Hi everyone, I’m Alison from A K Tax Services and since it’s tax time I thought I would share some hints, tricks and answers to some of the frequently asked questions that I receive from clients.
Receipts or it didn’t happen
Many people assume that there are automatic deductions or a certain amount that you can claim without records. This is not entirely true, even for items claimed under a cents per hour or kilometre method you need diary evidence to support your claim and just using your bank statements as records is not enough. For example, if you are claiming your motor vehicle use under the cents per kilometre method, you still need to have records to show how you have come up with the kilometres you are claiming.
If you aren’t great at keeping receipts, I suggest taking pictures of your receipts with your phone, putting them into a folder called “tax receipts” and keeping a separate folder for each financial year. Make sure the folder is backed up to the cloud, so even if you lose your phone you don’t lose your receipts.
If you use software such as MYOB or XERO, they each have in-built options so you can attach copies of receipts to the relevant transaction in the software (trust me, your Accountant will love you for doing this).
If you are ever audited by the ATO and can’t provide receipts to match up to your claims, you can say hello to a tax bill AND penalties imposed by the ATO.
As part of an election promise a couple of years ago, Scott Morrison and his government introduced the $1080 rebate (I refer to this as ScoMo’s bribery payment).
Many people assume that everyone is entitled to it, but this is not the case. Your taxable income must sit between $48,000 and $90,000 to receive the full payment of $1080. The amount gradually reduces on either side of those income thresholds.
Even if you sit within that income bracket, you are not guaranteed to receive this amount back into your pocket. It’s a tax rebate so it forms part of your income tax calculation. If you haven’t had enough tax taken out of your earnings, the $1080 will be swallowed up by any tax payable on your income.
So, your total refund or payable amount on your tax return includes this $1080 already.
If you are self-employed, contributing money into your superannuation fund is a great way to gain a tax deduction without furthering another business’s profit. Spending money on buying tools, cars, etc will also give you a tax deduction, but those assets will decrease in value and most likely cost you money to maintain.
Think of contributing to super as investing in yourself. You get the tax deduction AND the value of your super will generally continue to increase, and your future self will thank you!
If you did contribute to super and are planning on claiming a tax deduction, please make sure that you complete an “intent to claim” form before completing your tax return. Your super fund and the ATO both need to acknowledge the claim before you can complete and lodge your tax return.
Of course, because super is a financial investment, I always recommend getting advice from your financial planner prior to doing anything in this area.
Thanks for reading this far, if you have any other topics or questions you would like answered in future posts, please let me know!
For more information about accounting services head to Alison’s website