EOFY planning: Three steps to make tax time easier


As we head towards the end of the financial year, now is the time to take steps to get your tax affairs in order and look at any last-minute planning to maximise your return.

From getting your documents in order, to disposing of your underperforming shares or even making a personal superannuation contribution - there's plenty to do.

So read on for some useful tips to ensure that your tax time ends up being a fruitful one this year.


Check your paperwork

If you want to make a claim for work-related expenses, you need to follow the three golden rules:

  • The expense must relate to your work
  • You mustn't have been reimbursed by your employer
  • You must be able to prove that you spent the money. That means that you must keep receipts, invoices or statements to demonstrate that you actually incurred the expense.

My tip is to keep electronic copies of all documentation relating to expenses. Paper receipts get lost or fade, so keeping everything together on your phone or computer will save time and effort when you come to complete your tax return.

Take some time out to gather all the information you will need to help you prepare your tax returns, including invoices and receipts for work-related expenses and any bank/credit card statements that contain items of work-related expenses that you no longer have (or never had) receipts or invoices for.

If you're not sure if it's claimable, collect the receipt or invoice anyway and discuss it with your tax agent. If you don't have the paperwork, you can't claim a deduction, so it makes sense to set aside this time in advance of the end of the financial year to spare yourself a stressful document hunt whilst you're in the process of getting your return prepared!

In addition, if you're claiming any expenses that have a work-related element and a private element (such as for the use of a personal mobile phone) set some time aside to work out what a reasonable apportionment is for the work-related bit.

Do some last minute planning

As we've not yet reached the end of the financial year, it's not too late to generate some additional tax deductions this tax year. Here are some quick wins:

  • If you have any professional subscriptions or union fees due, pay them by 30 June and you can claim the deduction for the whole amount this year.
  • Charitable donations are tax deductible - anything over $2, with a receipt, paid to a charity registered as a deductible gift recipient (which covers most major charities) will be deductible.
  • If you use a bag for work, to carry papers or a laptop perhaps, you can claim a tax deduction for the cost. That could include a briefcase, a backpack or a handbag.

Beyond those, if you have some spare cash you could look at making a personal contribution into your super fund. Provided the total amount of your contributions (including the contributions made on your behalf by your employer) does not exceed $27,500, this can be a great way to boost your retirement savings and claim a tax deduction for the personal contribution.

The payment must be made by 30 June, and you need to advise your super fund that you've made the payment by the time you lodge your return (your super fund or accountant can give you guidance on how to complete the form and there's a standard form on the ATO website.

If you've disposed of shares or any other form of investment and you know you've made a capital gain, you may also want to take a look at your investment portfolio and consider disposing of any assets which you know are sitting at a loss. The resulting capital losses can be offset against the capital gain.

Be careful if you sell shares sitting at a loss and then buy them back in the new tax year though. The ATO takes a hard line against so-called "wash sales" in which assets are sold and then substantially identical assets are immediately after. The ATO regard the purchase and the sale as effectively the same asset and have issued a Tax Ruling which states that they can apply the anti-avoidance provisions to cancel any tax benefits and apply penalties.

Get help if you need it

There's a reason 70% of Australians use a tax accountant to prepare their tax return: tax is complicated. Get your tax return wrong and the comeback is on you, either in the form of a lower refund or a penalty from the ATO.

Many people find it less stressful to pass on their information to a tax accountant and leave it to the accountant to complete their return, safe in the knowledge that the return will be accurate and complete.

An experienced agent will usually be good at sniffing out those obscure tax deductions you didn't know you could claim so they can often pay for themselves several times over.  Best of all, the tax agent's fee is also tax deductible.

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Mark Chapman is director of tax communications at H&R Block, Australia's largest firm of tax accountants, and is a regular contributor to Money. Mark is a Chartered Accountant, CPA and Chartered Tax Adviser and holds a Masters of Tax Law from the University of New South Wales. Previously, he was a tax adviser for over 20 years, specialising in individual and small business tax, in both the UK and Australia. As well as operating his own private practice, Mark spent seven years as a Senior Director with the Australian Taxation Office. He is the author of Life and Taxes: A Look at Life Through Tax.