It’s beginning to feel like tax time. It’s literally Christmas in July for a lot of our clients who come to us to make sure we’re getting them the most amount of deductions and the biggest refund possible. End of Financial Year is a few months away and NOW is the perfect time to start preparing. A few simple changes could mean a lot more money in your pocket in July! As the tax rules are always changing these tips are based on the 2015 tax return.
Here are 10 easy tax tips to Max Your Tax Refund:
1. Home office Supplies
A lot of my clients are now working from home and outside the office so now is a great time to stock up on all those little items to fill your office. This could include stationary, paper, ink cartridges, books or storage boxes. Be prepared and make a list of everything you need, otherwise it’s very tempting to go overboard at places like Officeworks and buy a fancy gadget that seemed like a great deal, but that you never actually needed. (Not that I would have done this or anything… J)
Is your work uniform looking a bit drab and old? Or maybe your steel cap boots have seen better days? Now’s the perfect time to treat yourself to some brand new work or protective clothes and get the maximum cash back on your spending.
3. Education or Professional Development
If you’ve been thinking about attending some work-related courses for professional development, or even going back to tafe or Uni to increase your skills at work, if you’re able to enrol and pay for the courses in May or June, rather than July, you will be able to receive the tax and your cash back much quicker.
4. Prepay your expenses
Some of our clients take advantage of prepaying tax deductible expenses so that they can bring forward their deduction. For example, income protection insurance can be prepaid or prepaying interest on your investment property or margin loan. This is an excellent strategy for those who will have a lower income next Financial Year due to factors such as maternity leave or redundancy.
5. Delay income
While this might not always be possible for people with employee income, if there is the opportunity to be able to receive income in July 2015, rather than June 2015, you won’t have to be paying the tax on this income for a whole year. Some of our clients have reviewed their term deposit maturity dates to fall into the following Financial Year or hold off on invoicing until after June. A new client of mine accepted a retirement pay out on the 28th June 2014. As they were retiring their income reduced considerably in the 2015 Financial Year and if they had waited 3 days to accept the retirement package they could have saved about $20,000 in tax.
6. Charity Donations
Donating to charities is a fantastic way to be able to do something good for a cause you want to help and also receive a tax benefit at the same time. So if there are charities you want to donate to or a friend that’s raising money for a charity, considering donating sooner rather than waiting until after June. Now’s also a perfect time to organise a charity event and mention the tax benefits of donating now!
If you’re consistently on the road for your job, consider keeping a logbook as soon as you can for 12 weeks. I have clients that are in sales, are carers or tradies that carry bulky tools. They do a lot of driving away from their normal place of work to different places every day. Consequently, they’re claiming thousands of dollars of car expenses such as fuel, registration, insurance, interest, services, repairs and depreciation.
8. Investment Property Repairs & Maintenance
A happy tenant is a happy property owner. For those with investment properties, there always seem to be little things that need to be fixed to keep the tenants happy. Considering fixing up the repairs and maintenance issues before the End of Financial Year to take advantage of getting the tax back on this as quickly as possible.
9. Buy Private Health Insurance for high income earners
If you are on high incomes ($90,000 for singles and $180,000 for couples/families) and don’t have hospital cover as part of your private health insurance, you will be taxed an extra tax known as the Medicare Levy Surcharge. This surcharge is 1 to 1.5% depending on your level of income. Often I have clients that don’t have Private Health Insurance and their income gradually increases each year. Before they even realise they have now gone over the threshold and have been taxed the extra amount. It’s important to take out Private Health as soon as you can, if you are over these incomes, as the ATO will tax you for every day you don’t have the cover.
10. Capital Gains Tax
It’s an area that most people don’t understand, but it’s good to have a basic knowledge of Capital Gains Tax if you are an investor. This could be a property investment or shares. Coming to the end of the Financial Year if you’re thinking about offloading an investment that has capital losses, now’s the time. Alternatively, if you’re thinking about selling an investment that has made a profit and has capital gains, wait until July.
Where do people go wrong?
Often, I will have people come in thinking that by purchasing something before the End of the Financial Year they were going to get a massive refund because they could claim it all. Not all tax deductible expenses can be claimed at once. If items are over $300 they have to be depreciated, meaning the amount spent has to be divided and claimed over multiple years. For example, a lot of my clients have been fooled by tax time advertising from retailers encouraging them to buy a laptop before 30 June, to than find out that rules require the items to be claimed over multiple years.
It’s important to note that all of these tax tips come with their own individual rules, and that’s where we come in – to make sure you’re claiming the most the deductions you’re allowed to and to get every extra dollar back in your pocket.
Contact us on 1300 541 777 if you have any questions about this blog. We help people across Australia with an easy 30 minute tax phone call or at one of our offices.