Personal Income Tax (PIT) season is often a nightmare rush of catch-up, trying to capture and find invoices, mileage and other expenses! Now that we’re approaching March, start good habits that will make your next tax return that much easier and more rewarding in terms of returns.
You’ll be grateful you did…
Why everyone hates tax so much
Imagine yourself digging through a haystack to find a specific needle ten times in a row… that’s most people’s experience of filing tax returns. Because your information is not organised with your next tax return in mind every day or week, it’s that much harder eleven months on. Try to reduce the amount of needles lost in the haystack – or avoid the haystack entirely. Here are some tips to help you record the correct information – but please note that these are general guides. For proper tax advice, please get in touch.
Start a travel log now
This is one of the real pet peeves and where most people throw good money that they could’ve had in rebates away – their work-driving mileage. Keep a little A5 notebook in the car with you as a logbook and, each day, track your kilometres.
Another option for those of us more paperless is to take a screenshot of your odometer at the start and end of each work day and save these in a special folder on your phone.
Remember, you are not required to pay any tax on business travel expenses. That can get you a healthy rebate, as can declaring your amount of travel allowance given to you by an employer, as long as you’re not reimbursed more than 355 cents per kilometre which, let’s face it, most of us aren’t. That’s good money spent that you can get back from the taxman, as long as you keep a good record of it being for work-related travel.
Start tracking receipts now
If you’re going to track your work driving for tax, you’re going to need to keep your petrol purchase slips. So, while we’re at it, let’s talk about receipt-keeping.
Another good practice is to keep a folder in your office and car for every single receipt you accrue for work. Put everything in and use as this folder as a backup reference. Then, ask for your receipt to be emailed to you and keep that digital copy of the receipt as well. A good way to do this is simply to create a folder in your email purely for tax receipts and file things in there as soon as they come in.
Remember – do it that moment; it’s amazing how quickly we can forget. A bonus is that you’ll accrue much less paper clutter in your wallet, your car, laptop bag, handbag… definitely a win.
Because things slip through the gaps, it may also be good to set aside 20 minutes once a week – book it in your diary as if it were a meeting – and go over your work expenses for the week and check whether all of them are accounted for.
Think about using a tax professional, and keep them in the loop
A good accountant is with worth their weight in… well, tax rebates. However, handing over a mountain of receipts and logbooks once a year, just before tax deadline, is stressful for both you and them. A better way? Have a shared system where you can put stuff in immediately – a shared folder on Google Drive is a neat solution – so that your meeting the month you need to file your return is painless or, better yet, not even necessary. One less thing to do!
All these tips sound miniscule and so obvious, but that’s exactly the point: small changes do add up and, if you look after the pennies, the pounds really do look after themselves.
Try it and see. You’ll thank us next tax season, promise.