Tax time is just around the corner which can bring unexpected returns — but also stress and confusion.
But it doesn’t have to.
Australian finance expert, author and Smart Women Society CEO Téa Angelos this week shared with 7Life her simple guide to everything you need to know for tax time.
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According to Téa, there are many ways to get the most out of your tax return.
First, she says you need to “keep detailed records and keep track of all your income and claimable expenses throughout the year to make tax time a lot easier”.
“Don’t forget to keep all relevant receipts, the ATO has a free record-keeping tool on its app — you can take a picture of your receipts and save then directly in the app,” she says.
Téa also stresses the importance of claiming all applicable deductions and recommends “doing some research on the ATO website to understand all the deductions you can claim”.
“There are different eligibility requirements for every deduction so read them carefully and make sure you comply,” she says.
The finance expert recommends consulting a professional, such as an accountant or tax professional, to ensure you claim all possible deductions and credits.
“I would definitely recommend this if you have multiple streams of income, various cash-flow producing assets and a more complex financial structure,” Téa says.
One of the common mistakes Téa sees people make with their tax returns is “forgetting to claim deductions, particularly work-related expenses or charitable donations”.
She also warns against missing filing deadlines, as “putting off your tax can delay any refund payments and, if you miss the filing deadline, it can result in penalties and interest charges”.
“Simple mistakes like errors in your personal information or bank account details can cause delays and issues with your tax return,” she says.
If you’re wanting to get organised before you do your tax, Téa suggests starting by “putting all your documents together, such as income statements, receipts and bank statements”.
She also recommends sorting and categorising your expenses to understand what is claimable and what is not.
“Make sure you also review your tax return from last year to see that you haven’t missed any income sources, claimable deductions or credits,” she advises.
Téa says there are many unusual things people are frequently unaware they are able to claim tax on.
Some of these “include work-related travel, home office expenses and even a handbag if it’s used for work purposes”.
What you can claim also extends to “sunscreen and sunglasses if you work outside for long periods of the day as well as professional subscriptions relating to your work”.
While Téa agrees everyone has a different personal financial situation, she would recommend saving or investing at least 50 per cent of your tax return if you can.
She also says it can help to split your return and start by prioritising an emergency fund once you receive your return from the ATO.
“Then if you have any high-interest debt, I would prioritise paying this off next,” she says.
The finance expert says whatever is left over should be split between saving/investing and “splurging” on something you want.
“I recommend allocating 20 per cent of your refund towards ‘splurging’ — you can spend it on anything you like guilt-free,” she says.
“If you’re shopping online don’t forget to use cashback platforms such as Cashrewards, where you can earn actual dollars back when you shop from select brands.”
Lastly, Téa recommends also using your tax rebate to “invest in your future” if you can.
“Consider contributing towards your super or other investment types,” she advises.
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