5 tips to prepare you for tax time

Tax time is here. Use these helpful tips to whip your tax return into shape.

  • 8 June 2022

    Faced with the reality of completing your annual income tax return? We’re here to help make this as stress-free as possible for you.

    A person using a calculator, cropped to show just the calculator, hands and torso.

    It might not always be an easy task to keep track of and maintain all of your paperwork for your tax return. However, you should know that the Australian Taxation Office (ATO) requires you keep all records relating to your lodgement for five years from the date you lodge your tax return.

    These five tips can help you complete your tax return as simply as possible.

    1. Find out the records you need to keep

    The ATO has a ‘Records you need to keep’ webpage which makes it easy to understand which documents you need to hold on to. This hub of information will also help you understand the evidence you need to submit when claiming your deductions. 

    To get organised for next tax time, download the ATO app for a fast and easy way to keep track of your records on the go.

    2. Use a record keeping application

    Keep track of your electronic records using the myDeductions tool in the ATO app or using another app of your choosing. 

    The ATO app is free to download to your mobile device from the app store you normally use. The app helps you keep records of:

    • any work-related expenses (including a logbook feature for car trips)
    • gifts or donations 
    • cost of managing tax affairs
    • other deductions.

    Remember, all physical records can be photographed and stored electronically in the app as well (including photos of your receipts). 

    You can lodge your tax return online using myTax. To get started, you’ll need a myGov account linked to ATO online services. According to the ATO, 36% of Australians prepare their own tax returns and lodge them using this method.

    Lodging online is quick, easy and secure. The best time to lodge is late July when a lot of your tax return information has been prefilled by the ATO – including income, bank interest, health fund details and government payments. You just need to check the information is correct and add anything that’s missing.

    You have until 31 October to lodge your return. Visit the ATO website for more information.

    3. Lodge with a registered tax agent

    You can also lodge your return through a registered tax agent. For a fee, tax agents will help you complete and lodge your tax return.

    Tax agents use the data you provide them, so appropriate record-keeping will help to keep this process quick, simple, cost-effective and accurate. Another benefit of using a registered tax agent is that you can claim a deduction for the expenses you incur in engaging their services in the following year’s return.

    4. Organise your documentation 

    You can either create your own checklist, or download a checklist from the website of registered tax agents. It will need to include the following items:

    Income

    • Income statements or payment summaries from employers
    • Lump sum and employment termination payments
    • Government payments (including taxable COVID-19 support payments such as the Pandemic Leave Disaster Payment)
    • Interest from banks and other financial institutions
    • Dividend statements
    • Spouse details, including taxable and exempt income
    • Other income (e.g. rental property income, foreign income, capital gains from shares, rentals or crypto)

    Deductions

    • Work-related expenses, such as:

        ○compulsory uniforms or protective items

        ○self-education and professional development

        ○union, registrations, tools, subscriptions, seminars, conferences

        ○telephone, computer, internet

    • Donations to registered charities or building funds

    Offsets and refunds

    5. Be mindful of things that can go wrong

    Occasionally there can be issues with the documents you’re maintaining for your tax return. They could potentially become lost or be inadvertently destroyed. If this ever occurs, you must make sure you attempt to obtain a copy of your documents. If you are unsuccessful in doing so, you may need to submit evidence to the ATO showing that you tried to do so, if asked.

    If documentation is misplaced or overlooked, this could also mean that you are short-changing yourself when you lodge your return.

    Remember, guessing amounts for your deductions is an extremely bad idea – as it can easily result in penalisations and interest charges for incorrect claims. Even if you don’t need to present all your documents when lodging your tax return, you must have records to substantiate your claim if the ATO queries you.

    This article was originally published in July 2020 and updated in June 2022.

    Note: The information contained in this article is not to be taken as taxation advice. You should always consult a registered tax advisor for all tax-related matters. 

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