Getting your tax done can sometimes be a hassle, but at Tax Today we aim to make your life, just that little bit easier.
Every year thousands of taxpayers miss out on receiving their full refund from the ATO. Unfortunately, Australia’s tax system can seem extremely complicated to the average person. However, with a little effort and organisation, you could increase your tax return substantially.
Tax Today has put together some information to help you avoid some common mistakes and stop you losing hundreds of dollars this tax season:
Many taxpayers misplace work-related expense receipts and miss out on claiming a large amount of deductions. It’s always a good idea to check your bank statements to try and identify work-related expenses then request a duplicate invoice for your purchases.
Storing all your work-related receipts together and organised is very important when it comes to preparing your tax return and maximising your refund. The ATO has created an easy to use app called myDeductions which can be downloaded onto your mobile. The myDedutions App allows you to take pictures of your receipts and store them there. These records can be shared and emailed to your registered tax agent. This is especially important as receipts often fade after a few months.
When walking around the shops, many of us reach into our pocket and drop a few dollars into a charity bucket. However, did you know you are allowed to claim up to 10 donations with a maximum of $2.00 each. That’s a $20 deduction for helping a good cause! The key here is to make sure they are a Deductible Gift Recipient (that is, they have a DGR status) then you will be able to claim your donations as deductions. The good news is most of the checkout donations nowadays are tax-deductible so there’s never been a better time to give.
When organising your tax affairs, it’s not uncommon to come across the need to purchase notepads, pens and other stationery items from stores such as Office Works. Believe it or not, the ATO actually permits you to claim a deduction for expenses incurred in maintaining tax records. Many taxpayers forget to claim these expenses which can add up over the course of a full financial year, so remember to keep your receipts and photograph them next time you buy stationery.
One of the most overlooked items on many tax returns is claiming expenses in travelling to meet your tax agent. Depending on how far you have to travel, this could work out to be a neat little bonus. Next time you see your tax agent remind them to claim for travelling to see them.
Many people elect to pay their income protection premium from superannuation to help with cash flow. But, this comes at a very high price! With some basic tax planning, you could potentially save hundreds of dollars just by choosing to pay your premiums outside super. For example, if you pay an insurance premium of $1000, you would receive a tax deduction of $150 if paid from super. However, if you pay it out of your own pocket, you would save $195 assuming you are in the 34.5% tax bracket.
With businesses such as Uber, Airtasker and AirBNB, many people are increasingly participating in the sharing economy. However, many individuals are not aware they may be eligible to claim the Small Business Income Tax Offset worth $1000 each year.
Maximise Your Tax Return
According to the latest statistics released by the ATO, the average amount of deductions claimed is $2,498. However, over half of all tax returns submitted only claim less than $600 worth of deductions per year which represents a lot of money left on the table!
If your deductions don’t make the average, then it may be due to making some of the mistakes mentioned above. It’s then time to take a hard look at what you are claiming and get in touch with Tax Today for some professional advice. We may even be able to help you claim more deductions specific to your occupation.
For those people that pay their tax through the Pay-As-You-Go (PAYG) system, there are also a number of potential mistakes to avoid, including:
With the impact of COVID, more and more people are now working from home. In order to claim a deduction for a work-related expense you must have spent the money yourself and weren’t reimbursed by your employer and the expenses must be directly related to how you earn your income. Additionally, you must have a record to prove you incurred the expenses, such as a receipt.
Many people are unaware they can carry forward concessional super contributions without having to pay extra tax. The new carry-forward rules allow you to access unused extra concessional contributions above the general cap from previous years. These unused cap amounts occur when the concessional contributions you made in a previous financial year were less than your general concessional contributions cap. In plain English, you could be putting more into super and get some great tax benefits!
There’s also some good news with the ATO adjusting the personal income tax rates in your favour. For example, the lowest tax bracket has increase from an upper limit of $37,000 up to $45,000. This means you may now pay less tax on the same income than you did a year ago.
The low income tax offset reduces the tax you pay on your taxable income. With changes announced in the recent budget, the maximum low income tax offset is now $700 for 2020–21 which was increased from $445. Therefore, if your taxable income is less than $37,500 you will get the full offset of $700. Even if your income is up to $66,667, you’ll still receive some benefit.
With up to 600,000 Australians trading in crypto currencies, the ATO has begun to contact some people to remind them about their tax obligations. Similar to shares, crypto currencies are a tradeable asset and subject to capital gains tax. Although crypto comes with a certain amount of anonymity, the ATO is tracking the intersection with real world institutions such as banks and expects to write to over 100,000 taxpayers this year regarding their investments in digital currencies.
With some people claiming rental expense deductions in order to gain a bigger tax return, the ATO has now gotten more strategic in their data matching with new rental management software. Each year people claiming personal expenses as rental expenses adds to the billion dollar tax gap and the ATO is now clamping down.
Don’t Leave Money Sitting on the Table
As you can see, there’s a number of potentially tricky areas that may cause confusion to the average taxpayer. It’s always a smart move to enlist the help of professional tax agents such as Tax Today to ensure you get your tax right and maximise your return whilst avoiding trouble with the ATO.
Being in business can bring a lot of personal and financial freedom. However, it also brings complications and one of the most complicated is sorting out your taxation affairs. This tax season there are a few changes to be aware of so you don’t make any silly mistakes and can receive the highest possible return:
The tax rates for companies just got a little more complicated. Depending on whether you’re classified as a small business entity or a base rate entity, you could be eligible for a lower company tax rate in some years.
The ATO is now offering a loss carry back in the form of a refundable tax offset to eligible corporate entities who choose to carry back losses to earlier income years when they had income tax liabilities. The good news is this is a refundable tax offset so can come in the form of a cash refund, a reduction in a tax liability or a reduction of a debt to the ATO.
The instant asset write-off threshold increased to $150,000 per asset and can be written off immediately If not eligible for temporary full expensing or if you opt out of temporary full expensing. However, just remember the asset must be first used, or installed ready for use, by 30 June 2021 so time is of the essence.
The federal government is encouraging new investment with the recent announcement of a temporary full expensing incentive. This means most business can deduct the business portion of eligible new depreciating assets straight away. To be eligible, new assets must be purchased and first used or installed ready for use between 6 October 2020 and 30 June 2021. However, this may be extended to 30 June 2022. As an additional benefit, those businesses with an aggregated turnover of less than $50 million, may apply temporary full expensing to eligible second-hand depreciating assets. Furthermore, your business may also be able to immediately deduct improvements made to eligible depreciating assets depending on timing.
As you can see from the above, 2021 has seen a lot of tax changes being made by the ATO. To make sure you get the maximum refund, take advantage of the online lodgement service on the Tax Today website and leave it to the professionals!
Instant Tax Refunds are our specialty. Call 1300 829 863 Tax Today, Australia’s leading Tax Agents that provide Instant Tax Refunds, have offices in Sydney, Melbourne and Brisbane. You can even do the tax return online.Get your refund now