McKern News

The tedious task of record keeping may be what saves you!

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The Tax Office continues to remind us that in many situations a taxpayer’s outcome in a dispute could have been much more favourable for the taxpayer, if better records had been prepared and kept.

Some basic points to remember:

  1. When claiming deductions for expenses, receipts are required.   The deduction must relate specifically to your business or employment and must be an expense actually incurred.   If the deduction is for a vehicle it is important to substantiate the business use of the vehicle and keep a log book when required.

  2. Determining whether an outlay is an expense which is a deduction in the year it is incurred or a capital item that must be added to the cost of the asset is important to determine and document. 

  3. If you are holding an investment for a long period of time ensure you keep all purchase and additions records to substantiate the cost of the investment, for when you eventually sell.

  4. If you are running your business through a company or a trust you should establish a separate bank account in the entity’s name and keep personal transactions through this bank account to a minimum.

  5. It is important to have transactions occur through invoices and bank movement as much as possible.  Journal entries can only record transactions, not create them. 

  6. Written resolutions or minutes should be prepared, signed and dated, as needed.

  7. Agreements and Contracts should be prepared, reviewed and updated as needed.

If you have any questions regarding these issues please contact your Client Manager or Senior Accountant and we will be happy to help.

This article was written by Cindy Robertson, a Senior Accountant at our Burleigh Office. Cindy is a CPA with years of experience in Public Practise Accounting. Moving to the Gold Coast has allowed Cindy to spend her spare time embracing the outdoors as an avid runner and cyclist.