As tax season approaches, it is time to begin getting all of your information together to try and ensure that you can claim all possible deductions.

To help with this process, the Australian Taxation Office (ATO) offers a solution that can streamline and simplify this process for individual clients: the MyDeductions tool.

What is the MyDeductions Tool?

The MyDeductions tool is a feature within the ATO app designed to help individuals and sole traders manage their tax-related records throughout the year. It allows users to capture and record work-related expenses, vehicle trips, and other deductible items in real-time, meaning that they do not have to try to find information months later.

Key Features of MyDeductions

1. Expense Tracking: You can easily record work-related expenses, gifts and donations, and interest deductions. Simply take a photo of your receipt, enter the details, and the tool will store this information securely.
2. Vehicle Logbook: The tool includes a vehicle logbook feature, allowing you to track your work-related car trips.
3. Income Records: Sole traders can also record their income using the MyDeductions tool, ensuring all relevant financial data is in one place.
4. Export and Pre-Fill: At tax time, you can export your data and share it with your tax agent or use the information to pre-fill your tax return through myTax, the ATO’s online tax return system. If you do choose to lodge your return yourself, it is important to make sure you are only claiming those expenses you are eligible to claim.

Benefits of Using MyDeductions

Convenience: By recording income and expenses as they occur, you avoid the end-of-year rush to gather documentation. It also helps minimise the chance of expenses being forgotten or overlooked.

Accuracy: The tool helps reduce errors by providing a structured format for entering data. This can lead to more accurate claims and reduce the risk of ATO audits.

Time-Saving: Having all your information in one place saves time when preparing your tax return. The ability to export data directly to your tax agent or pre-fill your return further streamlines the process.

Maximise Deductions: By tracking all deductible expenses in real-time, you can ensure you claim everything you’re entitled to, potentially increasing your tax refund.

How to Get Started with MyDeductions

1. Download the ATO App:

The MyDeductions tool is part of the ATO app, which is available for download on both the Apple App Store and Google Play Store.

2. Set Up an Account:

Once you’ve downloaded the app, you’ll need to set up your account. This involves verifying your identity and linking your account to your tax file number (TFN).

3. Start Recording:

Begin using the tool to record your expenses, vehicle trips, and income. Make it a habit to enter this information as soon as you incur an expense or receive income.

Tips for Using MyDeductions Effectively

• Consistent Recording: Make it a habit to record expenses and income as they occur. Consistency is key to maintaining accurate records.
• Use Categories: Take advantage of the different categories within the tool to organise your deductions. This can make it easier to review and export your data.
• Backup Data: Regularly back up your data to avoid losing important information. The ATO app allows you to export your records for safekeeping.
• Consult Your Tax Agent: Share your MyDeductions records with your tax agent. They can help ensure you’re claiming everything you’re entitled to and offer advice on additional deductions you might not be aware of.

For more information contact us below.