Are you one of those people who don’t think too much about your tax return until it’s time to lodge it? You’re not alone, with many taxpayers waiting until they get their payment summary (group certificate pre-GST) before deciding who is going to do their tax return, what documentation they should have, and when they hope to get the return lodged. With most pay-as-you-go (PAYG) taxpayers expecting a refund, however small, it is very surprising that we are not nearly as diligent as we should be to take every opportunity to maximise that refund. With just a little forethought and organisation, everyone can get the best out of lodging their tax return.
The amount of time and organisation needed to keep everything in order depends on whether or not you run a business or are a wage and salary earner. Running a business requires a much higher level of organisation and the most important place to start is to ensure that your business and personal expenses are kept completely separate from each other. If they are all going into the same bucket, it is simply too difficult at tax time to separate them and be confident that everything is accurately accounted for. It makes life much easier for your tax accountant.
Whether you are a wage and salary earner or a business person, it is important that you have invoices and receipts for all tax related expenses, accurate records of all income, and some kind of system to keep them organised until it is time to lodge your tax return. Records can be kept electronically or be paper-based. It’s entirely up to you. If your affairs are fairly basic, all you really need is an accordion file to drop all the documents into when they have been dealt with. It’s a good idea to either put them in alphabetical order, or you could also file them monthly, starting a new section for each month.
Some people are natural organisers who have a place for everything, and put things where they belong every time, and there is no doubt that keeping everything organised is much easier if it’s a regular habit. If putting things away immediately is not your style, then setting aside an hour or two regularly every month to find and file your tax records will bring huge benefits at the end of the tax year. Part of this process could also be keeping a running summary of the totals, creating a month by month record of each income and expense which just needs to be totalled at the end of the tax year, and handed to your accountant.
With just a little effort and a regular habit of keeping all your tax records in one place, you will not only make the end of the financial year a breeze, but you may just find some legitimate deductions that you would have otherwise missed. This could increase the amount of any tax refund you may be due, just by getting organised.