7th July, 2023
Although the end of the financial year (EOFY) is here, you might be unconsciously trying to ignore that you must soon file your tax return.
While it’s natural to procrastinate about things we don’t love, sadly, this strategy won’t get us out of working on our taxes.
What might help, though, is better understanding the reasons why you might be procrastinating and knowing some tips for combating them.
One of the biggest reasons people don’t start work on their taxes sooner rather than later is overwhelm. This can stem from multiple factors.
For example, perhaps you haven’t had to do a tax return before, or you have a new business, new business structure (e.g., a company or trust), or new assets (e.g., shares or property) that you know are going to make it more complicated.
When this is the case, it’s easy to worry you don’t have enough skills or information to get the job done.
To combat this, start by making a list of your worries. List the things you don’t know and worry you’ll struggle with.
Once you have this list, you can create a plan to tackle every item on it.
Remember that information is plentiful these days, and you can learn a lot of data for free.
For example, check out the Australian Tax Office (ATO) website, where there is plentiful information, regardless of the type of business setup you might have.
Sometimes you might procrastinate over your tax return because you have to find all your relevant paperwork and/or have a mountain of receipts to sort through.
Quality systems streamline and automate many processes involved in keeping, tracking, sorting, and allocating receipts and other paperwork, like invoice payments, payroll details, etc.
You can use MYOB to take photos of your receipts while on the go, for instance, so you don’t have to worry about storing and finding them when it comes time to do your tax.
Plus, the software can automatically allocate expenses for you and help ensure all your numbers tally up at the end of each month, quarter, and at the end of the financial year.
Accounting programs can create invoices for you in just a few clicks, too, and send payment reminders to your customers, so you get paid quicker and can more easily see where you stand as far as accounts receivables go at the end of the financial year.
By investing a little time and effort into setting up accounting tech tools now, you will save yourself hundreds of hours long-term and ensure you keep good records for the future.
Sometimes, you might be well organised with your paperwork and have it all in one place, physically, but need to get it all to your accountant or bookkeeper because you’re getting them to go through it all for you.
To combat this, chat with your preferred professional about exactly what documents they need to see in person.
You might be surprised by what they can glean by accessing your accounting program or other reporting or financial information.
Many tech tools can be set up so you can give external contractors limited view-only logins (or more accessible ones as needed).
Plus, sometimes the government can view and compile a lot of information that your accountant can, in turn, see that you won’t need to pass on to them as a result.
For instance, this might include health fund and superannuation details, interest earnings from bank accounts, and share trading information.
Another reason you might procrastinate over your tax return is that you think you don’t need to. Or you’re not sure about filing a return and figure you can put off finding out until later.
However, it’s important to understand the ATO requires you to lodge a tax return even if your business hasn’t earned any income for the past financial year.
According to the ATO website, “There’s no threshold for business income, so you need to lodge an income tax return even if you only earn $1.
“What you need to report and how you lodge your annual tax return for your business depends on your type of business entity.”
So, even if you operate as a sole trader, you must lodge a return, whether you earn below the tax-free threshold or not.
Perhaps you procrastinate over your tax return because you’re worried about having a debt to pay.
While this may be a legitimate concern, remember you won’t actually know until you lodge your return.
You could be surprised with a refund or only owe an easily manageable amount once all your expenses are properly factored in.
If not, and you do owe the ATO money, don’t stress about being unable to pay the whole amount immediately.
The tax office will usually be able to set you up with a payment schedule so you have time to pay the debt off.
Plus, when you submit your return on time and are honest about all its elements, you’ll find that the ATO is also very reasonable regarding paying off overdue taxes.
It’s much better to complete your taxes ASAP and then make a plan (if necessary) for paying a debt than to bury your head in the sand and accumulate extra charges via late fines and other fees.
Tax time can be daunting and feel like a lot of work, but you can take steps to tackle procrastination and get your tax return done ASAP and with fewer headaches.
Keep reminding yourself that the sooner you start, the sooner you’ll be finished, and make a plan to get there.