Do it now to get the best return.
| Maximize tax deductions – keep a diary! |
There are several personal or business tax deductions that require you to substantiate your deductions.
Leaving this until May/June will not give you the best outcome.
Motor Vehicle
There are two methods to claim work/business related motor vehicle deductions.
- allows you to claim up to 5,000km at a set rate (68c). You do not have to keep a logbook, but you have to be able to substantiate the kilometres claimed. Use diaries to substantiate your claim.
- keep a logbook for 12 consecutive weeks to determine your work/business related percentage. You then claim that percentage of your yearly motor vehicle expenses (registration, fuel, repairs and maintenance, insurance, interest etc).
If you haven’t kept a logbook yet – make sure you keep it for 12 weeks before the financial year ends!
Home Office/Telephone/Internet expenses
ATO requests you to “diarise your use” to substantiate your claim for these expenses. The ATO is focusing on these areas of deductions, so it would be helpful to take time and keep a diary for your use of these items relating to work or business.
Allow yourself time to compile these records now, so you won’t be stressed at year end!
Records, records and more records
The biggest mistake is not keeping proper records to support claims. Take a regular look at your work/business related expenditure. Make sure that you keep records to support this. Receipts fade, they get lost or destroyed. Try to scan or take photos of your receipts. Use technology. There is no requirement to keep a physical copy of your receipts to substantiate your claims, a digital copy is fine.
Tax Planning
Tax planning should be an exercise for every person in business. Around this time of year all business owners should analyze the past months, and predict what the remaining months hold. That will give some idea of how the business is going and what to expect at year end.