The key to a better tax refund: Easy record keeping

Want to pay less tax and stress less at tax time?

It all starts with how you manage your receipts and records through the year.

The ATO is cracking down harder than ever on work-related deductions, so keeping clear, up-to-date records isn’t just helpful, it’s essential.

Whether you’re a freelancer, side-gigger, or full-time employee, these simple record keeping habits will help you:

1. Maximise your refund: Claim every deduction you’re entitled to, without missing a cent. All your records are right there when you need them.
2. Be prepared, now and in the future: If the ATO questions a claim, you have proof at your fingertips. The ATO can ask questions before they pay out a refund, or years after you’ve lodged a return.
3. Simplify your financial life: Organised records make it easier to apply for loans, get financial advice, and manage insurances.

The bottom line: As you can see, good record keeping doesn’t just boost your refund, it brings clarity to your entire financial situation. So grab your laptop, snap those receipts on your phone, and start building good habits that really do pay off.

So let’s get into the details:

Streamlining tax time

When you keep tax-related records organised during the year, completing your tax return is SO much easier. Plus, if any claim is questioned, you can quickly prove its authenticity.

Aside from that, the most important benefit is that clear and up to date financial records and tax receipts mean that you always claim ALL the tax deductions you’re entitled to.

Never pay too much tax again!

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Good record keeping isn’t just good for your tax refund

A clear outline of your income and expenses is the first thing you need to supply if you:

• need financial advice
• want to purchase or refinance a property
• get a business loan
• increase insurances

Good record keeping doesn’t just make tax time easier, it also keeps many other areas of your life in manageable order.

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So when it comes to record keeping, what do you actually need?

The following is an extensive list and for most people only a few items will apply to you, so don’t be daunted by it. However, ensure you’re familiar with all the different types of tax deductible expenses. This way, you’ll know what records to keep for these expenses if or when you have them in the future.

Income records

First of all, you need a record of all the INCOME you received during the year, including:

• Salary/wages
• Investments
• Dividends
• Managed funds
• Allowances
• Rent from rental properties
• Income from letting a room

Note: For investments, rental properties and managed funds, your providers or property manager should supply annual statements summarising your earnings each financial year.

Tax deduction records

Next, you’ll need a record of all your tax deductible expenses. This is how you bump up your tax refund:

10. Records of recently disposed or sold assets

11. Expense records related to any disability aids, attendant care or aged care

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Please note: For purchases over $300 you’ll need to claim a deduction for their decline in value over a longer period (depreciation) rather than claiming the purchase price in full on your next return.

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How long should I keep tax receipts?

The ATO suggest that you keep your records for 5 years if you:

• Claimed a deduction for decline in value (depreciation)
  • you need to keep the records of these for five years after the date of your last claim for decline in value.
• Acquire or dispose of an asset
  • you should keep this documentation until five years after no capital gains tax (CGT) is required – you will need this information to work out a capital gain or loss.
• Are in dispute with the ATO
  • you should keep these records  for five years from the date the dispute is finalised.

For most other tax payers who have simple tax affairs, you should keep records for at least two years.

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Good habits for tax record keeping

Here are our ‘must do’ record keeping habits for tax returns:

Get organised

Keep all your tax deductible expense records in logical order (newest to oldest). This way, at tax time you won’t find yourself frantically rummaging through mountains of receipts and paperwork — and you won’t lose any receipts and miss out on tax deductions.

Create a list of tax deductions

Maintain a detailed list of your expenses, along with a running total for each category. To make tax time easier, update this regularly so you always have accurate totals on hand.

Back up your receipts

Scan or photograph each receipt or supporting document as soon as you receive it to create an electronic backup.

This simple habit offers three key benefits:

1. Preserves receipts that may fade over time.
2. Protects against loss or damage to the original.
3. Makes attaching documents to your tax return quick and hassle-free, saving you time come July or August.

ETAX TIP: Log into your Etax account anytime and save your receipts in a couple of clicks!

Always keep proof of tax-deductible expenses

Make sure you always get a receipt for any expense you think you might be able to claim as a tax deduction. Remember, you can’t claim a tax deduction unless you have proof of purchase. If you don’t get a receipt for a payment at the time, follow up with the supplier until you get it.

Not sure if you can claim an expense? No problem! Keep the receipt and attach it to the ‘Any Other Questions‘ section at the very bottom of your Etax return, with a note for your accountant.

Any Other Questions?