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The end of the financial year means that it's tax time. Sorting out your finances during the tax period can be an intricate and often complex process, but with some assistance and knowledge, you might be able to minimise your risk of making some common mistakes with your tax return.
There are three things to consider that may help avoid common errors in your tax return:
1. Supporting documentation
Even if you manage to fill out your form correctly, some people might trip themselves up when it comes to being able to provide supporting documentation. This can be particularly important for rental property owners, as the Australian Taxation Office (ATO) has announced that they are keeping a close eye on these individuals during this taxation period1.
So if you have a rental arrangement in place or are currently advertising for a tenant, consider keeping any invoices, contracts or any other documentation that could prove this arrangement is in place, especially if you are claiming deductions for interest expenses for example.
2. Declaring all of your income
This might be obvious, but it can be easy to overlook things if you have multiple revenue streams. Interest from a bank account, pension payments and PAYG summaries - these are just some of the income sources that may need to make an appearance on your tax return.
However, if you do find that you have made a mistake, consider rectifying it as quickly as possible. It is likely better to rectify than to hope the ATO don't notice your error.
3. Claiming work expenses
Tax time may not always be a negative experience, as there might be a few areas where you could claim back some of your expenses. Some people have to purchase certain goods or equipment in order to run their business or perform their job correctly, and may have the option of claiming these costs at tax time.
Consider small things that you might be able to claim, such as the cost of a pair of sunglasses and a hat if you work outside. Consider also that you may need to prove the expense was work related and have some proof of the transaction.
Do you suspect that you might be paying a little more than you expected in tax? Consider getting in touch with a professional such as an accredited tax accountant to help with your individual circumstances.
