The end of the financial year is coming up, which means now is the time to start thinking about your tax return.
Here’s what to do before June 30 to get the most out of your deductions.
1. Make those tax-deductible purchases
While highlighters and other office supplies are an obvious way to make the most of your tax deductions, it’s worth checking the ATO website to see what other job-specific claims you can make. Uniforms, tools, travel expenses and even sunscreen may all be deductibles for you.
Consider paying 12 months of expenses in advance, such as property expenses if you’re a property investor; income protection insurance premiums; association and union membership fees; work related subscriptions; and the cost of an accountant or tax agent. They’re all tax deductible, so make sure you’ve looked at all your options. Another option is to prepay up to a year’s worth of interest on tax-deductible loans, which is one taken out to buy an income-producing asset such as a rental property or shares.
If you’re self employed, you can instantly write off up to $20,000 for expenses for your business such as computers and office furniture. If you work from a home office, you will be able to claim a portion of your rent, internet, phone and electricity bills – but the portion depends on what percentage of each is used for personal use and what percentage for professional.
Remember: all of these deductions will require all those receipts that we know you’ve been filing carefully all year.
2. Top up your superannuation
From this year employees can make contributions to their super funds which are now fully deductible. If you want to claim a tax deduction for personal contributions, you have to complete and lodge a notice of intent with your super fund and have this notice acknowledged in writing by your fund.
If you want to contribute to your spouse’s (married or de facto) fund, you can also write that off as a tax deduction, following the same notice lodgement process.
Be careful not to go over the cap, which is $25,000, including contributions from your employer.
3. Be a hero
As always, any donation of more than $2 made to a registered charity is deductible. If you would rather see your tax dollars go to a cause you believe in, make a donation and keep the receipt.
4. Bring forward capital losses
If you have made capital gains (ie. money earned on investments such as property or shares), you can offset them with capital losses (money lost on investments).
However, if you have made a loss on some investments in this financial but no gain, you can carry that loss forward into a future financial year to offset future gains.
Just keep in mind that the real value of a loss diminishes over time, so it’s better to offset the loss sooner rather than later.
5. Don’t get paid
If you’re on the edge of a higher tax bracket, you may find it worth delaying an invoice or payment to yourself until July 1. For reference, the tax brackets look like this:
| Taxable income | Tax on this income |
|---|---|
| 0 – $18,200 | Nil |
| $18,201 – $37,000 | 19c for each $1 over $18,200 |
| $37,001 – $87,000 | $3,572 plus 32.5c for each $1 over $37,000 |
| $87,001 – $180,000 | $19,822 plus 37c for each $1 over $87,000 |
| $180,001 and over | $54,232 plus 45c for each $1 over $180,000 |
(Don’t forget the Medicare levy of 2%.)
6. Get an accountant
If you’re at all unsure about any of this, speak to a professional. You may feel it’s counterproductive to pay someone to get more tax back, but a tax agent will be able to give you personalised advice for your situation and will probably more than offset the cost of their services with the increase in your return.
Ask friends and colleagues for recommendations of accountants they like, and check the register at the Tax Practitioners Board to be sure they’re registered.