Tax season can be a stressful time for both individuals and companies since there are many things that have to be taken into consideration, records that need to be kept, and dates to be mindful of. Due to this fact, it may be a good idea to create a checklist of the things you have to do and prepare prior to paying your taxes to the Australian Tax Office (ATO). Some of these things include:
- Keep your important tax-related records. Although Australia’s tax system works by self-assessment, the ATO may require you to submit documents that will help verify the details you provided in your tax return. In case they ask for it and you’re unable to provide them, the ATO may disallow your claims, amend your assessments leading to higher taxes, or charge you with interest or penalties. For this reason, you have to keep your important tax-related records, such as receipts, contracts, and invoices. Keep these handy so you can access and present them easily when the ATO requests for them. In most cases, you have to keep these documents for five years.
- Know when the lodgement and payment dates are. It may sound like a no-brainer, but it is also important that you take note of the lodgement and payment dates of taxes. Aside from keeping you from forgetting these dates and missing payments that may lead to penalties, it may also enable you to pay your taxes early, as the ATO gives credit for interest on early payments.
Please note that the lodgement and payment dates may vary and may depend on the type of individual or organisation making the payment. So there will be different dates for individuals, superannuation funds, and partnerships. To confirm dates, it is recommended that you check the ATO’s website, or give them a call.
- Choose a payment option that suits you. The ATO also provides a number of options when paying for taxes. One of the most convenient ways to do this is through telephone or internet banking as you may make the payment without leaving your home and at a time most ideal for you. If telephone or internet banking isn’t possible, you may also go to your bank’s branch to make the payment.
Another option is through credit card via the Government EasyPay service. All you need to do is go to their website to make a payment. As with telephone and internet banking, this will allow you to pay your taxes at your convenience.
Then there’s the good old mail, which you can use to send your cheque or money order to the ATO. However, the ATO recommends that you send payments made through mail early in order to prevent late payments due to delays.
If you are based overseas and have to make a payment, the previous options also apply. You may also make a payment through wire transfer from your overseas bank to the ATO. It is important that you take into account the time difference between your current location and Australia so as to avoid late payments.
You may also make a payment in person. However, you have to do this at Australia Post instead of an ATO site or shopfront. When paying at the post office, keep in mind the following: payments may be made in cheque or cash up to $3,000, or EFTPOS, and you have to present your payment slip with your payment.
- Take note of all the income you earned and deductions you can claim. It is also important that you are aware of the income you earned for a particular tax season. This includes income you’ve made from employment, pensions, investments, capital gains, and other forms of income.
The ATO also provides allowable deductions that you can claim. These deductions are subtracted from your total income, which will then result in your taxable income. If you’re a property investor, for example, you may claim deductions for your advertising and marketing expenses, or use negative gearing to lower your overall taxable income.
Overall, planning ahead can help reduce or even eliminate the stress of having to pay your taxes. So if you have kept all your records, kept track of all your income and have chosen the most convenient way to pay your tax, then the process will be much easier. Aside from that, it will also keep you from being penalised or paying interest on late payments.