If you feel like you’re paying too much tax, there are a number of simple steps you can take to help get it under control.

One thing most of our accounting clients would agree on is that they don’t want to pay more tax than they have to. Kerry Packer’s famous quote still rings true – “If anybody in this country doesn’t minimise their tax, they want their head read”. All too often though, inadequate record keeping and poor planning mean that tax specialists can’t get the best result for their clients.

So what can you do to help us help you?

Records Records Records 

As obvious as this sounds, it is imperative to keep your documentation. As well as receipts for work-related expenses and donations, you also need to keep any documentation about property and share transactions, and anything else that may impact on your current or future taxation returns. Individuals with simple tax affairs are legally only required to keep receipts for two years after the assessment is issued, but at TJL we recommend a longer buffer than that. Documents relating to capital gains need to be kept until well after the asset is disposed.

Install the ATO app

The ATO has developed a fantastic app (creatively titled Australian Taxation Office) that has loads of functions designed to save you time and help stay on top of your records.

One of the tools within the app is called myDeductions and it helps keep track of your expenses during the year. Simply take a photo of a receipt when you receive it, add a couple of small details and voila – the expense is saved, and can even be emailed directly to your accountant if required. At tax time a summary can then be generated to assist with preparing your tax return. Your accountant will be extremely grateful to not have to deal with a huge wad of fading paper receipts in July!

Another great tool on the ATO app is the ability to track your work-related travel. Motor vehicle claims are one of the most common on a tax return, and the only acceptable methods for claiming are the cents per kilometre and log book methods. Many people fall into the habit of just repeating their claim year on year, but unfortunately this doesn’t wash with the ATO. The ATO requires you to explain how you came up with your estimated kilometres, so it could save you loads of time to record your kilometres each time you use your car for work. Simply enter your car registration and details on the app once, and then plot your trip on the map or manually enter it when you arrive at your destination. It will save all your trips and then provide a total at the end of the reporting period which you can email directly to your accountant. Start logging your trips and you may even find that you’ve been underestimating your kilometres.

Download the app for free on the App store or Google Play store and get started!

Get a separate account

For people with more complicated tax affairs such as rental properties or regular work-related travel, we recommend keeping a separate bank and/or credit card for your tax-related transactions. Paying for your claimable expenses using multiple accounts and cash only increases the chance that you will miss something. Having all of your transactions in one separate account makes sense when there’s a lot to keep track of. At the beginning this may mean a little bit of extra fiddling, transferring funds and remembering to use the right card, but the benefits at tax time can’t be overstated. Your bank may charge extra for having a separate account so it’s worth weighing up the pros and cons and perhaps shopping around for the best deal.

Keep notes if you aren’t sure

Sometimes simply keeping receipts is not enough to justify your claims at tax time. Some examples of this may be claiming for work-related travel where there is a private portion, use of mobile telephone and home internet, or switching from a main residence to a rental property. Along with the relevant receipts, some notes about the expenditure or events may assist in ensuring you get the maximum claim you’re entitled to. Don’t forget that many expenses need to be apportioned for private use. You will need to document how you came up with your estimate and keep this with your tax records. Again, there is a function on the ATO app that allows you to nominate whether a recorded expense is 100% claimable, which can assist at tax time.

Seek advice

Navigating the Australian tax system is not always easy. Claiming the same amounts each year because it’s easy or relying on the advice of your mate who ‘always gets a huge tax return’ may not be the best strategy. For years the ATO have been warning us that they’re increasing their audit activity, employing more staff and improving their technology, and now a huge magnifying glass is being placed on individual taxpayers. If in doubt about your tax obligations you should speak with a tax specialist in the lead up to June 30, as there can be heavy penalties for false claims.

At TJL we pride ourselves on training and procedures to ensure our clients get the best results at tax time. If you have any questions relating to this article, please don’t hesitate to call the Forster office on (02) 6554 9511 or Taree on (02) 6552 3233 and make an appointment for a financial review.