The best time to start preparing for your tax return is yesterday.
Although it feels like the end of the financial year marks the beginning of tax time, David Thomas, the Managing Director of The Local Accountant, said locals need to prepare for their tax returns year-round.
“MyGov and myTax are a good place to start. There is an app called myDeductions, which is a free Australian Tax Office (ATO) app that allows people to collate all their information,” Thomas said.
“That includes taking photos of receipts, putting their diary evidence in for working from home, putting their kilometres in, collating that information, and then either completing their personal tax return on their own myTax app or engaging an accountant to help them through that process.”
But, even if you are prepared, it’s best not to lodge your tax return in the first week of July.
“Wait until all the ATO data has settled down because they will collect your income statements, information from your banks for your interest, and your private health insurance data, and none of that data comes through in the first week of July,” Thomas said.
“Delay lodging your tax return until the end of July at least. If you lodge in the middle of August, that’s great, and if you lodge at the start of September, that’s perfect.”
It’s also important to be careful of double dipping.
“If you claim the work from home cents-per-hour, you can’t then claim printing, stationary and telephone costs,” he said.
“You either claim cents-per-hour, or you claim a portion of your tax reductions for those other costs.”
Thomas also said you need to keep your records for five years.
“Make sure you keep copies of all your receipts for five years after lodgement,” he said.
“If you have capital assets, make sure you keep evidence for up to five years after you sell those assets. If you have a rental property, you have to make sure you keep the purchase contract of that rental property until five years after you sell that property.”
Side hustles are also under the ATO spotlight this year, including Uber, Airtasker, OnlyFans, short-term rental platforms, and crypto exchanges – all of which report to the ATO via data matching.
“A lot of people started side hustles during COVID. If it’s a hobby, it’s fine. If you’re doing it because you love making trinkets and selling them for $5, it doesn’t matter,” Thomas explained.
“But, if you do it in a business-like manner where you are doing it to make money, you have to record that on your tax return.”
Thomas also warned that the $1,000 instant tax deduction introduced in this year’s Federal Budget cannot be actioned until the end of the next financial year.
“Be very careful not to claim the $1,000 tax deduction this year because it doesn’t start until July 1, 2027,” he said.
“This particular financial year, make sure you have your diary for your work from home hours. There is a 70-cent per hour work from home tax deduction that people can claim.
“Make sure you have diary evidence that you worked from home to claim that tax deduction. The ATO is scrutinising and putting supported activity into reviewing that.”
If you are lodging your own tax return this year, it must be submitted to the ATO by October 31. If you are using a registered tax agent, the lodgement deadline extends to May 15 2027.
Ally Hall joined the team 2024, and focuses on entertainment and community stories. She is a graduate of the University of South Australia.