Know your tax facts

This article was published in the June 2012 Marie Claire magazine and can be seen on their website: http://au.lifestyle.yahoo.com/marie-claire/all-about-you/money/article/-/13947068/know-your-tax-facts/

It’s tax time again! Here’s how to get organised before you hit up your accountant…

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You didn’t get yourself organised for tax time – yet again? Don’t fret. Tracey Collins, director of Personal Tax Specialists (www.personaltaxspecialists.com.au), says it’s easy to create habits to make your return less painful and more profitable.

Use technology

“Take a photo of each receipt and save it on your computer,” advises Collins. “It saves you trying to decipher faded bits of paper when it comes to working out your claim.” Create a spreadsheet where each month you sit down and input your receipts under their correct category. “When tax time comes, it’ll save you time and money because you or your accountant will be able to easily see what your claims are.”

Know exactly what you’ve earned

“The tax office is very good at finding undeclared income. Collect all your payment summaries, any interest you’ve earned from savings, trusts, dividends and investments,” warns Collins. If you’re unsure about what to declare – what about that cash gift from Auntie Doris? – call the Australian Taxation Office (ATO) for advice or visit www.ato.gov.au.

Decide who’s doing your tax

“There are pros and cons of doing your own tax or getting some help,” explains Collins. “If you’re in a bit of a mess, employ a tax specialist. They’ll be able to educate you about what you can claim and enable you to do your own returns in the future.” Collins says to expect to pay $150 to $300 for an accountant, while a service such as H&R Block will be less. The ATO provides a lot of information online and you can do your own tax return, but if you make mistakes you could end up paying tax when you’re really owed a refund. Always keep a copy of your return, in case you want an expert to check it later.

Don’t panic!

Even if you owe money, it’s not the end of the world. “The tax office is usually very reasonable with payment options,” assures Collins. “Just contact them before the due date and discuss how you can pay. They may not even charge you interest if you handle it properly.” Also, don’t worry if you’ve skipped a year – just get it sorted as soon as possible.