So far in our moneyvator series we’ve looked at the top ways to blast your credit card debt and the best tactics for saying goodbye to hidden fees and charges. So this week, with the new financial year in full swing and the tax season upon us, we decided that it’s time for some serious #taxtalk.
Whether you’ll be submitting your return yourself on the Government’s myTax website or hiring a tax accountant to crunch the numbers for you, here are the top things to put on your tax checklist.
For some of us, collecting our income documents will be simple. Your employer/s send you your group certificate and, tick, your income docs are sorted.
But for those who own your own business or have other income from things like shares and investments, organising your income will become a bit more time consuming. Here are some of the common income declarations you may need to make:
- Government benefits: If you’re currently receiving a payment or benefit from the Australian Government, such as Centrelink or the Pension, you’ll need to add these allowances in your tax return.
- Dividend statements: All those investors out there, any earnings you receive as a shareholder is also deemed income. So check your dividend statement to see what your income from shares were over the year.
- Rental property information: Own an investment property? If your property is positively geared (AKA the rent is covering your home loan repayments and other property related costs) and you’re receiving an income then you will need to include that amount in your tax return.
- Savings account interest: The Australian Government also considers any interest you’ve accrued from your savings or term deposit as income, meaning you’ll also be taxed on that amount.
- Business owners or sole traders: If you work for yourself, make sure you include any earnings you’ve received over the 2014-15 tax year and declare this in your tax return. If you haven’t been using the pay as you go (PAYG) system, you will need to have a set amount of money put aside to pay the tax owed after you’ve submitted your tax return.
Once you’ve collected all your income documents, it’s time for the best part of doing your tax return – deductions! We all love tax deductions because the more you declare the bigger bumper of a tax return you’ll have.
Tax accountant from Accountly Ben Collin’s top tip when it comes to deductions is to always keep a record of your receipts. “So often I find people buy things that are completely tax deductible but they haven’t stored their receipts in a safe place.”
“My advice is to use a receipt tracker like Pocket Book, which allows you to take a photo of your receipts and they will be stored in the cloud. At the end of the financial year you can then print out a report, making tax deductions a breeze.”
Here are some of the top deductions to bring down your taxable income:
- Work related expenses: Have a good think about the work related items you have bought over the last financial year. The Australian Government says you can claim deductions for expenses directly related to your work, so think uniforms, work tools, education fees for courses in your field…the list goes on.
- Tax accountant fees: Ben says while you’ll be charged a fee for using a tax accountant, you’ll not only skip the headache of doing it yourself but can also claim the cost in your next tax return. “So if you hired a tax accountant last year, don’t forget to claim this as a deduction this time round.”
- Motor vehicle expenses: While you can’t claim the cost of getting to and from work, what you can claim is the cost of travelling for work related purposes. Ben explains, “anything from work trips to errands ran for work could be claimed at up to 77 cents per km as a deduction.”
- Financial fees: Are you charged a monthly bank account keeping fee? According to Ben as long as you get your salary deposited into your bank account that could be another deduction to add to your tax return. Plus you may be able to claim other charges, like financial advice fees.
- Investment purchases and fees: If you bought any investment over the last financial year like shares or property or already own an investment property and are charged fees like real estate agent charges this could also be an additional deduction you could make. “Even the cost of travelling to your investment property for an inspection could be deductible,” says Ben.
- Private health insurance details: Paying for private health insurance? Don’t forget to include this in your tax return to avoid the cost of the medicare levy surcharge.
- Phone bills: Another cost that Ben says you may be able to claim at tax time is a percentage of the your phone bill.
- Charitable donations: Last but not least, if you have donated $2 or more to a charity approved by the Australian Government as a tax deductible recipient then you can claim that amount.
If you’re unsure whether an item or cost is deductible, simply ask your tax accountant. Wondering what other surprising items you can claim? Then read more tips from Ben in our the things you could be claiming at tax time article.