EOFY: last minute tax tips to jump on
As the saying goes, nothing is certain in life but death and taxes. So with EOFY just days away and tax return season looming ahead, many Aussie taxpayers will be wondering if there’s anything they can do before the financial year ends to make their 2018 tax return more rewarding (and less painful).
And, the answer is yes. To give you a helping hand we’ve rounded up tips from tax experts which every type of taxpayer can take advantage of. But don’t delay, because EOFY is just around the corner.
Avoid an ATO expenses headache
According to Dave Ebdon, Senior Tax Specialist at Tax & Super Australia, many Australians fall into the common trap of over claiming expenses. That’s why it’s worth taking the time now to get up to speed with the expenses you can claim and the documentation you may need, especially if you’re planning to make any last minute purchases before the EOFY.
“The ATO will be paying particular attention to claims for clothing and laundry expenses, given that last year around 6 million people claimed work-related clothing and laundry expenses,” he said. “This is almost half of all taxpayers, and it is highly unlikely that this many people would be required to wear uniforms, protective clothing or occupation-specific clothing.”
“If you don’t have receipts for your expenses, you can only claim a maximum of $300 for work related expenses.”
Make extra super contributions (now!)
The vast majority of working Australians will have a superannuation account to save for their retirement, but while many take a set and forget approach to it, salary sacrificing through an employer or making extra contributions from a personal account could seriously plump up your nest egg come retirement time. And given that salary sacrificing attracts a concessional tax rate of just 15%, you’ll be able to increase your tax savings.
But for any Australians wanting to make extra super contributions before the EOFY, Senior Tax Counsel at The Tax Institute, Professor Robert Deutsch, has urged them to get in fast.
“One mistake people often make is leaving the making of superannuation contributions to the last minute. A contribution made by cheque must be received by the trustee of the fund by midnight on 30 June; where paid by electronic funds transfer it must be credited to the funds bank account by then,” he said.
“This year 30 June is a Saturday, so remember nothing much will happen in a banking sense on that day. Don’t leave it until Friday 29 June as it will almost certainly not get to the right spot until the following week.”
Get organised for a quicker return
Oliver Garside, Co-Founder and COO at accounting software firm Rounded, said that many Australians make the EOFY more stressful, expensive and time consuming than it needs to be by failing to get organised.
“There can be numerous challenges for a freelancer or small business owner when it comes to preparing for EOFY. It may sound obvious but the main one is not being prepared,” he said.
“This could mean having invoices which haven’t been paid or even not really knowing what’s been paid and what hasn’t. When it comes to expenses, receipts might be all over the place, or even not considered for EOFY due to lack of knowledge on what can be claimed and what can’t.”
Invest in your property
While property is one of the most popular investment options for Australians, many investment property owners may not be aware of the multitude of opportunities they have to boost their tax savings by making a claim come tax time.
Anything from repairs, renovations and even travel expenses to an investment property out of state may be deductible, but while conducting a major renovation might not be achievable in a short time frame, Mozo Property Expert Steve Jovcevski says there are still a number of last minute opportunities to take before the EOFY.
“If you’re an investor with any small upgrades or outstanding repairs, it could be worthwhile doing them before the end of the financial year because of the tax benefit you’ll essentially get almost straight away. Instead of having to wait over a year, you’ll be able to get a refund as early as next month,” he said.
“Obviously in a week you’re not going to be able to get a major renovation done, but what you can do is order a repair or do a three day upgrade. If you haven’t got the time though, you can still buy the materials you’re going to use for a renovation, because as long as you buy them before the end of June, those materials will be tax deductible.”
If you do have the time to undertake some last minute renovations before the EOFY, Mozo has you covered with four value-adding renovations that can be done over a weekend.