As the end of financial year is almost here, it’s time to get all your ducks in a row for your tax return.
Did you know that you can claim work related expenses? Some of them are not too obvious, but they can add up some extra dollars at the end.
We have collated some tips for you. Check below.
Lost receipts. If you’re terrible at keeping receipts, you threw them out, you forgot to ask for one or your dog ate them, all is not lost. If you paid for the deduction on your debit or credit card, your bank statement may be proof of your claim.
Motor vehicle. If you use your car for work but haven’t kept a logbook you might still be able to use the cents per kilometre method. You need to justify your business kilometres travelled of up to 5000 kilometres, which may include driving to client meetings, training, study, airports, picking up supplies or lugging more than 20 kilograms of equipment to work and not being provided a lockable facility to store it.
Working from home. If you’re bringing work home (which let’s face it, is most of us), you may be able to claim for light, heat and internet. Light and heat is a cents per hour claim while internet is a percentage of your bills. You’ll need to keep a log for a month to prove your usage.
Your phone. A phone isn’t just a phone any more so this includes potentially a percentage of your calls, your data, the phone plan, accessories and apps.
Sun protection. Whether you’re driving, sitting under fluorescent lights or working outside, chances are you’re affected by UV which means you can claim sun protection. This includes sun glasses and sunscreen which means the moisturiser and foundation you use that has an SPF factor may be included here.
Handbags and carry-ons. The commissioner delighted women last year when he suggested handbags might be claimable as a tax deduction. It’s important to understand the conditions including whether you’re using your bag exclusively for carrying laptops and work bits and pieces or if it’s a percentage of use.
Meals and accommodation. If you travel overnight for work, you may claim costs of travel which means your food, drink, fares and accommodation.
Donations. Unfortunately, the loose change you throw in the bucket at the pub or the raffle tickets you buy can’t be claimed however, any other genuine donations can be claimed if you’re donating to a deductible gift recipient (DGR). If you’re using a family trust, you may be able to claim distributions to non-DGR charities such as churches if your trust deed allows for it.
Subscriptions and direct deposits. Rather than paying cash and forgetting to ask for a receipt, consider subscribing to your deductible magazines. You’ll save both money on the subscription and guarantee yourself a tax deduction.
Capital gains. If you’ve sold property or shares and are carrying some poorly performing shares, consider selling them before June 30. This means the capital loss will offset some or all of the gain. If you don’t have any under-performers, consider salary sacrificing to superannuation to lower your taxable income and reduce the tax payable.
Understand good vs bad debt. Not all debt is bad debt and it’s important to understand the order we should be paying it off. If you have a mortgage on your home you’re almost always better off paying interest only on your investment loans and paying down your mortgage or your bad debt first.
Move your income. If your partner isn’t working or is on a lower tax bracket consider moving your joint savings into their name (with you both to sign of course) or preferably, move all your savings into an offset account if you have a mortgage.
Take advantage of negative gearing. If you’re on a high income and you’re not accumulating assets consider taking advantage of the negative gearing rules and borrow to invest in shares, a managed fund or property. Yes, you need to do your research and ensure it’s a good investment but once you have, it can be a great way to save tax while building wealth.
Consider different structures. Owning property, investments or a business in your own name is not always wise either from asset protection or tax minimisation. Consider alternatives such as a company, discretionary trust, unit trust or self managed super fund to spread your risk and potentially your tax load.
Look into your crystal ball. If you know that next year you’re going to drop income because you’re taking gardening leave, maternity leave or are quitting your job, you might want to look at your tax-deductible expenses. That’s because it may be worthwhile before June 30 to prepay expenses while your income is higher. This may include prepaying interest or insurance for up to 12 months in advance.
We source this from The Sydney Morning Herald, Tax hacks for the last quarter of the financial year for you. Enjoy and get saving.