The weather is colder, the End-of-Financial-Year sale signs are in the windows – yep, that means it’s almost tax time. Are you in line to receive a nice refund, or get slugged with an ugly tax payable bill with the ATO?
Regardless of your current position, the good news is that it isn’t too late to improve your standing with the ATO, and in turn boost your tax position in 2016.
Here are some last minute ideas you might be able to employ from now until the end of the month to maximise the deductions you claim on your tax return and reduce the likelihood of owing money to the tax office.
Pay attention to your Internet and Mobile Use
Do you ever work from home out of hours, check your work emails from home on the weekend or make work-related calls on your mobile? If so, it’s likely you can claim at least some your home internet and personal phone expenses as a deduction.
That means it’s important to start taking note of how much of your home internet or mobile phone use is work-related.
For example, if you pay $60 per month for your internet, and you estimate that 40 per cent of your internet use is for work purposes, that adds up to $24 per month ($288 per year) that you can claim as a deduction on your tax return.
Just remember, if you share the costs with a spouse, partner or roommate, you can only calculate the part of the bill that you actually pay for.
Similarly, if you make work related calls on your mobile phone, estimate the work percentage following the same calculations as above and you’ve got another deduction to boost your refund.
By keeping track of these things now, you’ll end up with more money in your pocket at tax time!
It’s Time for an Upgrade
If you run your own business with an ABN, you might be able to take advantage of the generous small business tax break options. Any business-related items costing under $20,000 each are eligible for an immediate tax deduction in the year you buy them, rather than having to depreciate the purchase over its effective working life.
Before you rush out on a spending spree, however, here’s an important note to remember: Your tax deductions are not a dollar-for-dollar refund. Any expenses you claim are deducted from your taxable income and they don’t come straight back to you in full. You’re likely to get back well under half of the value of the expense—the rest of the expense is paid by you so don’t let budget announcements trick you into becoming over-extended.
Even if you don’t run your own business, you can instantly claim any item that you’ve purchased for income-producing purposes, if it costs less than $300. Items that are more expensive need to be depreciated over their effective working life (check with a tax agent if you’re not sure how to work this out).
Whether it’s a new portable hard drive, a Bluetooth keyboard, or wireless router for your home Wi-Fi network, these purchases can add up and result in a decent deduction off your total income.
It may sound counter-intuitive to suggest that delaying any income could put MORE money in your pocket, but it just might be the best option for you.
Since you are taxed on income you earn in the financial year (from 1 July 2015 to 30 June 2016), delaying that income to July 2016 means you won’t be taxed on it in this financial year. This could include a salary bonus, or capital gains from selling shares, investments or property.
Claim the Cost of Doing Last Year’s Return
Were you among the 70% of Australians who used a registered tax agent to help prepare their tax return in 2015? If so, then you can claim the amount you paid last year on this year’s return. On your tax return, simply put the amount you paid in 2015 into section D10 – “Cost of Managing Tax Affairs”. The fees you pay your tax agent for tax return help are always tax deductible.