The end of financial year is almost here. With a little planning, you can increase your chances of a healthy tax return and start the new financial year in top financial shape. Here are three tips to get you started.
1. Focus on deductions
Whether you’re an employee or a business owner, chances are you’re entitled to tax deductions for work-related expenses. These will be specific to the kind of work you do, so check the Australian Tax Office (ATO) website for details. This website also has a range of occupation guides that shows you what you can claim for your job as well as what you can’t.
Remember, there are three rules for work-related tax deductions:
- You need to have spent the money
- The expense must relate to your job
- You need to have a record of the payment
If record-keeping isn’t your strong suit, it’s a good idea to start chasing those receipts well in advance. But if you can’t remember every deductible expense you’ve made since July 2013, try checking through your bank and credit card statements online.
2. Spend ahead
If you’re planning a major work-related expense, it may be worth considering spending the money this financial year rather than in the future (if you are eligible).
For example, if you’re thinking of doing some work-related study at some point in the future, it might be beneficial to pay the course fees in advance, even if you’re not yet ready to hit the books. That way you can bring the deduction forward into the current year, and get the benefit of a larger tax return sooner.
Other things you can prepay for a tax advantage may include:
- Income protection insurance premiums
- Repairs and maintenance for investment properties
- Interest on investment loans
3. Get the right advice
While we all need to pay tax, nobody wants to pay more than their fair share. But Australia’s tax system is complex, so personalised advice can make a big difference. Without talking to an expert, it’s easy to miss out on concessions and deductions you may be entitled to. For example, your relationship and residential status, your assets and investments, even your insurance cover can all have an impact on the tax you pay.
While they can’t give you tax advice, it may be a good idea to talk to a financial planner about the tax implications of your investment decisions. By creating a financial plan that’s tailored to your personal circumstances, a financial planner can help you earn better after-tax returns and avoid nasty surprises at tax time.