tax - july 12

This is it – TAX TIME…. Have you started thinking about getting all your things ready for the tax return? The chances are you are not - because from experience not too many people are that well organized. My advice is – if you are expecting a tax refund then I suggest you get your tax return done as soon as possible – money in your bank account is better than sitting with the tax office.

 Due dates for tax returns:

If you are lodging your own tax return direct with the tax office – you have until 31^st August. If you are using a tax agent to lodge it on your behalf then we (tax agents) have an automatic extension until end of October and possibly even longer, depending what our own lodgement programs is. But you must be added on the tax agents’ client data base.

Personally, I believe that all individual tax returns should be done as soon as possible. There is no need to delay the inevitable. Once you have done it – you will know it’s done and over for the next 12 months. Some people think of the tax return like going to a dental appointment – not true – the dentist charges more.

What information do you need:

The most important item is the income for the year. This includes all group certificates (including Centrelink payments), bank interest, dividends, rental income etc. The tax office now has the ability to track down most of the incomes earned by taxpayers such as bank interest, dividends, sale of property etc so make sure you include it. If you don’t; then you may be charged with both hefty penalties and interest charges.

What do you need to know about deductions:

When it comes to claiming expenses then there are three things you need to be aware before it can be allowed as a deduction:

1. actually incurred – unless you have spent the money then you can not claim a tax deduction. So you can not ask your tax agent “what can I claim?” You need to ask “which one of these items that I have spent can I claim?”

2. meets the deductibility test – you must be able to show that the expense was incurred in the course of gaining or producing assessable income.

3. satisfies the substantiation rules – you must have a written evidence to prove their deduction.

The three most commonly misunderstood expenses by clients are: motor vehicle, mobile telephone and home office.

Final note: this year new and lower tax rates will apply.

If you have specific tax questions, feel free to contact me.