By Lucinda Starr
That’s right, tax time is nearly upon again. But, June 30 doesn’t have to be a date you dread. Instead, we’re here to show you how to nail tax time and get the most out of your tax return this financial year.
We know that women shoulder the lion’s share of unpaid work and are disproportionately impacted by the mental load (a.k.a. The fatigue and exhaustion caused by organising, list-making and planning for chores and life admin).
You’ve got enough on your plate, ladies. So, that’s why we’re curated your ultimate guide to everything you need to do at tax time to save you time, stress and (hopefully) money.
Whether you’ve been supported by JobSeeker, started a small business or worked from home in FY 2020/21, we’ve pulled together our top tips to help you prepare for tax with ease.
Plus, if you’re weighing up how to lodge your tax return, we reveal all your options from working with an accountant to opting for a DIY return.
Ready? Ladies, let’s do this.
Get your paperwork sorted
Even before June 30 rolls around, the first step to mastering tax time is getting your paperwork in order. That means tracking down all your bank statements, logbook entries, receipts and any work-related expenses you’re thinking about claiming.
So, what key documents do you need to gather ahead of your tax return?
- Income documents, such as:
- Payment Summaries and Income Summaries
- Lump Sum and Termination Payment Summaries
- Government payment statements (if you received financial assistance this year)
- Interest income from banks and building societies
- Any other sources of income (such as rental properties, business income, employee share schemes etc.)
- Deductions for work-related expenses, such as:
- Car expenses
- Travel (fares and accommodation)
- Any uniforms or work-wear
- Training or professional development courses
- Home office gear (such as printer ink and paper)
- Telephone, computer and internet costs
- Donations to registered charities
- Income protection insurance premiums
- Offsets and refunds, such as:
- Health insurance and rebate entitlement statement (if you’re covered by private health insurance)
- IAS statements and PAYG instalments paid (if you’re a sole trader or running your own business)
When it comes to your tax return, remember this golden rule: if you’re planning to claim something as a deduction, HAVE A RECEIPT.
Whether you create a Dropbox or Google Drive folder or use the free ATO myDeductions app, make sure you’ve got a copy of every expense receipt saved ahead of time. And if physical paperwork is more your jam, create simple manilla folders or large envelopes for all your records for each financial year.
Because nobody wants to be scrambling if they get audited by the ATO, right?
Figure out what deductions you can make
Speaking of deductions, there are plenty of expenses you can claim at tax time to reduce your taxable income (and ultimately your tax bill). But, there are strict rules and eligibility criteria that apply, particularly as more of us are working from home.
First up, let’s chat about work-related expenses. The ATO spells out three key criteria your expenses have to meet in order to be a deduction at tax time, including:
- You need to have spent your own money on the item (and can’t have been reimbursed from your employer)
- You must be using the expense as a direct means of earning your income
- You must have a record (a.k.a. receipt) to prove it
For a complete list of all the work-related expenses you can claim and any conditions that might apply, head to the ATO’s website.
Have you been working from home this financial year? The extra costs of power, lighting, heating and even a portion of your rent can be claimed as deductions. And last year, 4.4 million Aussies made a claim on WFH deductions (with many more expected to do the same in 2021).
There are two main ways to make a claim on work from home expenses, which include:
- The “shortcut method”: was launched by the ATO last year in response to the pandemic. It allows taxpayers to claim 80 cents for every hour worked from home.
- In order to claim, you need to have timesheets, rosters or a diary of all the hours you’ve worked from home over the last financial year.
- The 52 cent method: this method allows you to claim 52 cents for every hour worked from home over the past year. Then, you can make additional claims for any work-related expenses such as a portion of your internet and phone bills, office consumables, and even the decline in value of equipment and devices (such as work laptops and office furniture).
- With this method, you’ll need receipts for any expenses you want to claim (such as phone bills and tax invoices for electronics).
As we mentioned, the ATO is being increasingly vigilant about work-from-home related expense claims. So, make sure you have the correct records and receipts on hand when lodging your tax return.
Decide how you’re going to lodge your tax return
It’s the question you might be asking yourself: do I need to see an accountant or can I lodge my tax return myself?
For each of us, the answer to this question will be different. If you’re happy to navigate the process on your own, you can jump online to lodge your tax return via the ATO’s myTax website. But, if you’re looking for extra support or have a more complex return to make, an accountant can streamline the process.
When deciding whether or not to see a tax accountant, here are a few questions to consider:
- Do you have multiple sources of income? If you’re running a business, have a side hustle or are earning income from investments, an accountant can help you navigate the complexities of your tax return.
- Do you know what you can claim? If you’ve checked the ATO’s website and are still scratching your head about what you can and can’t claim, an accountant can walk you through the process.
- Do you want the peace of mind of working with an expert? 74% of Aussies find it less stressful having a tax accountant on hand to lodge their tax return. If that rings true for you, speaking with an accountant might be the right move.
- How much do you want to spend on your tax return? Lodging a tax return via the ATO’s website on your own is the most cost-effective option. When it comes to accountants, their fees vary upwards of a few hundred dollars (depending on their rates and the level of work required to lodge your tax return).
If you’re thinking of working with an accountant, make sure to speak with a few accountants and get a range of quotes to ensure you’re getting a fair price.
Ways to (potentially) boost your tax refund
If you’re looking for ways to maximise your tax return, there are a few steps you can take before June 30. Make sure to speak with an accountant before taking these steps to ensure these strategies are right for you and your personal financial situation.
Some ways to maximise your tax return include:
- Making donations to registered charities: donations of more than $2 to a registered charity are usually able to be claimed as tax deductions. To check which charities are eligible, head to the ACNC’s Charity Register website.
- Boost your super: we know that women retire with 47% less super than men, and making additional contributions can also have helpful tax benefits.
- If you’re earning less than $54,837 and make additional super contributions, the government may also make a super co-contribution of up to $500.
- If you’re not working or earning a low income, your partner may be able to make an after-tax contribution and claim it as a tax offset.
- Plus, if you can claim deductions for personal super contributions (with a cap of up to $25,000 per year). These contributions need to be made by June 30 and you must give your super fund a Notice of intent to claim before this date.
- Pre-pay business expenses: if you own your own business, you can consider prepaying expenses (such as insurance premiums and subscriptions) before June 30 to claim as deductions at your next tax return. There are stacks of rules that apply, so head to the ATO website to find out what criteria you need to meet.
When it comes to tax time, a bit of planning and preparation will put you in the best position to lodge a successful tax return. If you’re feeling overwhelmed or confused by the process, consider speaking with an accountant who can help you lodge your return with confidence. Whether you’re lodging your return yourself or not, always remember to have records of every expense claim on hand and ready for the taxman.