Top Tax Tips for the EOFY
The good news is all the mid year end of financial year savings are about to begin. Time to stock up on clothes and other seasonal merchandise usually discounted this time of year. A great way to save money is to only buy clothing on special, even though at this time of the year it will be mostly summery gear on sale, but you will be well stocked for the warmer months.
The bad news it is getting cold, and its time to get your tax sorted.
If you’re lucky that means find the shoebox under your bed, or the folder on your desk or laptop and sort through all the receipts you’ve collected over the past 12 months. If you’re not so lucky (or organised) it means trailing through your car, bags, drawers, dog baskets and pockets for any remnant receipts you may still have lurking around. Not so much fun and also not as likely to reap as big a tax return either…
So here are some tips to help you along your way to maximising your tax return.
Get your tax tidied.
If you don’t already have a basic filing system for your receipts, you might want to make a promise to yourself that next financial year you will be more organised. All you need is a shoebox! Some people like to punch holes in their receipts and put them in a folder in some kind of order, others like to scan everything and keep it on their computer. At the very least keep all your receipts in the same place to save your the hassle of trying to find that all important receipt last minute.
If you run your own small business or have an ABN you will probably find you need to go beyond the box method and list all your business expenses and earnings for the month or week, filing like-receipts and invoices together (ie. keep your travel expenses in one envelope, and your stationary expenses in another etc) and you will most likely need your own accountant at tax time.
Find a system that works for you and stick to it.
2. Take advantage of tax breaks
You might need to speak to an accountant or financial planner to find out what tax breaks apply to your financial situation but there are some great opportunities to lower your taxable income depending on your salary. These include the 30% private health insurance rebate, superannuation contribution rebates (salary thresholds apply as do limits to the amount you can contribute) and the medical expenses rebate (if you spend over $2000 you could be eligible for a rebate – this is currently not means tested but will be from July 1 onwards). Also, From July 1 the tax free threshold will be trebled from $6000 to $18,200 which will result in tax cuts of up to $600 for low income earners.
Another way to reduce your taxable income is by salary sacrificing into your super or through purchases such as laptops, mobile phones and even cars! Speak to your employer to see if this might be an option.
3. Claim as many purchases as you can
Different types of jobs incur different types of expenditure, but it is definitely worth investigating what you might be able to claim. If you own a small business you are more likely to have a greater range of items that are able to be claimed, from stationary items, to computers, publications, even study, cars, travel and accommodation if work related.
If you are employed you have a little less scope to claim, but things from your mobile, to laundry expenses might be claimable. If you go to an accountant or donate to charities these are always tax deductable. To find out which might apply to you speak to an accountant or check out www.ato.gov.au/occupations
4. Get ahead for next financial year.
Use your tax return to pay off any debts you might have incurred this financial year to put yourself in a better place financially for the new financial year. While it might be tempting to blow it all, try to commit to pay at least some of your debt to help reduce interest payments and start afresh.
Set yourself a new budget for the new financial year and do your best to stick to it. Set a savings and earnings goal and think about setting up a budgeting plan to stay out of debt and build up your savings.
Start the new financial year with an organised tax filing system if you don’t already have one in place. (See point 1) This will ensure the next 12 months of paperwork will be simple, meaning this time next year will be a breeze!