Tuesday 17 May 2016
It’s everybody's favourite time of year again - the season for scrambling through poorly filed receipts, placing confused calls to your accountant and debating with yourself whether or not that lobster dinner was really a business expense.
Yes, the end of financial year is rapidly approaching, and there’s just six weeks left to shrink your taxable income and whip your tax savings potential into shape.
The clock is ticking, so what are you waiting for? Get started on these 10 tax tips now and plump up your tax return!
1. Know your tax bracket. First things first, know which tax bracket your income fits into. To find out what cut of your salary is going to the tax man, check out Mozo’s tax calculator, and to see which tax bracket you fall in, check out the ATO’s website.
2. Gather up your receipts. Hopefully, you’re already keeping your receipts in some kind of filing system - whether they’re in a shoebox under your bed or Shoeboxed on your iPhone - and if you aren’t it’s time to start. It's important to keep receipts for anything you’re going to claim, and even if you’re not sure a purchase is tax deductible, it's a good idea to keep the receipt just in case. Better safe than sorry!
3. Organise your deductions. If you’re going to be making a bunch of deductions at tax time - maybe you’ve been supporting charities, driving to different worksites and kitting out your home office - keeping them all straight can quickly become complicated. Stay organised with the ATO’s very own app, called myDeductions, which will help you store and organise receipts, gifts, and work-related expenses, as well as logging car trips.
4. Give a little (or a lot). In the lead up to tax time, unleash your charitable side and donate to a worthy cause. Not only will you feel good about helping someone in need, but you’ll also reduce your taxable income. Make sure the organisation you're giving to qualifies for tax deductible gifts by plugging their ABN into this ATO search tool.
5. Be super romantic. If your spouse or defacto partner is unemployed or earning low income (under $13,800 p.a.), make a super contribution on their behalf and you could qualify for a tax offset. And they say romance is dead.
6. Indulge in some retail therapy. This is always a favourite way to cut down taxable income - hit the shops! Now is the perfect time to update your laptop, snag a new power drill or revamp your home work space. Most work related expenses are tax deductible, but remember, if you use something for work and leisure, keep a record of how you use it, so you can justify claiming it as a work tool.
7. Claim your ride. Find yourself driving back and forth a lot for work? You might be able to claim your car related costs. To be eligible, you must own your car and the travel has to be a part of your work day - not including the commute to and from work. As of 2016 there are two methods to keep track of your car-related expenses - cents per kilometre, or by using a logbook. You’ll need to choose the best method for you depending on how you use your car. You may also be able to claim the cost of your car insurance.
8. Get your rental up to scratch. If you’ve got an investment property, now is the time to get on top of all those renovations your tenants have been pushing for and lower your taxable income while you’re at it. Check out our home renovation hub for some great tips and inspiration!
9. Claim everything. Everything. Don’t be shy about filing your tax return - claim anything you can! Within reason, of course. You probably can’t claim your new Hermes handbag as a business expense. But make sure you find out everything you can claim and then do it. For example, did you know that if you’re part of a work-related union, you can claim any membership fees on your tax return?
10. Make some new year’s resolutions. Once you’ve got this financial year done and dusted, it’s time to turn your sights to the future. Start planning for next year’s tax return by keeping your receipts in order, tracking your tax deductible spends and sorting out your budget. Plus, once you’ve maximised your tax return, don’t forget to check out a high interest savings account to stash it in!
Have you got a handle on your taxes this year, or is it time to start whipping them into shape? Let us know in the comments.