How to Prepare your Tax Return in Australia

When it gets to the end of the financial year, your tax return is the last thing that you want to think about. The good news is tax return preparation can be a smooth process. All you need is a proactive approach. Whether you’re an employee, investor or business owner, a little preparation throughout the year makes a huge difference when the tax return deadline rolls around.

The Practice has an extensive tax preparation service. Our Tax and Business Advisory teams lodge tax returns for many businesses and individuals across Melbourne. To help you with a proactive approach to how to prepare your taxes, we’ve created this guide. 

Get organised early

One of the biggest causes of stress during tax returns is disorganisation. Throughout the year, you’ll have many different documents that are going to be critical to preparing your tax return. A good approach is to keep your documents all in one place. 

If you haven’t already, start a folder for anything tax related and gather everything together. Some key documents include income statements, interest payments on your mortgage, rental property records and private health insurance details. 

Keep digital records

Paper receipts fade, not to mention, get lost. The best way to keep everything in one place is to store all your documents digitally. 

Having your records in digital form will make it much easier to find when your tax accountant is ready to start your tax return. Digital records are easy to share. 

There are a number of accounting software that help with digitising your records. However, if you’re creating a folder on your computer, think about cloud storage or backing up your files. This way, you mitigate the risk of losing any records due to computer mishaps. 

Remember the more robust your record keeping, the smoother the tax return process.

Track your work related expenses

Don’t forget to keep records of your work related expenses. Also known as tax deductions, these are important to claim as they reduce your tax liability. 

Some common tax deductions in Australia are:

• Home office tools and equipment

• Work from home costs
• Uniforms and protective clothing expenses
• Professional development  

Tracking these expenses and collating digital records will ensure you don’t miss anything when it comes to tax time. 

Review your income streams

For those of you with multiple income streams, it’s important to review them. Especially business owners and investors, you may have different income sources that have different tax treatments. 

Ensure you keep digital records of your:

• Salary and wages
• Rental  income
• Business income
• Dividends received
• Interest earned
• Capital gains made

The Australian Taxation Office (ATO) may receive most of this information automatically however you should verify the accuracy. 

Understand what you can claim

With tax rules, changes are frequent and can impact your tax return. 

Here are a few examples of rules that can change: 

• Work from home deduction methods
• Car expense rules
• Depreciation rules
• Investment deductions
• Small business concessions

Staying informed about changes to tax rules ensures you’re able to minimise your tax liability. 

Plan your deductions before the end of the financial year

Tax planning is most effective before the end of the financial year as this provides the opportunity for proactive tax planning. 

For instance, you may want to prepay expenses to help ease the burden for the next financial year. You could also make personal super contributions and take advantage of the tax deduction. 

Other tax planning initiatives you may want to consider include:

• Bringing forward repairs or maintenance for your rental property
• Reviewing investment strategies
• Managing capital gains and losses

Tax planning is key to reducing your tax liability so don’t wait until the end of the financial year.

Reconcile monthly

For business owners, reconciling your accounts monthly gives you clean books. This means faster and easier tax returns. Accounts include bank feeds, payroll and any invoices or receipts. Depending on the size of your business, it may also be wise to reconcile your BAS and GST on a monthly basis. 

Work with an Australian tax accountant

Accurate record keeping will remain with you or your bookkeeper. For that, the above tax return checklist will be hugely helpful. But, if you want to get the best outcome for your tax return, a tax accountant can provide vital advice and take away any stress with tax compliance. 

Tax accountants are experts in maximising your tax deductions and avoiding any common mistakes. You can also ask about tax planning for the next financial year so you stay ahead.

Get ahead of your tax return

Tax returns don’t need to be stressful. With good organisation, proactive planning and the right support, you’ll approach the end of the financial year with confidence. Take away the scrambling and focus on tangible outcomes.

If you’d like help preparing your tax return or building a robust tax strategy, the Tax and Business Advisory teams at The Practice are here to help.

Frequently asked questions

When is the tax return deadline in Australia?

The standard tax return deadline in Australia is 31 October for individuals lodging their own return. However, if you use a registered tax accountant or agent, you may be eligible for an extended deadline. Speak to our Tax and Business Advisory team to see how you can benefit from an extended tax return deadline. 

Do I need a tax accountant to prepare my tax return?

While it’s possible to prepare and lodge your tax return yourself, working with an Australian tax accountant can help maximise your deductions, ensure compliance with ATO regulations and identify tax planning opportunities. For business owners or individuals with multiple income streams or investments, engaging a tax accountant can be greatly beneficial.

What happens if I lodge my tax return late?

Lodging your tax return late can result in penalties from the ATO, including fines and interest charges. Delayed lodgements may also affect your ability to access refunds or government benefits. If you anticipate missing the deadline, it’s best to engage a tax professional early to explore your options and minimise potential penalties.

This article provides general information only and does not constitute personal financial advice. It does not consider your individual objectives, financial situation, or needs. You should seek professional advice before making any financial decisions.