Published: June 11, 2020
Most of us don’t look forward to tax time. But it doesn’t have to be difficult. By getting organised early, you can save time, claim all the deductions you’re entitled to — and even get your return paid faster.
Not looking forward to doing your tax? You’re not alone. While most of us dread the administration that goes with completing a tax return, it only takes a little bit of planning to make it much less of a hassle. Here are 5 things you can do today that will have you sorted come 30 June.
1. Create a system
It may not be exciting, but getting your tax organised starts with having a system. Start by filing your papers and receipts as you go.
Remember, you don’t have to have a filing cabinet or folders; you can keep good records by scanning or photographing all your paperwork on your phone to keep your desk clutter-free and avoid the risk of losing receipts.
Even if you do misplace or forget to keep some receipts, you can still claim up to $300 worth of employment-related expenses without documentation. But you can claim even more with evidence —so it pays keep your receipts in order now.
There are plenty of apps that can help too, such as the ATO app, which is suitable for both individuals and small business owners.
2. Maximise your deductions
Unless you’ve been paying close attention to your tax, or have a great accountant, you probably aren’t claiming all the deductions you’re entitled to claim. This means you’re paying more tax than you legally need to, and missing out on getting money back. Worse, it could mean you’re paying a tax bill that you could otherwise reduce or avoid.
So it’s worth getting clear about what you can (and can’t) claim. Claims generally fall into the following categories:
– Work travel expenses, such as taxi fares or airfares (travel to and from your normal workplace is usually excluded).
– Special clothing, uniforms and laundry.
– Expenses from income-earning investments, such as maintenance to an investment property.
– Tools and equipment used for your work.
– Subscriptions to relevant publications or services.
– Self-education related to your current role.
– Costs of a home office.
If you’re not sure, talk to your tax adviser or check the ATO website to find out exactly what you can claim this financial year.
3. Submit your returns online
If you expect to get a refund, you can usually get it faster by submitting your tax return online with the ATO using e-tax, and providing your bank account details. Any returns are then transferred directly to your bank account, usually within 12 business days. That means you’ll have access to the money faster — to pay down debt, boost your super, or simply enjoy.
If you prefer to use a tax adviser, it’s a good idea to book them now, as after year-end is usually their busiest time. That way you’ll be first in line to submit your tax return, and get any money you’re owed back sooner.
4. Contribute to your super
Tax time is also a great time to make an extra contribution to super, and take advantage of the tax benefits it can offer.
By setting up a salary sacrifice arrangement with your employer, you can reduce your taxable income and take advantage of the concessional tax rates for super, particularly if you’re on a higher income. But make sure you stay under the contributions limits for concessional contributions (which also includes employer payments).
If you’re self-employed, you might also want to consider making after tax personal contribution, as you can generally claim a deduction when you have accessible business income. The amount you can claim is subject to the concessional contribution mentioned earlier.
5. Get help
If you think your tax is going to be complicated, get professional help — after all, their fees are also tax-deductible. If you’re not sure, talk to your tax adviser or check the ATO website to find out exactly what you can claim this financial Year. A financial adviser can also help you make the most of tax time.
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Article originally appeared at https://yourfinancialwellness.com.au/
Any advice given is of a general nature only and does not take into consideration your personal circumstances. Please consider the appropriateness of the advice before acting.