Tax Tips; Guide to 2019’s End of Financial Year
With June upon us and the End of Financial Year drawing close, it is time to prepare for tax season. Tax is inevitable for all Australians. From those of us that are employed and pay tax through PAYG to small business owners, all of us will need to begin preparing a tax return.
The question is should you try lodge your own tax return or should you get a professional tax agent to manage your affairs?
Learning the rules behind tax filing can be a difficult and time-consuming task. Most choose to delegate the filing of their returns to a tax agent. If an accountants’ dull prattle of the Australian Tax Office’s complex rules and regulations won’t deter you from filing by yourself, the cost of hiring a competent tax agent will “pay for itself”, as the price of their fees could be surpassed by the increase they make to your tax refund.
For some brae hearted you can learn how to lodge your own tax return. It will put you further in touch with your own finances. In addition to this, more people are beginning to lodge their own tax returns every year. It has become easier for the layperson to lodge their tax returns, thanks to Tax Office’s integration of the internet in their operation. Let’s begin by me introducing to MyTax. For those that are unfamiliar, MyTax is the current service that the ATO recommends people use to file their taxes (video introduction: https://www.youtube.com/watch?v=r0Z1ArEEPQk). Designed for the layman, MyTax was created it with convenience in mind. One of MyTax’s best features is that it includes prefill data that has already been collected on you from health funds, banks, employers and government agencies to expediate the process; however, this information isn’t usually available until August.
We do however believe life isn’t suppose to be spent lodging your own tax return so we would suggest seeking the advice of a tax agent. They can be fortune savers and your personal situation may necessitate one.
Here at Pursue Wealth we have created a colourful guide to returns, short and ripe with tax tips. Here, we’re going to bolster your understanding so you can be educated around your own tax return with the benefit of knowing that your return will yield the highest possible deduction.
Rule No. 1: Claim as much as you think you possibly can. What you possibly can claim as deductible is various. This is so long they meet these four prerequisites:
- You spent your own money. You cannot have received any reimbursements (such as a rebate) or other form of compensation for your purchase.
- You can connect the purchase to your work (i.e. fuel purchased for work-related commutes or laundry services for uniforms and other work-related attire)
- The expense was made before the close of the financial year. Although the lodgement date is on the 31th of October, you may only claim purchases that were made prior to the end of the financial year (30th of June).
- You can prove it. In most instances, a receipt is required to claim deductions. The ATO has created “allowances” for certain expenses, which are explained further below.
Rule No. 2: Never miss the Lodgement deadline.
It is of paramount importance that you lodge your taxes before the deadline (31st of October). Failure to do so can result in fines that exceed $1,000.
Rule No. 3: Trust only accredited sources.
Use reliable sources to determine what deductions are open to you. The general public’s understanding of the tax system is flimsy at best, so it is prudent to cross-reference every suggested tax deduction with trusted resources. People you know could falsely believe that certain items can be (legally) claimed because they themselves have received deductions on those items.
This is not always the case. As Australia’s taxation system is self-assessed (automated), people can misinterpret a successful tax deductions as proof that their claim was legitimate. Unless your return is flagged by the system, you’re tax return won’t come under manual review. It isn’t rare for those that try to cheat the system to get flagged, but it is for those that make honest mistakes on their returns. Ergo, you need to draw information on tax deductible goods from trustworthy resources.
Here, we have created a brief list of a few example offsets that can help you for this year’s tax return, so long as you meet the prerequisites:
Private Health Insurance
Based on your income and age, you may be eligible for a tax offset of up to 33.4% of your health insurance.
Personal Deductible Contributions
From the 1st of July 2017, if you are eligible to contribute to super, you may make voluntary personal continuations and claim tax deductions u to you concessional contribution cap. Basically, you can make voluntary payments into you super and receive a rebate on it.
If you earn under $37,697 a year, you may be eligible for the super co-contribution of $500 from the Government for an after-tax contribution of $1,000.
Net Medical Expenses Tax Offset
You may be eligible for this tax offset if you have out-of-pocket medical expenses relating to disability aids, attendant care or aged care.
Income Protection Premiums
Paying for your income protection premiums personally (not through Super) is likely to be eligible as a tax deduction.
As mentioned previously, there several allowances made by the ATO for receipt-less deductions. In lieu of receipts, you may be required to provide alternative records such as a calendar or diary to prove your eligibility for this allowance. Here is a quick legend on what to claim on tax without a receipt:
- Up to $150 in laundry expenses is claimable for the cleaning of work uniforms.
- If you work from home, you can deduct a fixed rate of $0.52 for every hour worked to compensate you for running expenses: electricity, heating/cooling and furniture depreciation. This does not include telecommunications and electronics, allowing you to seek separate deductions on those expenses.
- For self-employed individuals that use their vehicle in work, you can use the cents-per-kilometre method: $0.62 per dollar. This is capped at 5,000km for the entire year, totalling out as a maximum of $3,400 in savings for both fuel and vehicular depreciation.
Our advisers hope you can make the most out of this financial year. We understand that maximising your tax return can be a tricky task; so we’re available to all that wish for the best possible return, for both this EOFY and those to come. Contact us! And have a Happy End of Financial Year!
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