# 1 KEEP ACCURATE RECORDS
Do you come to the end of each tax year dreading the time it’s going to take to get your records together to lodge your return? Well, with a little bit of planning that can all change and now is the best time to start.
Whether you are an employee or self-employed, you need accurate records of your income and tax-deductible expenses for the financial year and simply retaining hard copies of receipts in a shoe box can prove to be a dangerous game. Imagine the horror when you go to dig out all your receipts for the accountant at the end of the year to find that some are completely blank . . . . oops, the ink just isn’t what it used to be!!
So, what records do you need to keep? All your income and allowable expenses relating to earning that income can be claimed. Let’s look at these now.
Income source includes your employment, government benefits you may have received, investment returns and business profits. It also includes any other income you may have earned throughout the year such as certain insurance proceeds, foreign income or shares you have received as part of an employee share plan.
If you are an employee, you will be provided with a payment summary (group certificate) after the end of the financial year (June 30). If you are running your own business, you will need to have your financial books to determine the net profit (or loss) of your business for the financial year.
When it comes to expenses, these are generally expenses you have incurred that are directly related to the earning of your income and can include:
- Vehicle and travel expenses
- Clothing, laundry and dry-cleaning expenses
- Gifts and donations
- Home office expenses
- Interest, dividend and investment expense deductions
- Self-education expenses
- Tools and equipment
These expenses are generally deductible against your income which then reduces the tax you must pay. The best way of storing this information is electronically (ensuring you backup all your files regularly). Depending on your personal preference you could use folders on you home computer to do this or an app on your mobile phone. There are so many great apps out there but perhaps two of the more popular ones would be One Note or Evernote. There is an app that can be used with Evernote called Receipts by Tidal Pool Software that is worth a look. If using your home computer, I’d suggest creating a folder for the tax year and then sub-folders for the different categories outlined above. You can then start scanning and storing to your heart’s content.
I keep a pencil-case in my bag that I pop receipts into. Each month I then scan them all at once and file them. For you, it may mean scanning once a quarter, it really depends on how many expenses you may have. I promise you this, it will save you so much time and stress in the long run.