Get more back from the taxman with these tips
Finalising your tax return each year needn’t be a taxing chore. Spending a little time getting your finances in order now can go a long way towards helping you save money and getting the benefits of deductions sooner.
The Australian Taxation Office will tell you about any undeclared wages, interest income, share dividends or any other income subject to tax. But of course, it won’t inform you about forgotten deductions for work-related expenses, investment costs or other items you are able to claim to reduce your tax obligations!
So to improve your refund, all you have to do is think a little proactively. If you don’t have an accountant to help you out with your tax, these handy tips can help you maximise your return.
1) Make sure you claim all the deductions you can
Tax deductions are the easiest way to get a higher tax refund. You can claim a deduction for every expense you’ve incurred that is work-related, and that your employer has not already reimbursed you for.
These expenses are often easy to miss. They may include:
- Vehicle and travel expenses
- Clothing, laundry and dry-cleaning expenses
- Mobile phone, internet and home phone expense
- Overtime meals
- Self-education expenses
- Tools and other equipment
There are obviously rules on what you can actually claim, but it pays to look carefully at each area so that you don’t miss anything.
2) Save all your receipts
You’ll need to be able to prove that you’ve spent money to incur legitimate expenses, which is why you need to keep every receipt if you want to claim a deductible expense.
Some ideas that will help you through the year are:
- Whenever you make a work-related expense, keep your receipt and put it in a tax folder.
- If you work from home – even only occasionally – save your invoices for phone, power, water, internet, and office supplies. And keep a diary about how much time you actually spend working at home.
- Do you invest in shares or property? Keep the receipts of all associated costs.
- Have you donated to a charity? Keep the proof, as this will also likely be deductible.
- Driving for a work meeting? Write down your dates and mileage in a logbook or diary. You just can’t claim costs of driving to and from home.
If you aren’t sure whether an expense is deductible or not, save the receipt anyway! Your accountant or adviser should be able to clarify this for you.
3) Make a donation to charity
Here’s a way to lower your tax bill and assist a good cause at the same time! A donation of ten or twenty dollars to a charity might not seem like much at a time, but when you make a few through the year they can really add up. You can generally claim a deduction for any donation over $2 – just make sure you save the receipt.
4) Prepay your bills
While it may be more convenient to pay your bills weekly or monthly, it’s better for your tax return if you can pay some bills like insurances, union fees and professional subscriptions in a lump sum.
Since you can claim a tax deduction this year for expenses which wholly or partly relate to next year, this tip will not only help you reclaim these expenses earlier, but you’ll also receive a higher refund in the current year.
5) Put some money into your super fund
This tip is especially beneficial for couples where one partner either isn’t working, or is a low-income earner. That partner can use their super contributions to reduce the tax paid by the other partner.
The partner with a higher income can contribute up to $3,000 to the non-working partner’s super fund, and claim a tax offset of 18 per cent which equates to $540.
The person working on low wages can also contribute extra money into their own superannuation, and get a government co-contribution of 50 cents for each $1 they put in.
Getting these types of contributions right takes some knowledge, so it pays to seek advice before you contribute to your super. And to claim these benefits in the current tax year, they must get into your super fund this year.
6) Sell any loss-making investments
If you’ve sold some shares that have increased in value, you’ll have to pay capital gains tax on them. A way to minimise this tax payable is by also selling some assets that are sitting at a loss. That way, the “capital loss” can be offset against the “capital gain”.
Just be careful if you plan to sell shares sitting at a loss and then buy them back early in the new tax year, as the ATO takes a dim view of selling assets just for tax purposes.
Need advice on your tax return? Talk to Henderson Matusch
Like most parts of your personal finances, planning early for your tax affairs makes outcomes more certain – but it still pays to get things in order before the tax year has finished. Your bank account will be healthier for your diligence! For advice and assistance with your tax return call Henderson Matusch on (07) 3229 3688 or fill out the simple contact form here.