Did you ‘really’ know? Tax Time Tips & Traps
Whether you are running your business, studying, working full time or at home helping with kids, you feel you know the system well. However though, we do come across so many instances that surprise us when we find out that we really wern’t aware of that before. Does that ring a bell? Well, it happens to me quite often. Just when I feel confident and walk Melbourne’s streets thinking I understand most of life, something comes up and shatters my confidence. Well my opinion on this is, we all are humans and there is so much to know about in this world that if god does decide to take us for a joy ride; every day we could get stumped with something new that we were not aware of before and the almighty will never run out of options. Anyways, my topic as usual is Accounting and Tax. I will bring up a few “Did you really Know’s” that may interest you.
Like I mention in every article of mine, here it goes again. Every scenario used in this article will be true, given certain circumstances prevail. The information being shared is general in nature and you should seek appropriate legal, financial and tax advice considring your personal circumstances.
The tax legislation is one that keeps on evolving in relevancy to the needs of the country and the broader economy in general. Mentioned below are a few “tips” and “traps” that may come to you as a surprise.
Tip # 1: Did you ‘really’ know; what the due dates for lodgement of tax returns are?
This question looks very simple and most of you will jump of your seats and answer 31st October in the year following the 30th June EOFY. However, few will know that if you do use the services of a tax agent the due dates could be as late as 31st March and also sometimes 15th of May. Now think about this, did you ‘really’ know this?
Tip#2: Did you ‘really’ know; that using a registered tax agent could be cheaper than you may think?
You may think this question is vague in nature. However vague it may seem, I believe you are aware that fees paid to the tax agent are tax deductible, but you may have never calculated the benefit. If you pay $100 as a fee to a registered tax agent to prepare your tax returns, the fee will be deductible next year. Considering you may be on or around the 30% tax bracket, you will be eligible to receive a refund of $30 if you claim this as an expense at D10 “Cost of Managing Tax Affairs”. This means you actually only paid $70 out of your pocket for the Tax return preparation? Think about it? Is the $75 tax return fee paid to the tax agent really $75?
Tip #3: Did you ‘really’ know, from 2012-13 FY refunds can be received only by one medium?
This year onwards refunds can be received only through bank transfer, so if you are one of the those who gets cheque refunds, this may be bad news to you, however it should not be very hard flicking through your BSB and account details to your tax agent who could then proceed and get the refund directly into your bank account.
Tip#4: Did you ‘really’ know how long do you need to maintain appropriate records and supporting documents that are a part of your tax returns?
I am sure some of you will say 2 years or 5 years and some will say 7 years. While one of these may be the right answer in certain circumstances, I have plucked this one straight from a recent ATO generated document. The answer is, you need to keep your business records for the longest of:
- 1: Five years after completing the transactions they relate to.
- 2: Four years after the activity statement has been lodged.
- 3 Four years after you have been given a notice of assessment or a notice of amended assessment.
While the above is true for business’s and most individual cases PAYG summaries for Individuals from 1 July 2004 or later need to retained for only 2 years.
Tip#5: Now I am coming to the mother of all questions; Did you ‘really’ know what records to take to your tax agent for your tax claims? By this I do not mean the obvious ones such as PAYG summaries but the ones that give you a headache every year and you ring your accountant/tax agent/ATO for answers.
I have included this question because this is the most common question asked by clients in relation to the below-mentioned. Well I know how you feel and hence I have provided a table below that will guide you in regards to what records could be used for your tax claims. Please be aware this list is non-exhaustive and there could be more depending on your circumstances.
|Rental Property||Real Estate Agent’s Statement,Other BillsDepreciation Schedule (If Applicable)|
|Capital Gain from sale of property||Property Purchase & Disposal Documents.Solicitor’s Conveyance statement.Bank Loan Settlement Statement|
|Dividend Income||Dividend Statements|
|Work Related Car Expenses||Either the Travel diary to claim work related travel as per cents per kilometre method, or logbook with all invoices, bills or receipts.|
|Work related Uniform||Receipts/Invoices|
|Personal Superannuation contributions deductions||Notice from your superfund advising this and clearly stipulating the contributed amount.|
|Centrelink Income (taxable)||Centrelink issued PAYG summary|
While I can not mention a complete list of all documents in this short space allocated, I have given you a brief idea of what I am trying to achieve. I mean you will need appropriate records to be able to claim as well as declare figures on your tax return. It is you who declares and we who act as your agents with the ATO. The list of documents could be endless, it really comes down to whether you are able to substantiate your claims or not if you get Audited or reviewed.
With this I wish you all a Happy New Year (Financial), Good luck with your tax returns and will also hope to receive some feedback about my article(s) to firstname.lastname@example.org. Stay tuned there will be another thought provoking article in the next edition of Beyond India.
This article comes with a full disclaimer, please contact A One Accountants by calling 0386091889 and in writing to access a complete copy of this.