8 Tips to prepare for your 2021 tax return
30 June is approaching and perhaps you are keen to get it lodged with the ATO as soon as possible. Perhaps you have a refund and you are keen to receive it soon for your next project. You may have to pay some tax but you would like to know how much you owe the ATO sooner rather than later. Here are 7 tips to prepare for your 2021 tax return.
1. Get your accounting file in order
If you are using an accounting software (like XERO), make sure you are up to date with the reconciliation so that your accountant is not waiting for that to finalise the tax returns. If you have employees, make sure that you have completed the STP finalisation by the due date on the 14th July.
2. COVID related payment
Have you received Jobkeeper or Cash Flow Boost? These are unique payments from the ATO in the 2020 and 2021 financial year. Make sure you know how much of these have you been paid compile it for your accountant.
3. Gather your trading bank statements at 30 June
If you have not been downloading your bank statements throughout the year, this is a good time to do so in preparation for your accountant. The bank statements are needed to confirm the balance as at 30 June so that your accountant can present the financial statements accurately.
4. Make a list of all the asset in your business
Did you purchase any equipment or vehicles throughout the year? Make a list of all the assets and attach it with the associated invoices so that your accountant and apply the appropriate depreciation rules for those assets. If you are using XERO, the asset register function in the software is a good tool to use to record these assets.
5. Have the business and vehicle loan documents ready
If you have used finance to purchase those assets, make sure you have the loan documents ready for the end of the year. Your accountant will need to calculate the interest paid on these loans and claim it in your tax return.
6. Don’t forget your personal tax return information
While completing your business tax return is important, clients often forget that they need to complete their personal tax returns too even if your trading structure is not a sole trader. Have you been married or divorced? Do you have children? Do you have private hospital cover on your private health policies? These are important information you need to let your accountant know to complete your tax returns.
7. Do you have investment properties or shares?
If you own investment properties and are managed by property managers, you will need a copy of the financial year statement for your accountant. Loan statements for the property is often forgotten too. If you have sold shares in the financial year, it is then important to find out the purchase cost and date of those shares so that the accountant can calculate any capital gains tax.
8. Did you invest/trade in Cryptocurrencies?
Cryptocurrencies are capital gains tax assets. Depending on trading volume any profit/loss will have specific tax implications. Connect your digital wallet to Koinly and prepare your annual tax statement.
Even if you have a tax bill to pay, it is always ideal to have your accountants prepare it earlier and delay on lodgement until May next year. At least this way you know where you stand.
Contact us to get a checklist to prepare your 2021 tax returns.