A tax return is the formal document lodged with your tax authority reporting your income, deductions and tax payable for a specific period, usually annually.
Tax returns are the primary mechanism for reporting your tax position to the government. The specific return type depends on your business structure: sole traders report business income on their personal tax return (with a business schedule), companies lodge separate company tax returns and partnerships lodge a partnership return with income flowing through to individual partners' returns. Preparing a tax return requires accurate and complete financial records for the entire reporting period. The return calculates taxable income (assessable income minus allowable deductions), applies the appropriate tax rate and determines the tax payable or refundable. Most tax returns must be lodged annually by specific deadlines - using a registered tax agent often extends your deadline. Late lodgement attracts penalties. The quality of your bookkeeping directly determines the accuracy of your tax return and the deductions you can claim. SortBooks provides your accountant with clean, categorised financial data from Xero, making tax return preparation faster, more accurate and less expensive.
SortBooks automates the bookkeeping processes related to tax return by connecting to your Xero account and using AI to categorise transactions, reconcile bank feeds and generate accurate reports. Instead of manually managing tax return, SortBooks handles it automatically with 97%+ accuracy - saving you hours every week and ensuring your books are always up to date and compliant.
Taxable income is your total assessable income minus all allowable deductions. It is the amount on which your income tax is calculated.
A tax deduction is an expense that reduces your taxable income, therefore reducing the amount of tax you owe. It must be incurred in earning your assessable income.
In bookkeeping, compliance refers to meeting all legal and regulatory requirements for financial record keeping, tax reporting and lodgement obligations set by your tax authority.
The financial year (or fiscal year) is the 12-month period your business uses for accounting and tax reporting purposes. It may or may not align with the calendar year.
Tax compliance means meeting all your obligations to file tax returns, make payments and maintain records as required by your country's tax laws and tax authority.
SortBooks handles all the complexity automatically. Just connect Xero and let AI manage your books.