Get prepared for tax time

Each year, as we head towards tax time, teachers are faced with the reality of completing their annual income tax return.

The Australian Taxation Office (ATO) requires you keep all records relevant to your tax return for five years from the date you lodge it. It’s not always easy to manage all of this paperwork, so we’ve put together some tips to help you complete this year’s tax return with ease.

Keep accurate records

The ATO recommends referencing their ‘Records you need to keep’ webpage, as it features an abundance of information to help you understand what records you must keep in order to claim deductions.

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

Use myDeductions and myTax

Remember, the records you keep don’t have to be paper-based, electronic receipts or photos of your receipts are also acceptable. 

Keeping track of these electronic records is now much easier thanks to the myDeductions tool in the ATO app. The app is free to download from your app store of choice.

Using the myDeductions tool you can keep records of: 

• any work-related expenses (including car trips)
• gifts or donations 
• costs associated with managing tax affairs
• other deductions.

At tax time, you can choose to either send the records to your registered tax agent or import them into the ATO myTax online lodgement system. According to the ATO, 36% of Australians prepare and lodge their own tax returns using this method.

For many people, this is a relatively easy process. There are resources to help you to complete your return, such as those on the ATO website as well as the Australian Securities and Investments Commission’s MoneySmart website.

Use another record-keeping application

There are also plenty of other accounting software packages offering downloadable mobile apps to help with record-keeping. These apps can store data that can be used to lodge your own return or forwarded to your registered tax agent for them to do this on your behalf.

Please note: if you choose to download an app to maintain your tax records, you must make sure it adheres to Australian tax standards, and keeps the information the ATO requires.

Use a registered tax agent

Using a registered tax agent may help you complete your return accurately and quickly.

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

Be organised

Many registered tax agents will provide downloadable checklists on their websites. You can also create your own checklist, which should include the following information at a minimum.

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, including first aid courses
• union, registrations, tools, subscriptions, seminars, conferences
• the work-related portion of school excursions, trips and camps
• working from home expenses
• donations to registered charities or building funds.

Offsets and refunds

• Private health insurance rebate and offset
• Zone tax offset
• Low and middle income earners tax offset

Keeping your records in order can reduce some of that tax time stress. As we move into the new financial year, try setting up an easy record keeping system (such as an Excel spreadsheet or downloading the ATO app). If you maintain it throughout the year, when the next tax time rolls around, you will be able to locate, collate and decipher all of your documents in the easiest way possible.

Where things can go wrong

Sometimes, problems can arise when maintaining records for your tax return. They could potentially become lost or be inadvertently destroyed. In such circumstances, you must make sure you attempt to obtain a copy of your documents. If you are unsuccessful in doing so, you may need to provide evidence to the ATO that you have tried, if asked.

Overlooking or misplacing documentation could also mean that you are short-changing yourself when lodging your tax return.

Make sure you don’t guess amounts for your deductions, as this could result in penalties and interest charges for making an incorrect claim. Even in the event that you may not need to present all of your documents when lodging your tax return, you must have records to substantiate your claim if queried by the ATO. 

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. This article was originally published in July 2019 and updated in June 2022.