It’s tax time again and every year if you’re like me you wonder if you are on top of all your tax submission requirements. If you have a complex submission, it could end up costing you a bunch of money if you’re relying on your accountant to manage everything for you. Even a simple tax return can cost you more money than you should be paying if you are not prepared when you get to your accountant. Engaging an accountant to add up simple receipt amounts, doesn’t make sense to me. You can easily input your information into a spreadsheet. At the end of this article, you can register for our free tax expenses calculation spreadsheet, see figure 1. A quick look at the spreadsheet from your accountant, and they can take the input required for your return, saving you loads of time and money. The alternative is you send your accountant a bunch of receipts or take in your expanding carry file and they sift through the receipts at a couple of hundred dollars an hour. Your accountant then essentially creates a spreadsheet for you! It’s convenient, but a more expensive option.
Figure 1: Tax expenses calculation spreadsheet –Download free
It’s easy to make mistakes
Following on from above. An accountant is human, and can easily make mistakes like the rest of us, and you should be across what you’re signing. In the end, you are responsible for it. Several times I’ve sat there with my different accountants over the years and picked up errors in the calculations. One wrong digit can make a huge difference in your submission. But the same goes the other way too; I have been picked up for my errors in my entries. In most things in life peer reviews are common, engineering, medicine, and banking just to name a few disciplines. By getting involved and prepared for your return, it gives a second set of eyes and understanding to how that magic number appears at the end of the calculation. It’s good for you and your accountant because neither one wants to be involved in an incorrect submission, which could be picked up in that random audit that heads your way, or that sends a red flag to the taxation office that triggers them to start poking around your affairs!
Personally, I have a medium complex tax return with some small investments. Usually, with my return, I sit with my accountant and go through it within an hour.
Seven tips for your tax return
Here are a few tips to save you time, money and be organised for the next tax return:
- Do your tax return early, just after the financial year ends. That way there is less chance of losing receipts and the chance of forgetting one of your expenses throughout the year is less likely.
- Prepare a compilation summary sheet. That way you know what you need to account for, and nothing is missing. Each year you can add to this sheet, or take away things that are not required for that year.
- Sit down with your accountant and go through your summary sheet with them. It’s efficient, and it gives your accountant the chance to ask you questions while you’re there in front of them. Likewise, it gives you the chance to question them, about areas you not sure on, or pick up on mistakes.
- Create a folder for each year, i.e. 15/16, 14/15, etc. This could be in the form of a physical folder, a digital folder or both. That way you can easily find things down the track when you need to.
- Break your folder into logical sections, i.e. Property 1, Property 2, Car Expenses, Health, Shares, Banking, Receipts, etc.
- Set up automatic filtering on your email accounts. For example, many receipts these days come in the form of digital. Applying a filter is very easy to do on your mail account that will automatically drag emails into the right folders. Anything in the header that mentions receipt will divert to your receipts folder you set up without you doing a thing. The result is you will have a folder full of all your receipts for that financial year.
- Ask the question to your accountant, what can I do to maximise my return for next year? That way all year you can work on it. For example, it could be that you need a work computer or keep a car log book for work. Or it you may need to make some repairs to an investment property you have been holding off doing.
Download our tax return spreadsheet for free, register here: