Our 10 Tax Return Tips – With tax season in full swing, it is important to remember the little things that might have a huge effect on the result of your tax return.
To help you get into gear, here are our top tax return tips for 2018:
1. Have a deduction strategy
The best way to increase your tax savings is through deductions.
Despite this, more than 45% of young Australians aged between 25 and 34 failed to claim more than the $300 threshold in their tax returns the previous year.
The Australian Tax Office (ATO) allows you to claim this amount without receipts.
It’s important to remember that you are still required to have actually incurred the cost to be eligible to claim it.
Once this $300 amount is exceeded, you must be able to produce tax receipts for all tax expenses.
To maximise your refund, it’s worth spending some time getting to know the items you can and cannot claim for your particular industry or occupation.
2. Stay organised
Being organised is really is the best way to avoid unnecessary stress when it comes to tax time.
A great tax savings tip is to keep copies and record transactions as they occur, and you will thank yourself come tax time.
This will make both your own and your accountant’s life much easier.
Do you have a motor vehicle and travel more than 5000 kms for work?
Make sure you keep a logbook and use it for your easy online income tax return.
3. Keep your employer informed
If you have a HECS/HELP debt and earn above $55,874 for the 2018 financial year, you are required to begin to repay your loan via your online tax return.
It is important to know that this amount does not only include your taxable income for the year.
For the purpose of calculating a HECS/HELP debt repayment, the ATO includes your taxable income plus any total net investment loss (which includes net rental losses), total reportable fringe benefits amounts, reportable super contributions and exempt foreign employment income.
A tax return tip is to inform your employer of your HECS/HELP debt, so they can withhold the appropriate additional amounts from your wage to cover the required repayments.
This will help you avoid an unwanted tax payable by the end of the year.
4. Avoid simple mistakes
The tax system is complex, and making a mistake can be detrimental to your finances.
The most common mistake is overlooking the amounts earned from your financial institution account, i.e. interest income, which must be declared when lodging your online tax return.
Another common income tax return mistake is over-claiming deductions for holiday and residential rental properties or failing to declare all rental income received.
5. Be honest
This is our easiest tax return tip and it might sound like an obvious thing to do, but you’d be surprised how many people fail to do this, whether it’s accidental or on purpose.
Inaccuracy is a common mistake but one that should be avoided at all costs.
A personal tax return tip is to ensure you use accurate figures rather than estimates and keep your tax return receipts in case you are reviewed by the ATO.
6. Don’t leave it to the last minute
A personal tax return tip is to not leave your online tax return until the last lodgement day. The best way to prepare your income tax return is to do it all in one go online and allocate enough time to make sure you are able to finalise it.
Depending on your situation, the time needed will differ. One way of speeding up the process, as well as ensuring you are including everything correctly, is to hire a professional like ezytaxback.
7. Prepay expenses
If you have some spare money coming to the end of the financial year, tax saving tips is to prepay certain expenses. There may be expenses you are eligible to claim now, such as subscriptions for professional bodies/unions or magazines. If you have an investment property, prepay the insurance or even the interest on your loan.
A personal tax tip is that you are entitled to claim a tax deduction for expenses which wholly or partly relates to the next financial year, as long as the payment was made before the 30th June of the current financial year.
8. Make a donation
Making a last-minute tax-deductible donation can boost your tax benefit leading up to the end of the financial year. This has the added bonus of being for a good cause and will benefit the less fortunate than ourselves!
There’s no limit on how much you can donate (and claim!), as long as you can substantiate the donation with a receipt and the donation is made to a Deductible Gift Recipient (DGR). Be aware that you can’t claim for donations that give you any form of benefit in return such as raffle tickets.
9. Keep track of your receipts
Without tax receipts, you are only allowed to claim a total of $300 of work-related expenses. Therefore, keeping track of your expenses as well as receipts is the key to lodging an accurate online tax return. If you are tech savvy, there are plenty of smartphone apps that can be used to store all your receipts and expenses. Some even allow you to send a file directly to your accountant at income tax time!
10. Use a registered tax agent
Filing an individual claim with a registered tax agent like ezytaxback will help ensure an accurate return and increase your tax savings. You’ll also receive expert advice and minimize the chances of any penalties in the event of an audit.
Our team of qualified tax accountants will also review your return and let you know about possible deductions you are missing out on before your return reaches the ATO.
These were our 10 tips of tax returns to find out more contact our friendly Customer Care team at CustomerCare@ezytaxback.com and they will assist you in getting the most of your personal income tax return.
So remember the golden rule for tax deductions, for an expense to be tax-deductible there must be nexus between your work-related expense and you earning your income. We have created a handy tax calculator to help estimate your return.