Paperwork Tips

If you are a business owner, we talk about bookkeeping, but the principles are the same for your personal tax if you own a rental property or shares, or any other form of paperwork that you need.

Here are some tips for you.

What is your missing paperwork costing you?

Quite often missing paperwork will mean that you can't take a tax deduction, but sometimes the stress of having your paperwork not done is costing you more.

For those of you in business, read more on this blog post:

How long do I need to keep my paperwork?

GENERALLY - you need to keep records for 5 years.

I love this FAQ - and the answer is "it depends".

It depends on your business type, your tax return type and whether you have employees or not.

For tax purposes:

Keep the information for the time period in which the ATO can be amended (or 5 years, whichever is longer). This is:

2 years for individuals and small businesses.

4 years for other taxpayers.

(This date is calculated from the date of your notice of assessment)

4 years from the date of lodgement of each BAS period.

3 years after an FBT (Fringe Benefits Tax) return is lodged.

If you are claiming over multiple years, such as borrowing costs or depreciating assets: Keep it for as long as you have the assets, and then another 5 years after you sell or dispose of it.

As an EMPLOYER, your record requirement keeping is longer.

If you have employees, the time and wages records for all staff need to be kept for 7 years.

What receipts do I need to keep for my tax return?

This one keeps changing each year. As the ATO data collection ability increases, and as technology makes it easier for businesses to submit the data, the Tax Office has access to more information, more quickly.

However, the tax system is still a Self Assessment system. This means the onus is on you to provide the information and lodge the return (whether this is for tax or BAS or anything else).

The main thing for you to keep is your tax deductions - that is - the things that you bought for work, that you can use to reduce your income (and reduce the amount of tax you pay overall).

If you have to pay for things for work, these are your Work-Related Expenses: some common work-related expenses include:

- phone costs (what % of your phone is used for work vs private?)

- union dues, if you are part of a union

- work from home costs, either at a per hour rate as set by the ATO or based on your actual costs - internet, power, etc, based on the floor plan of your house.

- uniforms, if they are occupation-specific (eg chef uniform) or have your work logo on it - including laundry based on the number of washes you do.

- work-related study - study costs that are related to increasing your knowledge at work, or to getting a promotion on your current job (But not for a brand new job)

- vehicle costs, where you use your own car AT work (not to go to work except in certain circumstances)

Other costs you might have, that might be tax-deductible, include:

- donations to charities

- income protection insurance

- cost to manage your tax affairs (tax agent fees as well as paperwork filing systems!)

As far as income goes, most (but not all) income will already show on your prefill report. See a list of the current Prefilled information on the ATO online services (myGov) that your tax agent can access, or you can see yourself.

What's in a prefill report?

Resources & Tools

You can use the ATO app to save copies of your receipts in the MyDeductions area. This will also add to the prefill report.

For businesses, we recommend using Xero as it is easy to learn, and easy to fix mistakes. It links with your bank accounts to reduce the amount of time you spend doing data entry and can be customised to suit your business.

For bookkeepers who know MYOB, we also recommend MYOB AccountRight - this program is reliable, however, there are manual tasks that still need to be done that take a little longer than Xero.

Using online storage - if you already have online storage, such as Google drive, or Apple Files, set up folders within your system per year (and investment) that will help you save and sort.

My electronic folder system looks like this:

Personal Tax
- 2020/2021
- 2021/2022

Investment Property Name
- Purchase details
- Improvements
- 2020/2021
- 2021/2022

With Shares, I keep all of the data on one spreadsheet. Email me back if you would like me to put a copy for you up on the website.

And if you are not yet into electronic data keeping, feel free to store your paperwork in a manual filing system - I have seen people with flip folders, lever arch files, and divider folders - and all work well if you have labels and file your documents in a timely manner.

There are always bonus points from us at tax time if you have added up the contents of your folder and summarised them too!