If just the thought of tax time makes your stress levels rise, you are not alone according to new research conducted by cloud-based tax software, TaxTank.
The recent survey of 1000 Australian taxpayers revealed more than half (56%) find tax time stressful with missed deductions the leading cause of stress ahead of not knowing if they will receive a tax refund or bill and making a mistake.
Not only do Australian taxpayers find missing out on deductions the most stressful part of the tax return process, nine out of 10 (90%) respondents believe they are missing out or not claiming every possible deduction, with more than half (54.1%) certain they are definitely missing out, not confident, or find the rules too complicated to understand.
Tax accountant and TaxTank Founder, Nicole Kelly said: “It’s pretty clear from the research that the best way to avoid tax time stress is to address how you are managing your expenses throughout the year. Tax should not be a once a year event.
If you are scrambling around for your folder of receipts and scrolling through bank statements to consolidate expenses at the last minute, perhaps it’s time to look for a new method. Not only will it save you stress but ensure you don’t miss any deduction opportunities come tax time,” said Nicole.
The research also uncovered that almost half (47%) of all Australian taxpayers were uncertain what percentage of tax they paid last year, of which one-third (35%) claimed to have no idea.
“Knowing what percentage of tax you pay is what taxpayers should be focusing on, not the refund or payable amount, as it helps identify ways to reduce tax and optimise spending and investments. Keeping track of your taxes and optimising them throughout the year might not sound exciting, but can be easier than you think if you have the right systems in place,” Nicole added.
The research also uncovered women are far more uncertain than men of the percentage of tax they pay, with 45 percent claiming to have no idea in contrast to 24 percent of males.
To avoid tax time stress and avoid not missing a deduction here are Nicole’s top tips:
Stop treating your tax return as a once a year event
We are always looking for ways to cut expenses in our everyday lives, however tax as an expense is so often overlooked and it is actually one of your highest yearly outlays.
One of the best ways to ensure you can claim every possible deduction and reduce stress each year is to dedicate time each month, or if you can each week, to track your expenses and record any possible deductions.
Go digital and ditch the spreadsheet
There are so many different ways to manage and organise your taxes but it’s important to find the right solution for your individual circumstances, especially if you have investment properties or other incomes to keep track of.
Moving away from multiple spreadsheets and the box of faded receipts to software can be a gamechanger. Cloud-based tax software can be accessed anywhere and anytime with live feeds and built- in automation to organise all your incomes and deductions to deliver transparency of your tax position, and of course a stress free tax time.
Substantiate substantiate substantiate
According to the ATO, the number one cause leading to an audit is when a taxpayer is unable to substantiate a deduction. In fact, 467,884 taxpayers failed to substantiate deductions in 2019-20, which amounted to $13.7 billion dollars of taxpayer money lost to the ATO.
To avoid becoming an ATO statistic you need to keep your receipts organised and of course readable, and the best way to do that is to go digital. The time and stress saved is invaluable.
Using cloud-based software, you can attach receipts to transactions straight from your live bank feeds, and store them for easy retrieval now and for future years.
Claim what you are entitled to
When you work hard for your money, claiming everything you are entitled to and paying attention to the smallest details will maximise your return.
For all deductions, there are a few important boxes to tick which will also remove any uncertainty and stress from the process:
- You must have a record to prove it
- You must have spent the money yourself
- You must not have been reimbursed for the cost
- The expense must be related to your job or other income-generating activity
- If the expense you are claiming is for both work and private purposes, you can only claim the work portion of the cost.
Using a tax management software with smart tax tools combined with up-to-date taxation rules and live data makes it easy to identify what you are entitled to claim. It can also assist in making decisions throughout the year to proactively control how much tax you pay.
About the survey
The survey was commissioned by TaxTank and undertaken by Pureprofile to analyse habits of individual Australian taxpayers ahead of the 2022 tax season. Their attitudes towards managing their taxes, sentiment towards the Australian tax system and spending intentions was also analysed. From 29 April – 4 May 2022, Pureprofile conducted an online quantitative survey, interviewing 1000 Australian taxpayers. The survey is nationally representative.