Wondering what the ATO is looking for when you submit your tax return?
If you want to ensure that you’re meeting all your tax obligations, it’s good sense to get a professional tax accountant on board with your business as early as possible. Your accountant will keep you informed and on time with submitting your taxes.
However, if you decide to complete your tax return yourself, you should be aware of what the ATO is paying attention to at tax time. In this article, we’ll share some insights.
You need to pay your taxes
This should be pretty obvious, but the ATO wants to know that you’re paying your fair share of taxes, just like everybody else earning an income. If you fail to submit your tax return on time, you can put yourself at risk of late fees and interest.
This of course can have a negative impact on the cash flow of your business. That’s why it’s a good idea to forecast your cash flow and predict your yearly net income. That way you can put aside enough money for tax throughout the year and not receive a nasty surprise when you get your notice of assessment.
If you do find yourself in a bit of a pickle with a large tax bill to pay, the ATO does offer interest free payment plans.
Keep your receipts and document expenses properly
Tax audits are never fun, which is why it’s critical that you keep records of your receipts for expenses you claim as deductions on your tax return. If you do happen to be audited by the ATO, they’ll want to see through records of all your business purchases and expenses.
It’s a good idea to make electronic copies of any physical receipts, so that you have a digital backup if you lose your paper copy.
Don’t forget any capital gains or losses
If you’ve sold any investments in the past financial year (this includes cryptocurrency), you’ll need to declare any capital gains or losses on your tax return. Capital gains are increases in the value of your assets. For example, if you purchase crypto and sell it later in the year making a profit. Capital losses, on the other hand, are when you sell an asset and get back less than what you originally paid for the asset.
If you do make a capital gain you will have to pay tax on it. However, the amount of tax you pay and the rate at which you are taxed varies depending on the value of the asset and other factors like your personal income.
Thinking about sneaking your capital gains past the ATO? Think again! The ATO has several measures in place to monitor capital gains.
Don’t risk it – Hire the team at Infinity22
Getting into trouble with the ATO is not a good idea. So to ensure you’re meeting your tax obligations and tracking your income and expenses properly, it’s best to outsource your accounting to a professional team like us here at Infinity22.
Infinity22 is an expert team of accountants. We specialise in ecommerce and online businesses, and we can give you reliable advice regarding your taxes and other business financials. Get in touch with our team today for more information.