Tax time rolls around every year at the end of June, and there’s simply no avoiding it. It can be a difficult and time consuming process for many, though there are a number of simple things that you can do throughout the year that will make tax time far less painful than it might otherwise be.
Be diligent and organised all year long
Every year the biggest problem that professionals have is that they were not organised enough with the filing of receipts or maintenance of records, so that come tax time, they are scrambling to find all of their paperwork for the financial year just passed.
In order to avoid this, set up a robust filing system immediately. Some people like to keep paper records, and others like to scan everything in order to keep a digital database. If you’re feeling especially organised it’s a good idea to do both, so that in the event of an accident or disaster you’ll have digital records in case your home or office goes up in smoke, or hard copies in case the computer gets doused in coffee and stops working.
In a comprehensive filing system you should be keeping bank statements, expense recepits and reports, old tax forms, payroll information and any other paperwork that you might need in order to accurately fill out your tax return.
It’s also a good idea to keep separate files for your business tax (if you’re a business owner) and your personal tax. For sole traders, there’s a lot of crossover there, but the additional layer of organisation will make the process of filling out tax forms much more straightforward.
Know the dates that forms are due
Individuals only need to know the one date for tax; October 31 is the date in which your income tax paperwork is due, although most people fill theirs out by the end of June, in line with the end of the financial year. If you’re a business owner, though, there are other dates that you’ll need to keep in mind:
- Business Activity Statement or Instalment Activity Statement: These are due on the 21st of the following month for monthly forms, and the 28th of the following month for quarterly forms.
- PAYG Payment Summaries: These must be provided to employees by July 14, and lodged to the ATO by August 14.
- Payroll Tax: These are generally lodged monthly, but different states have varying laws here.
Additionally, some industries have special requirements. For example, the construction industry has a Taxable Payments Report that needs to be lodged annually (by August 28), so be sure to check if your industry has any additional taxation requirements to the ones above.
If you’re paying employees, make sure you’re compliant with SuperStream
As of this year, all businesses need to be compliant with SuperStream if they are paying employees. SuperStream is a system whereby superannuation is paid through an electronic format. It was brought in to make superannuation payments easier for employers, but you do need to make sure that whatever accounting solution that you’re using is compatible with SuperStream. Most of them are, but check just to make sure, especially if you’re using legacy software.
Make sure that you’re going to be able to substantiate any deductions that you might claim
This one catches a lot of people out. In the event that they are audited by the ATO, many people are able to produce proof that they spent money on things; receipts and the like, but in such an event you’re also going to need to be able to substantiate that the expenses were for the purposes of work.
There are some simple techniques to doing this. Firstly, write on the back of receipts the reason that the money was spent. For example if you paid for a lunch that was business related, note it on the back of the receipt and file it.
Secondly, keep a business journal. This adds a little extra work to the day, but if you set up an Outlook or Google calendar to keep track of your daily activities, then it becomes much easier to substantiate how your movements or activities would result in a certain expense being paid (and the business reason for having made those movements).
Thirdly, for business expenses, use debit or credit cards rather than cash. You’ll be able to prove, via statements, expenses more easily using cards, and while the detail on the statements won’t be enough in itself to prove your case, it is another vitally important piece of evidence in establishing your case when it comes to claiming deductions.
Tax doesn’t always have to be a burden
Tax doesn’t need to be the awful burden that many people allow it to become. Yes it might require good record-keeping skills, but for those that are able to organise themselves and establish a recordkeeping system, they’ll find that when it comes time to fill out the paperwork to give to your business or financial advisor, the actual process is quite straightforward and simple. Having a professional to rely on to provide expert tax advice and assistance can significantly help save your own time and resources. Contact Pinn Deavin today for all your tax needs, so you can get on with growing and managing your own business.