How to take control of your 2019 taxes (yes, you need to start now)
With Christmas just out of the way, thinking about your 2019 taxes may be the last thing you want to do. But the time to start planning is now.
Taxes are not just an annual event. Some people 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 process smoother but it may also help to maximise your return.
Here are 10 things you can do now to take control of your 2019 taxes:
1. Look back at last year's return.
Hopefully you've already filed your 2018 return (the deadline was October 31 unless you use a tax agent).
But now 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 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 documents and receipts. Have a system to keep everything in one place.
3. Adjust your PAYG withholding or hang out for a tax refund?
The amount of PAYG tax withheld each pay day determines whether you'll get a refund, break even or owe money 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. Hang on to your receipts.
If you own a business or plan to claim taxable deductions, it is imperative you hold onto your receipts.
While receipts are not needed when filing your return, they are usually required should the tax office decide to audit your 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 from person to person and year to year. This is especially true of big-ticket deduction claims, such as 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.
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? 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 options you have invested in.
Also make sure all your super accounts are consolidated, 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 until the last minute 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 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 tax office offers plenty of deductions that have the potential to reduce your 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 cash flow 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 an 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.