The end of the financial year can feel like Christmas in July or your worst nightmare, a Tax Refund can go a long way to paying off credit card debt, treating yourself to that well deserved holiday or just accumulating savings. However, for some taxpayers tax time means another unwanted expense.
For most millennials and Australians their Tax Return is straightforward, although having never been educated or exposed to the Australian Tax System, the thought of preparing and lodging their Tax Return can be daunting. As a result many Australians do not get the most out of their return.
So what’s the secret to maximising your tax return? It’s all about that dirty little word starting with D…Deductions. Depending on your occupation and industry, you may be able to claim a tax deduction for some costs related to your job. The Australian Tax Office(ATO) provides a list of allowable tax deductions, some of these include:
- Vehicle and travel expenses
- Clothing, laundry and dry-cleaning expenses
- Gifts and donations
- Home office expenses
- Tools, equipment and other equipment
Prior to claiming a tax deduction there are three important rules to remember:
- You must have spent the money
- It must be related to your job
- You must have a record to prove it
You can keep a record of your expenses via receipts, bank statements, and diary entries. If you are unsure as to what expenses are tax deductible, it would pay to reach out to a tax professional to assist you.
There is a fine line to under-claiming and over-claiming. The ATO is targeting taxpayers who abuse tax deductions in the form of work-related expenses, such as travel, meals, clothes, phones and use of internet. Unfortunately, Sunday brunch or a round of cold ones probably won’t qualify as a tax deduction.
Employers are required to issue PAYG Payment Summaries by 14th July 2017. If you haven’t got your affairs in order, don’t fret, you have until the 31st of October to lodge your Tax Return. However, it pays to get in early so you know whether you have a Tax Refund or Tax Payable.
The ATO has simplified its tax lodgement system, making it easier for individuals to lodge their Tax Returns online. However, when preparing and lodging your Tax Return you will still need to ensure that it is correct, and that you have correctly claimed your allowable tax deductions. For those with more complicated Tax Returns, including rental properties, dividends, and capital gains tax, it would pay to use a tax professional.
Now tax isn’t the most exciting topic in the world, and if you’ve read this far, I will impart a bit of wisdom which will help you with your future tax returns. You can take photos of all your receipts, print out bank statements and highlight any work-related expenses, and for those who are tech-savvy, there are number of apps that can also help you track your expenses, so everything is readily available come tax time.
If you found this helpful or want more information, feel free to reach out and leave a comment.