With the year nearly over, thinking about next year’s tax may be the last thing you want to do.
However, mid-year tax planning is essential, according to advice issued today by Chartered Accountants Australia and New Zealand (CA ANZ).
“Taxes are not just an annual event,” said Michael Croker, CA ANZ Australian Tax Leader.
“Some Australians stress out about tax, but it doesn’t have to be that way.
“Preparing for your 2019 taxes throughout the year can not only make the tax return process smoother, but it may also help to maximise your return”.
Here’s 10 things you can do now to take control of your 2019 taxes:
1. Look back at last year’s return Hopefully by now you’ve already filed your 2018 return.
If you haven’t, now’s the time to get cracking!
However, if you’ve already done this year’s taxes, take some time to reflect back and think about the areas that were particularly demanding or complex for you.
Now is the time to plan, so that your next tax return is stress-free.
2. Set up a system
Much like skinning a cat – there’s more than one way to organise your tax records.
Don’t wait until the end of June to start organising your important tax documents and receipts.
Have a system to keep everything in one place.
3. Adjust your PAYG withholding or hang out for a tax refund?
Why is it important?
The amount of PAYG tax withheld each pay day determines whether you’ll get a refund, break-even, or owe tax when it comes to filing your tax return.
Whether you want your tax return to act as an annual savings plan, or prefer to break-even, the goal is to eliminate any surprises at tax time.
4. Retain your receipts
If you own a business or plan to claim taxable deductions, it is imperative you hold onto your receipts.
Whilst receipts are not needed when filing your tax return, they are usually required should the Australian Tax Office (ATO) decide to audit your tax return.
There are helpful smartphone apps to help keep track of your outgoings, but when it comes to filing, you should speak to your local Chartered Accountant about what you can and can’t claim, as it varies person to person, and year to year.
This is especially true of big-ticket deduction claims, like car expenses, travel and self-education.
5. Chart your charitable contributions
Fortunately, doing good for others has the benefit of giving your tax refund a boost.
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Keep records of all tax-deductible gifts and contributions you make over the year.
6. Sort your super savings
Employers pay 9.5% of employee earnings into super, but are you thinking about contributing more for your retirement yet?
If you have some funds to spare, extra contributions can be tax effective.
Learn more about your super. Log into your super fund account, check your balance, and know what’s going on including what option(s) you have invested in.
Also make sure all your super accounts are consolidated into one as having multiple accounts means paying multiple fees, so take the time to roll your accounts into one if that makes things easier and less costly for you.
7. Check for new tax rules and policies
Tax and super rules change constantly so don’t wait till tax time 2019 to check-in with your accountant for an update.
There may have been tax breaks you have taken advantage of in the past that are no longer applicable, or there may be tax legislation changes that have come into effect impacting how much tax you will owe.
With a Federal Election coming in 2019, think about the tax policies of the major parties and the impact on your finances.
It pays to know.
8. Don’t make financial decisions based solely on potential tax breaks
The ATO offers plenty of deductions that have the potential to reduce your tax liability.
But if you’re spending the cash just to get a tax break, you may end up worse off.
9. Plan for the unexpected
Nobody likes receiving an unwanted tax or super top-up tax bill – let alone an unexpected one.
The ATO expects you to manage your cashflow and pay your tax when due.
Your local Chartered Accountant can help you anticipate, and plan for, your personal and business tax requirements.
10. Use a Chartered Accountant
When it comes to managing your finances, you want to be sure that your money is being cared for in the best, most professional way possible.
While many can technically call themselves an ‘accountant’, how do you know you’re choosing a good one?
Chartered Accountants must meet educational, ethical and professional standards.
The bar is set high, so choose a CA and be in safe hands.