to finish their tax returns at the beginning of July, the Australian Taxation Office finds a lot of inaccuracies. If you file your return online, the Australian Taxation Office (ATO) has simplified the process for you by automatically populating certain areas of your tax return with data provided by third parties like employers, banks, and other government agencies.
Late in July is the deadline for the majority of organisations to provide their information to the ATO; however, numerous organisations send their information far earlier. If you typically handle your own tax return, the Australian Taxation Office (ATO) will notify you through myGov as soon as the relevant information is made available. When you have all of your information ready, they will recommend lodging. Just make sure to check over your information and edit or add any data that is wrong or missing.
Before you submit your return, don’t forget to check that your income statement has been flagged as “tax ready.” This is an extremely critical step. This is due to the fact that the majority of employees have until the 14th of July to complete their income statements.
If you wait a few weeks, you will have an easier time finding lodging.
15. Make Efforts to Prepare for the Following Year
The myDeductions tool within the ATO app can assist you if you spend numerous hours looking for your receipts or if those receipts have become worn down to the point that they are unreadable.
Using the deductions tool will make it simpler and more easy for you to organise all of your cost information in a single location and be ready for tax season. You have the ability to photograph your receipts and invoices, as well as record your costs and car journeys.
When it comes time to file your taxes, you can either send your data to your tax agent or upload it to your tax return in order to prefill it. After that, instal the ATO app on your mobile device and navigate to the myDeductions icon within the app.
Other Tips
- Claims, according to the ATO, have to be closely associated with the production of one’s income (different rules apply if you work solely from home and depending on whether or not you have a dedicated office space). You are also required to have spent the money and not been reimbursed for it, and if the total amount of your deductions is more than $300, you are required to have written documentation for it.
- In such a case, what kinds of records do we need to receive from you? For the purpose of proving tax deduction claims, receipts and invoices for the purchase or sale of assets or pieces of equipment, as well as expenditure claims and records of repairs, payment summaries, bank statements with sufficient detail, contracts, and records of tenant rentals are needed.
- There is a wide variety of software available in the form of apps that can simplify the process of keeping track of receipts and other data in preparation for filing taxes.
- Keep in mind that you are only allowed to make a claim for a portion of the item or thing that you utilise for work. Therefore, if you are going to make a claim for the internet but use it for both work and personal reasons, you will need to determine what percentage of the total cost you may submit as a deduction for work-related activities.
- Unless you are working with a certified tax agency, it is in your best interest to submit your tax return before the October 31 deadline. If you do not pay what you owe to the Australian Tax Office by the due date, you risk incurring interest and penalties.
- If you postpone filing your claim until August or September, certain pieces of information will be prefilled on the tax return form you have to fill out. This will save you time and reduce the likelihood of making any mistakes.
