With a juicy refund up for grabs, bank statements can hold the key to tax savings. Find out why from your industry super fund-owned bank ME.
It’s tax time again, and that means working out what you can legitimately claim to maximise your refund.
That’s not always straightforward because over the course of a financial year it’s easy to overlook some of the expenses we have paid that can be claimed on tax.
That’s where bank statements can offer vital clues.
Key pieces of the puzzle
Our bank statements show two key pieces of information that the tax man is looking out for – income we have earned, and expenses we have paid in earning that income.
Reviewing your bank statements can trigger a recall of both pieces of data. And in these days of electronic transactions, many payments will appear on your bank statements.
Add in interest income
Okay, if you earn a wage or salary, your pay as you go (PAYG) certificate will display your pre-tax earnings plus the tax deducted. But plenty of workers supplement their income through investment earnings – like interest on cash deposits.
Take a look through your statements to add up what your savings have earned in the way of interest. Omitting interest income could see you receive a ‘please explain’ from the tax man later on.
If you run a small business, bank statements are crucial in providing clear evidence of your earnings over the current financial year. Remember, any deposits to your account from customers or clients can be regarded as assessable income.
Don’t overlook deductions
Now on to deductible expenses. If you run a home office, you may be able to claim the proportion of your power or phone bills that relate to your home office. So check through bank statements for payments made for electricity or to telcos.
If you travel for work, payments for flights and accommodation may also be tax deductible if your employer hasn’t reimbursed you for the cost.
If you are able to claim the cost of motor vehicle expenses, your bank statements may show payments for fuel at service stations plus annual registration, vehicle servicing and insurance costs. It all adds up. You will need evidence of receipts from suppliers but your bank statements acts as an excellent memory jogger.
Seek advice from a registered tax agent
Rather than taking a punt on tax claims, it’s worth seeking professional tax advice.
A registered tax agent can guide you through all your legitimate deductions. And you can claim your tax agent’s fee in next year’s tax return. You may see the cost of last year’s advice in your current bank statements.
If you can’t afford a tax agent, contact the Tax Office about Tax Help – assistance from trained volunteers offering help with your tax return. To make an appointment for Tax Help contact the Tax Office on 13 28 61.
Bear in mind, most of us need to hold on to tax records for at least five years. So store your bank statements carefully just in case the tax man wants to take a closer look at your tax return.
This article was brought to you by ME. For more information, please visit www.mebank.com.au
Members Equity Bank Limited ABN 56 070 887 679.