So, you just received your Payment Summary from your employer and you’re thinking, what happens now?

The payment summary is a document that summarises the income you have received from your employer, how much tax your employer has paid on your behalf and any other relevant payments that have been paid to you throughout the financial year.

Why is this important? Your employer has paid tax on your behalf based on your full income, but when you claim a tax deduction, you reduce your taxable income. When you reduce your taxable income, the income tax your employer has already paid on your behalf is usually more than what you are required to pay, so the ATO gives you a refund.

This is where it becomes interesting because there are many deductions you can claim, however you should only claim the deductions you are entitled to. The deductions should also be relevant to your industry. You can’t claim vehicle expenses when you don’t even own a car, or claim travel expenses when you have never travelled for work. We have a document that outlines what deductions are acceptable and which deductions are not. Please get in touch if you would like us to send you this document.

You should also keep receipts for all the expenses you would like to claim as deductions. The ATO app allows you to take photos of your receipts and keep them saved electronically. There are also many other apps for your phone to keep a record of your receipts, its never been easier to keep a track of your expenses for tax purposes. It’s also a good idea to keep a logbook if you are claiming vehicle expenses, this can also be done electronically via various apps.

Please ensure you spend time with your accountant to understand your financial position and your tax return as this is really important. This is also a good time to discuss any future plan you may have with your accountant as they may give you advice on how to prepare for it.

You pay taxes for as long as you earn an income, you might as well understand it . Wallace Ng

Thank you for reading