Tax 2023: Expert tips for the end of financial year

Aussies will do just about anything to avoid filling out their taxes in 2023, but there are ways to make the EOFY process less taxing.

Almost 20 per cent of NSW residents would rather pick up dog poop than complete their tax return in 2023, 11 per cent would prefer to get stuck in an elevator with a sweaty stranger and 18 per cent would prefer to take the middle seat on a long-haul flight.

Indeed, it seems Aussies will do just about anything to avoid filling out their taxes, according to new research commissioned by Intuit QuickBooks, conducted by YouGov.

But as cost-of-living pressures continue and we approach tax time, there are ways to make the EOFY process less taxing for individuals and small business owners.

Gabi Andrade, co-founder of Lionfish Collective, a northern beaches tattoo studio, says accounting software allows her to manage her business finances in one place.

Sydney small business owner Gabi followed her dreams and started her own tattoo studio in the Northern Beaches.

“Intuit QuickBooks helps me a lot ... I can keep an eye on what’s going on and we’ve integrated it with the ATO, which makes life so much easier,” Andrade says.

“I have created a strong network with a great team of employees, my amazing accountant, and using digital tools to simplify the admin of tax time.

“It’s important for small business owners to keep a positive outlook. Take a deep breath, have a laugh and remember that tax time is a great time to start fresh and build future growth that is good for the business and for everyone else on the planet.”

GET SOME HELP

The research reveals 31 per cent of people in NSW find the end of the financial year and tax submission time stressful.

One third also find completing their tax returns difficult – suggesting the ATO’s auto-fill capabilities aren’t as user-friendly as they could be, says Intuit QuickBooks Australia accountant Damien Greathead.

“The biggest barriers for those who find the tax return process challenging are a lack of knowledge and understanding of the correct process, lack of motivation to complete it and lack of organisation,” he says.

EOFY is an ideal time to invest in digital tools to keep track of finances.

“A common issue is that people don’t prepare for tax time throughout the year and need to backtrack their finances. Typical tax time pain points, like having to retroactively calculate mileage and track down missing receipts, are easily avoided by using software as you go.

“Small businesses tell us that leaning on professional advisers (accountants or bookkeepers) for advice and support is vital for helping them plan for the year ahead. These professionals help small businesses factor in things like price changes and yearly peaks and troughs, whilst ensuring they set enough money aside for tax.”

As well as the Intuit QuickBooks app, the ATO has a number of free online tools to help “keep track of things throughout the year”, Greathead says.

“Aussie small businesses have had a tough few years. Whether you’re a tradie, hairdresser or a fast-paced start-up, tax time adds significant stress and mental load. Working with an accountant or bookkeeper, or using the online accounting software, can reduce stress and get vital time back.”

EXPERT ADVICE

Jimmy Nguyen, senior tax accountant at DKM Accounting, shares his tips for a less stressful tax time:

• Use cloud accounting software (to streamline processes): Making use of software and digital tools will provide business owners with better oversight of their finances, increased speed in getting paid and ensuring tax deductions are maximised. It also means you’re less likely to make an error or omission. Having tax and accounting software like Intuit QuickBooks makes all the difference at the end of the financial year.

• Know your deadlines: October 31 is the deadline to lodge your own tax re- turn each year. If you choose to use the services of a registered tax agent (ie. an accountant), this deadline is extended to May 15 the following year (however, you will need to engage an adviser before October 31 in order to take advantage of this extended deadline). Once registered, they will be able to help complete the year’s tax return as well as any other years you may have missed. The cost of using a tax agent is completely tax-deductible, regardless of when you lodge your return.

• Not all real estate agents (property managers) provide EOFY statements, so be sure to ask for them: They will give you a clear indication of what expenses you can claim as deductions and any rental-related income you will need to declare in your return. The ATO website has helpful advice on rental income and expenses.

• Appreciate depreciation: Many people still don’t know the value of depreciation. Put simply, depreciation is a reduction in the value of an asset over time, due in particular to wear and tear. Tax depreciation is a process by which tax-paying businesses write off the depreciation as an expense on their tax returns, in order to recover the cost that they’ve invested in a certain type of asset. Advisers are best placed to help you understand the value of depreciation (if relevant) at tax time.

• Prioritise getting good advice and support: Investing in a relationship with a trusted adviser, such as an accountant, is one of the best ways to maximise your success and help ease and manage the burden of tax time.