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June 30 is approaching quickly. Find out how to get your end-of-financial-year paperwork together for tax time.
The Australian tax system relies on taxpayers self-assessing. This means you are responsible for working out how much you can declare and claim on your tax return.
You also need to be able to show how you arrived at these figures and you may be required to provide written evidence.
Generally, you must keep your written evidence for five years from the date you lodge your tax return, five years after you have claimed a depreciation deduction, and five years after you dispose an asset that involves a capital gain or loss.1
The records you need to keep depend on your situation, but as a rule, it is better to keep too many records than not enough.
If you claim a work from home tax deduction, there are changes you need to know about.2 You may need to keep different records.
If you work from home, you can choose one of two methods to claim working from home deductions ─ either the ‘actual cost’ or ‘fixed-rate’ method.
Only the fixed-rate method is changing. The revised fixed-rate method applies from 1 July 2022 and can be used when you are working out deductions for your 2022–23 income tax returns.
Here are four possible ways to tackle your tax time paperwork.
Use the ATO's tax deductions app
The ATO’s myDeductions tool to keep your tax deduction and income records in one place.
If you are an employee, you can use myDeductions to keep records of your work and general expenses and to make lodging your tax return easier.
If you are not an employee, you can still record your general expenses, such as gifts and donations and the cost of managing your tax affairs.
If you are a sole trader, you can use the myDeductions tool to keep records of your income and deductions.
The tool enables users to record expenses, photograph receipts and log your work-related travel using GPS data.
It stores all your information in one place and that information can be uploaded into online tax returns at tax time or emailed to your tax agent.
The tax-time shoebox strategy
This way of collecting tax records is still effective, although perhaps more time-consuming than end-of-financial-year paperwork needs to be.
Every receipt you collect can be piled into a box to be sorted out when the financial year ends
If you use a tax agent, you may save time and money by sorting the receipts into categories or creating a list or spreadsheet that tallies them up.
You may still send this information electronically by later photographing all your receipts.
The online tax-time search
Many people do a lot of spending electronically on credit and debit cards, which leaves a handy online trail showing where your dollars go each financial year.
You will still need receipts as proof of purchase for most deductions, but printing out bank account and credit card statements will show interest costs, fees, and purchases during the year for tax-deductible expenses.
Lodge with a tax agent
A tax agent is a qualified professional who can help you prepare and lodge your tax return. You can engage the services of a tax agent either face-to-face or you can do it online.
Registered tax agents are the only people allowed to charge a fee to prepare and lodge your tax return. However, you are still responsible for the tax records you provide your tax agent.
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1. Australian Taxation Office, updated 5 August 2022, Keeping your tax records, accessed 23 April 2023, at ato.gov.au
2. Media release, 16 February 2023, ATO announces changes to working from home deductions, at ato.gov.au
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