Got a box of receipts and a headache? Must mean tax time – that yearly exercise that has us wringing our hands and hoping we don’t see the words “you owe…”. Fear not. With a little help from the clever mind of Mr Taxman Dr Adrian Raftery, author of 101 Ways to Save Money on Your Tax – Legally!, we've got some easy tips to help you get the most out of your tax return.
Perhaps you’ll be taking maternity leave or redundancy, or you're going part-time. Whatever the reason, if you’re expecting less income next financial year, bring any deductions you can into this year. For example, before June 30, stock up your home office stationery and computer gear, and prepay work-related subscriptions. That way you may be able to claim the items this year, which could reduce your current income and therefore the tax you pay. Then you won’t be out of pocket next financial year when you're earning less.
Did you know you can claim deductions for costs incurred in running a home office, even if you don’t work from home full-time or have a special room set aside for work-related purposes? Dr Raftery says you can claim deductions for the work-related portion of your home telephone, internet, stationery, computer equipment and printers. Not sure how and what to claim? A simple way is to keep a diary of your time that you work from home, then claim a 45 cents per hour deduction for electricity, gas and depreciation of home-based furniture.
You can claim deductions for costs incurred in running a home office. Photo by Thought Catalog on Unsplash
Private health insurances rates goes up every year. However, if you prepay 12 months of premiums before July 1, you’ll skip the annual April price-hike for at least the period that you’ve prepaid. Another reason to consider prepaying your health insurance is if you think your earnings will increase to more than $90,000 (single) or $180,000 (couple). Earn over those amounts and the 26.79 per cent rebate on private health insurance is gradually phased out. “So, if you're currently under these earning thresholds but think you will go above them in the next financial year, you can still get the rebate in full if you prepay 12 months of premiums before 1 July,” says Dr Raftery.
If you use your car for work purposes – whether you're self-employed or an employee – keep track of all your expenses as the deductions can be in the thousands. “Make sure you record all costs associated with the running of your car, such as petrol, insurance, registration, servicing and lease payments. The government has a strict ‘no receipts, no deduction’ rule,” says Dr Raftery.
It’s surprising how few people actually take advantage of this initiative. Dr Raftery calls it “free money from the government”. If your income is between $36,021 and $51,021 and you make contributions to your super, the government will match this at 50 cents for every dollar, up to a maximum of $500.
Got kids? Make sure you’re registered with the Family Assistance Office at the Department of Human Services, then enquire about any payments you may be entitled to, such as the Family Tax Benefit or Childcare Rebate. It’s worth tackling the helpline to make sure you’re up-to-date. Payments are assessed according to your family income, so you need to have lodged your tax return.
If you’re not confident doing your own taxes, get yourself a great tax accountant. They know all the ins and outs and their fees are tax deductible. Failing that, Dr Raftery’s book boasts 101 tax-time tips, so if DIY is more your bag, check it out! Expecting a tax windfall? Before you splash the cash, be smart with how you spend it. Check out our tips for being a savvy online saver and our guide to things you should always buy second-hand. Intending to get your cents in order in the new financial year? There's an app for that. And while you're getting your money sorted, why not pass those good habits on to your kids and get them saving early?
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