It’s a busy time of the year but it’s important to be ready for tax time to ensure the smooth lodgment of your tax returns. You will receive the usual tax information from us including checklists. One of the key things is to gather and sort records as this will save time in the long run. Please collate your bank statements, PAYG withholding summaries, and dividends and interest received if any. A simple management accounting system like Xero can assist you with this. Ask us about special packages available now.
Also gather records of income, including business income or sale of property and share investments and claimable expenses, either business deduction or employment deductions. Please be sure to include union fees, motor vehicle expenses, donations or gifts and other expenses directly related to your income. Remember to show how you apportioned your expenses between private and business use. If you’ve changed record-keeping systems, check to ensure that all of your information has correctly transferred to your new system.
At this time of the year, the ATO announces the deductions that will be strictly monitored. The ATO will use technology to closely watch these claims where taxpayers are not entitled and fraudulent claims are made.
The ATO will be watching gig economy workers such as Airbnb lessors and those who rent out their vehicle or rooms in their home. These taxpayers are entitled to some deductions, but the expenses must directly relate to the earning of income and receipts may be required. It is very important to include all income in your tax return.
The ATO will closely look at claims for work expenses as these claims are often unsupported. Last financial year, 6.7 million Australian claimed $7.9 billion in work-related deductions. This year the ATO will closely look at claims for phone calls and clothing. You cannot claim a deduction for conventional clothing even if your boss requires you to wear specified items unless these items qualify as uniform. However, occupation-specific and protective clothing can be claimed as deductions.
There were $8.8 billion car-related claims from 3.75 million people last financial year, that’s $2,347 per person! The ATO will disallow claims for private trips or those that have been reimbursed by the employer. In some cases, a logbook is required. It is alarming that 870,000 people claimed the maximum amount for work-related travel under 5,000 km.
If you would like to know more about your tax deductions and management accounting systems you can use, you can click here to know more about Chan & Naylor services. You can leave your details here and we can schedule you for a free consultation. We’ll contact you to explain more.
Whether you are a beginner, seasoned investor or business owner, our property and business tax accountants can give you guidance to maximise the financial areas of your life. We can also give you an integrated and tailored solution for your superannuation, taxation, property investment, asset protection, estate planning and more.
Chan & Naylor Group has national offices in Brisbane and Capalaba in Queensland, Melbourne and Moonee Ponds in Victoria, East Perth in Western Australia, and South West Sydney, Parramatta, Pymble, North Sydney, and Sydney in New South Wales that can assist you with tax deductions and management accounting systems.