May 17, 2019 11:18:47 AM

Preparing for end of financial year

Topics: Financial Year End, tax time, Income Tax, EOFY, Investment Finance, Australia Mortgage Broker, Property and Investments 0

It’s almost that time of year again: Tax time! And if you’re lodging a tax return for the first time, you’ve likely got many questions on your mind. To help you prepare for end of financial year, we’re sharing our tips around what you need to do, what you can claim, and some of the mistakes to avoid.

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Start preparing now
It’s a good idea to diarise the tax time deadlines by adding reminders to your calendar a few days or weeks before July 1. Australians usually have until October 31 to lodge their tax return so get in early if you can to avoid the mad rush.

Get organised early
Trying to work through a year’s worth of receipts is certainly challenging if you’re not organised. To avoid having to dig through a shoebox of receipts, file your receipts in one place as soon as you get them. Along with a hard copy of the receipt, we recommend you keep a digital copy too – a photo or online version of the receipt filed by month or expense will make it far easier for you to review at tax time. Expense-tracking apps like Expensify or Zoho make it easy for you to quickly upload and store an online copy of your receipt as you get it.

What you can claim
Some work-related expenses that you’ve paid during the financial year can be claimed back as part of your tax return. These expenses could include professional development courses, professional subscriptions, uniforms, phone bills for work-related calls and even some charitable donations.

To claim a work-related deduction you must have spent the money yourself and not been reimbursed; it must directly relate to earning your income and you must have a record to prove it. If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion. Work expenses reimbursed to you by your employer are not deductible.

Work-related expenses that could be claimed include:

• Vehicle and travel expenses – including travel between work and home.
• Clothing, laundry and dry-cleaning expenses.
• Home office expenses.
• Self-education expenses.
• Tools, equipment and other assets.
• Other work-related deductions.

If you’re unsure about what you can claim, check the ATO website

Get help when you need it
Choosing whether to lodge your tax return yourself or to use a tax agent will largely depend on how comfortable you are managing the process. If you’re unsure about how to lodge your tax return, it’s best to seek professional advice from an accountant or tax agent. A registered tax agent can complete your tax return for you which has the added advantage of an extended tax lodgement deadline. Remember too that your accountant’s fees may be tax deductible so you could claim that money back in next year’s tax return.

Mistakes to avoid
Making a mistake on your tax return could end up costing you. If it’s an honest mistake, you’ll be required to pay the primary tax you avoided paying including any interest owing. If you purposely mislead or provide false statements, ATO applies a penalty based on a percentage of the shortfall between the correct tax liability and the amount you paid. Penalties can range from between 25 per cent right up to 75 per cent of the shortfall amount!

Below are the top five mistakes that tax payers make year after year, according to ATO. Ensure you avoid making these same mistakes and get it right first time.

• Leaving out income.
• Claiming deductions for personal expenses.
• Forgetting to keep receipts or records of expenses.
• Claiming for something you never paid for.
• Claiming personal expenses for rental properties.

Once EOFY is over
After you’ve submitted your tax return, it’s time to prepare for the next year. Set up a new folder for your documentation and begin recording your receipts and expenses either online or in an organised filing system so you’re prepared for the next financial year.

For more advice around investing in property or buying a first home, get in touch with a Mortgage Express broker.


Disclaimer:

While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.

Finservice Pty Ltd (Mortgage Express) is authorised as a corporate credit representative (Corporate Credit Representative Number 397386) to engage in credit activities on behalf of BLSSA Pty Ltd (Australian Credit Licence number 391237) ACN 123 600 000 | Full member of MFAA | Member of Australian Financial Complaints Authority (AFCA)