I would not consider myself an obsessive type of person, but the one thing I have very strict rules about is having all my tax information prepared and to the accountant by the 7th July.
‘But why?’ you may ask! The fact is that the longer you delay, the harder it is to get started, and the harder it is to find all of your information. In addition, it is often too late after the 30th of June to correct any accidental errors such as paying from an incorrect account or forgetting to pay an account.
The government has pretty much removed most esoteric options to reduce tax. Now is the time to discuss with your accountant if there are any tax optimization options you should consider for the next financial year.
My suggestion is that after the 31st of May, download and prepare all of your information ready for your accountant. To this follow these easy steps:
- Make sure all your accounts are balanced and no errors have been made in relation to which account the item was paid.
- Check you have all of your receipts in a format that will stand the test of time. You will need to keep this information for about 8 years.
- Complete the last download on the 1st of July, together with your tax return. This final preparation should only take a few hours.
You may have receipts relating to items of property capital improvement, which are deductions from future capital gains. If this is the case, when you sell the investment property, make sure you keep all these receipts in a safe place together with receipts from previous years. In the event of your death, if the property is sold, your relatives will need to access this information. Your accountant should have lodged all this information with the taxation department. As you may be talking 20 or 30 years to make the claim, ensure you keep the hard copies in a safe place.
There are many software packages which will allow you to prepare the information for your tax return. Talk to your accountant about what they recommend. If you do your own tax returns, you may want to purchase software to help you do this. Kath Yakal (8 April 2017) has written a blog, The Best Tax Preparation Software of 2017, which includes helpful suggestions.
In addition, there are many phone apps that allow you to take photos and keep records of all your purchases. The good ones will categorize the expenses and have everything ready for the end of the year. Two popular apps are Pocketbook Easy Budget Planner and MoneyBrilliant. If you search the app stores you are sure to find something to meet your needs and price. If you plan to go down this path next financial year, now is the time to start your research.
My accountant is perfectly happy having all my tax information prepared using Excel Workbooks. For me, this is my preferred method of keeping my financial records. It is quite easy to download all your banking and credit card transactions and categorize them accordingly. Once you have made your templates, you can reuse them each year and it costs you nothing.
The joy of having your tax records completed by the first week in July is that your accountant will most likely have it completed very quickly. Any tax refund occurs within two weeks after your tax return being submitted. If you owe tax, your accountant can delay submission. This will give you time to save for your outstanding tax due and set in place procedures so you don’t have a repeat episode in twelve months’ time.
Now you can forget about all the worry of tax and get on with planning your future.
Financial Mappers is a good place to start preparing for better wealth management over the coming years. You can plan, back test and seek advice from either your accountant or financial adviser using one of the many Reports.
Glenis Phillips, F Fin
Disclaimer: Financial Mappers does not have an Australian Financial Services License, does not offer financial planning advice and does not recommend financial products.