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(03) 9497 5885 Filing your taxes can be a stressful time of year. However, our Heidelberg accountant is here to offer some tips of things to avoid during this time, and tear down some common misconceptions about tax time. If you own a small business, you should be keeping on top of your taxes all year round, making sure they’re up-to-date in real-time. This can make things exponentially easier when it comes time to lodge your taxes and can also help avoid some simple mistakes that a lot of people fall victim to.
#1: Misreporting your income
Reporting your income to be more or less than what it actually is can be a red flag to the ATO and, if caught out, penalties and audits can apply. This unfortunate possibility can be easily avoided by updating all of your financial records regularly and keeping track of all money leaving and coming into your account.
Staying on top of your financial records is a good way to ensure your income is reported correctly. You’re also required to hold onto your relevant tax documents for five years after they’ve been lodged, in case the ATO requires them for a review. Our personal tax accountant in Heidelberg will be happy to help and see you throughout the year if you require any assistance with the matter.
#2: Not separating your expenses
It can be easy to confuse which expenses are deductible when it comes to personal and business expenses. Running personal errands during work hours and counting the fuel cost as a work expense, or even buying clothes to wear to work – not because it is required, but simply because you want to have multiple outfits and look great every day – does not count as a work expense, for example.
If what you’re doing is not benefitting your business – or does not directly relate to the work you’re doing – then it does not count as a business expense. However, if you’re using your personal laptop for work, or mobile phone to make business-related calls, then you can claim those items on tax, as they’re being used for work purposes.
The ATO has created the myDeductions app to make it easier for people to keep track of what can and can’t be deducted come tax time. Your accountant in Heidelberg is also available and happy to help you differentiate between the two.
#3: Lodging your tax too early
Some people like to stay on top of things in all facets of their life, even when it comes to tax time. Whilst this is a good attitude to have, sometimes lodging your tax return early can lead to mistakes being made. If you simply wait until the pre-fill in August, then the ATO will fill out the bulk of your required information from sources such as government agencies, financial institutions and employers. This way, all that is left for you to do is to review the information and fill out gaps that may be left.
#4: Claiming your superannuation on tax
If you are someone who is contributing to your superannuation out of your own pocket, then you’re entitled to a tax deduction. However it is not as simple as ticking a box when you lodge your tax. You must first submit a “Notice of intent to claim or vary a deduction for personal super contributions form” (otherwise known as a NAT 71121 form). This must be done prior to lodging your tax return. You must also meet the age requirements for this form, as well as have it approved by your super fund prior to your tax lodgement.
#5: Assuming you’re entitled to the uniform tax deduction
Australians are also able to claim a maximum of $150 on clothes, laundry and dry cleaning expenses without receipts or proof of purchase. You are eligible for this if you were required to purchase a specific uniform for your job or any form of protective wear. Anything above this amount will require evidence for the purchase.
It is important to note that the ATO have stated that more and more people seem to be claiming the maximum – without need for receipts – and they will now be scrutinising each claim to catch those who think they’re entitled to the $150 regardless.
Looking for an accountant in Heidelberg?
Silverdale Consulting Group proudly provides tax services for businesses and individuals. With more than 40 years of experience and knowledge in the accounting and finance industries, we are well-equipped to assist with your taxes and any other financial advice you might need.
If you would like to find out more about our Melbourne-based services, please give us a call on (03) 9497 5885. Alternatively, you may fill out our online enquiry form here.