If you operate a business as a sole trader or a partnership, you are required to lodge an individual tax return and pay your tax dues annually. So the question arises: What needs to be included in my tax return?

To arrive at your taxable income when completing your tax return you generally must declare income and expenses you will deduct.

Income

As a general rule, you must declare certain types of income in your tax return. These are amounts you received as:

• Employment income;
• interest, dividends and rent;
• pensions, annuities and government payments;
• income from a partnership or trust;
• income from capital gains;
• any compensation or insurance payments received from lost income;
• all foreign source income;
• under certain circumstances, the value of a prize or reward.

When you think about “my tax return” there may be exceptions or certain types of income that you don’t need to pay taxes on that you must remember as they may be used in other calculations for your tax return. Examples are:

• Child support and spouse maintenance payments;
• carer allowance, baby bonus and child care benefit;
• Australian government disability support pension;
• some Australian Government education payments, such as allowances for students under 16 years old;
• some pay and allowance for Australian Defence Force personnel.

Deductions

The following expenses can be deducted from your total annual income to reduce your taxable income which is the basis of your income tax.

• Work related expenses;
• car expenses;
• self educated expenses;
• gifts and donations;
• specific occupations;
• clothing expenses.

On the other hand, you are not allowed to claim the following expenses even if these are associated with your work:

• Travel between your home and your workplace;
• self education expenses where the course you are taking is not sufficiently connected with your work;
• entertainment.

Showing Proof

The tax office may require you to show written evidence of how you arrived at the figures you report in the tax return. You should keep careful records for at least five to seven years, including papers, documents, receipts and other written records showing any payments you have received and expenses you incurred and paid.

These records may be kept in written or electronic form for as long as these are true and clear reproductions of the originals.

Don’t let “doing my tax return properly” be a concern for you. This burden can be easily and quickly removed by seeking professional advice.