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Get ready for tax time

Are you claiming all the tax deductions you’re entitled to?

With the end of the financial just around the corner, now is the time to look at ways of legitimately boosting your tax deductions while potentially beefing up your financial well being.

If you’re an employee, consider bringing forward spending on items that can be claimed on tax for your occupation. This includes classroom resources for teachers, protective gear for mine workers or tradies, and hats and sunscreen for outdoor workers.

The Australian Taxation Office website features an A-Z of jobs and the work-related costs that can be claimed for each of them. Be sure to follow three golden rules – you must have spent the money yourself and not be reimbursed by the boss; the expense must be related to your work; and you need a record, like a receipt, to prove your claim.

If your partner or spouse is a low income earner, an easy way to save on tax is by making a contribution to his or her super fund. It could see you eligible for a tax offset worth up to $540.

The tax breaks on super for self-employed workers are worth a look too. If you run your own show you can claim a tax deduction for up to $30,000 in before-tax super contributions, or $35,000 if you’re aged 50-plus.

The latest Federal Budget proposes to reduce these limits to $25,000 annually regardless of age, from 1 July 2017. So it makes sense to take advantage of the more generous thresholds available in the current financial year.

For small business owners, there’s still time to invest in additional business equipment. You may be able to claim an instant tax write-off on the purchase of new or secondhand equipment costing up to $20,000.

If you’re happy to prepare your own tax return, the government’s online lodgement system myTax has been upgraded while the older e-Tax has been put to bed. myTax has been expanded and can now be used by property investors.

On that note, the Tax Office has flagged it will be taking a close look at rental property claims. In particular, excessive claims for interest costs will go under the spotlight – especially if the property wasn’t available to rent all the time, which can be the case with holiday homes.

Speaking with a registered tax agent is a smart way to be sure you toe the tax man’s line. If you plan to see a tax agent for the first time, or you’re changing to a new tax agent, you need to have it sorted before 31 October – the final date for lodging do-it-yourself returns.

 

Source: AMP

by Paul Clithroe

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.