Individuals: Going Electronic
We’ve been hearing it a lot in the media recently that ‘everything is going electronic’. This includes your ‘old-fashioned’ PAYG Payment Summary, which your employer will no longer issue from the next financial year (ending 30 June 2020) onwards. Instead, all payroll data will appear in your MyGov account.
With most of life going electronic, what does this mean for individuals from a tax perspective?
Already, the ATO is cracking down on various Work-Related expense claims. In your tax return, they are asking you to break down various Expenses into separate amounts, as a single lump sum of Work-Related Expenses will no longer be acceptable. You will have to separately list your Expense items, such as telephone, internet, training courses, memberships of professional organisations, laptops, stationery and so on. Motor vehicle expenses will also likely have to show the separate components for fuel, maintenance, insurance, finance costs, and other information.
The ATO will then use this information to benchmark people by industry and occupation and work out whether a taxpayer’s deduction level is above average or below average. This will help them determine whether to audit.
The same goes for tax agents—the ATO is putting us under more scrutiny to check whether we’re educating and advising clients correctly or whether we’re a risk to the tax collection process. Tax Agents are compared across the country, and then the claims by our clients are matched against other tax agents’ clients, and then we are ranked accordingly.
Therefore, ensuring that you have all of your receipts, log books, and other justifications for claims to survive an audit will be more critical now than ever.
We prepare tax returns for our clients with the view that if the ATO walks through the door, they will stand up to the scrutiny of an ATO audit. Therefore, we educate clients on what they may or may not be able to claim and what evidence is required.
With a lot of technology now available, we have been assisting individual clients who are not in business with their record keeping by providing free use of an App for collecting their information electronically. This is an offer from AAG only and isn’t available unless you are an AAG client.
- Dext for Individuals – Technology to make life simpler for your personal tax return
- Dext for Business – Technology to make life simpler for your business
The benefit of this technology is that you can collect your data and information as you go. This means that you don’t have to worry about collating a shoe box full of receipts at the end of the financial year or trying to remember or recall what you had an expense claim on or for. Instead, you can take a photo of the receipt on your smartphone or mobile device, or email it to a particular email address, and make notes about the expense and how it’s related to your:
- Work, including professional development, self-education, and general expenses;
- Investments, including margin loans or research; and
- Rental Property or properties.
Other apps are available for free, including the ATO app. Our concern about using the ATO app is that it can access more of your information and claims. This is like playing poker and showing your hand to the dealer before you play!
The App that we provide free to our clients can be accessed from your smartphone, mobile device, or web browser. As it’s cloud-based, we can access this information at the end of the financial year, which means that we can readily review it. You don’t need to worry about spending hours at the end of the financial year providing your receipts or collating data for us.
The App also collates information by date order. So, when you upload a receipt six months later that you’d previously forgotten about, the App will ensure that it’s included in the correct financial year.
We have been working to assist clients in not only simplifying the process of collecting their data but also enabling them to withstand an audit and justify claims.
As the late Kerry Packer once said:
“I pay the tax I am required to pay, not a penny more, not a penny less. If anybody in this country doesn’t minimise their tax, they want their heads to read because, as a government, I can tell you they’re not spending it that well and that we should be donating extra.”
