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Tax time is coming! 7 tips for EOFY

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Tax Time Tips

The end of the financial year is fast approaching, which means that it’s nearly time to lodge your taxes. These tips will help you ensure your tax preparation and filing is as stress-free as possible.

1. Understand how this year may be different

COVID-19 has impacted our lives over the last few months and some people may have some changes in the way their taxes should be handled this year. Some of the most common effects include:

  • Working from home – if you’ve been working from home during COVID-19, the ATO has introduced a temporary simplified method to claim work-related expenses incurred during the COVID-19 period. More information can be found on the ATO website.
  • Changes to your circumstances - If you’ve taken leave, been stood down or lost your job because of COVID-19 and you have received a payment from your employer, it’s important you understand potential tax consequences for these payments. More information can be found on the ATO website.
  • Early access to super – individuals who have chosen to access their super early will not need to pay tax on amounts released and will not need to include it in their tax return. More information can be found on the ATO website.

2. Consider using an accountant

The ATO’s online myTax system is a fast and easy way to lodge your tax. Integration with tools like MyDeductions and the ATO’s prefill function make the process quick and efficient and it may be a good way to lodge your tax if you have a relatively simple financial situation.

Depending on your circumstances, you may also be eligible for the ATO’s Tax Help program, a network of ATO-trained and accredited community volunteers who provide a free and confidential service to help people complete their tax returns online using myTax.

But if you have a complex financial situation, or you’re not sure how the COVID-19 related changes may affect you, then using a qualified tax accountant may be helpful to ensure your taxes are filed correctly.

3. Gather your work-related expense receipts

An important part of completing your tax return is to claim eligible work-related expenses. In general, you can claim a work-related expense where:

  • you have spent the money yourself and weren't reimbursed;
  • the expense was directly related to earning your income; and
  • you have a record to prove it.

If the expense was for both work and private purposes, you may be able to claim a deduction for the work-related portion. Work expenses reimbursed to you by your employer are not deductible in your personal income tax return. It’s a good idea to visit the ATO website to ensure you understand which work-related expenses can be claimed for the remainder of the financial year.

4. Consider your Super

If you have chosen to access your Super early then it’s important to understand the tax implications of this. The ATO website is the best source of information.

If you're a low or middle-income earner and make personal, after-tax, contributions to your super fund, you may be entitled to the government co-contribution (up to a maximum amount of $500).

5. Check on your investments

Income from investments is generally treated as taxable income, whether it’s interest, dividends, managed funds distributions, capital gains or rent from an investment property.

If you sell a capital asset (for example, real estate or shares) you usually make a capital gain or a capital loss, which is the difference between what it cost you to acquire the asset and what you receive when you dispose of it. You need to report capital gains and losses in your income tax return and pay tax on your capital gains.

Check out this helpful ATO webpage for more information.

6. Prepare your documentation

In addition to receipts for work-related expenses and investment information described above, you may also need to collect the following documents to prepare your tax:

  • Your tax file number
  • Your payment summary (now generally called an ‘income statement’)
  • Bank statements to determine how much interest you have earned on your bank accounts in the financial year
  • Private health insurance statement
  • Details of child support payments
  • Receipts from donations to charities

7. Stay on top of your tax

To ensure there are no unwelcome surprises at tax time, it’s a good idea to regularly check how much tax you should be paying against how much is actually coming out each pay cycle.

Our income tax calculator can give you a rough idea.* If it seems out of balance at any point during the year, you might consider raising the issue with your employer to ensure that you aren’t landed with an unexpected tax bill after lodging.

While preparing and lodging taxes may be no-one’s idea of a good time, by following these seven steps you will help to make the process as easy and stress-free as possible.

  Disclaimer:

Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557 AFSL/Australian Credit Licence 238 305. The information in this article is of a general nature and has been prepared without considering your objectives, financial situation or needs. Before acting on the information, consider its appropriateness to your circumstances.

* The results from this calculator should be used as an indication only.

Article published June 2020