With tax season in full swing, it is important to remember the little things that might have a huge effect on the result of your tax return. To help you get into gear, here are our top tax return tips for 2018:
1. Have a deduction strategy
The best tip to increase your tax savings is through deductions. It may seem like an obvious solution, yet more than 45% of young Australians aged between 25 and 34 failed to claim more than the $300 threshold in their tax returns the previous year. The Australian Tax Office (ATO) allows you to claim this amount without receipts, however bear in mind you are still required to actually have incurred the cost to be eligible to claim it. Once this amount is exceeded you must be able to produce tax receipts for all tax expenses. To maximise your refund, it’s worth spending some time getting to know the items you can and cannot claim for your particular industry or occupation.
2. Stay organised
We’ve all heard it before, but to be organised when it comes to things like tax really is the best way to avoid unnecessary stress. A great tax savings tip is to keep copies and record transactions when they occur and you will thank yourself come tax time. This will make both your own and your accountants life much easier. Do you have a motor vehicle and travel more than 5000 kms for work? Make sure you keep a logbook and use it for your easy online income tax return.
3. Keep your employer informed
If you have a HECS/HELP debt and earn above $55,874 for the 2018 financial year, you are required to begin to repay your loan via your online tax return. It is important to realise that this amount does not only include your taxable income for the year. For the purpose of calculating a HECS/HELP debt repayment, the ATO includes your taxable income plus any total net investment loss (which includes net rental losses), total reportable fringe benefits amounts, reportable super contributions and exempt foreign employment income. A tax return tip is to inform your employer of your HECS/HELP debt, so they can withhold the appropriate additional amounts from your wage to cover the required repayments. This will help you avoid an unwanted tax payable by the end of the year.
4. Avoid simple mistakes
The tax system is complex in nature and making a mistake can be detrimental to your finances. The most common mistake is overlooking the amounts earned from your financial institution account, i.e. interest income, which must be declared when lodging your online tax return. Another common income tax return mistake is over-claiming deductions for holiday and residential rental properties or failing to declare all rental income received.
5. Be honest
This is probably our easiest tax return tip and it might sound like an obvious thing to do, but you’d be surprised on how many people fail to do this, whether it’s accidental or on purpose. Inaccuracy is a common mistake but one that should be avoided at all costs. A personal tax return tip is to ensure you use accurate figures rather than estimates and keep your tax return receipts in case you are reviewed by the ATO.
6. Don’t leave it to the last minute
A personal tax return tip is to not leave your online tax return until the last lodgement day. The best way to prepare your income tax return is to do it all in one go online and allocate enough time to make sure you are able to finalise it. Depending on your situation, the time needed will differ and one way of speeding up the process as well as ensuring you are including everything correctly is to hire a professional like Ezytaxback.com
7. Prepay expenses
If you have some spare money coming to the end of the financial year, a tax saving tips is to prepay certain expenses you are eligible to claim now, such as subscriptions for professional bodies/unions or magazines. If you have an investment property, prepay the insurance or even the interest on your loan. A personal tax tip is that you are entitled to claim a tax deduction for expenses which wholly or partly relates to the next financial year, as long as the payment was made before the 30th June 2018.
8. Make a donation
Not only is this for a good cause and will benefit the less fortunate than ourselves, making a last minute tax deductible donation can boost your tax benefit leading up to the end of the financial year. There’s no limit on how much you can donate (and claim!) and as such it is a great tax savings tip, as long as you can substantiate the donation with a receipt and the donation is made to a Deductible Gift Recipient (DGR). Be aware that you can’t claim for donations that give you any form of benefit in return such as raffle tickets.
9. Keep track of your receipts
Without tax receipts, you are only allowed to claim a total of $300 of work-related expenses. Therefore, keeping track of your expenses as well as receipts is the key to accuracy of your online tax return. For those more tech savvy, there are plenty of apps that can be used to store all your receipts and expenses and some even allow you to send a file directly to your accountant at income tax time. Add this to your tax return tips list!
10. Use a registered tax agent
It’s important to keep up to date with your tax and filing an individual claim with a registered tax agent like Ezytaxback.com will help ensure an accurate return and increase your tax savings. You’ll also receive expert advice and minimize the chances of any penalties in the event of an audit. Our team of qualified tax accountants will also review your return and let you know about possible deductions you are missing out on before your return reaches the ATO. Contact our friendly Customer Care team at CustomerCare@ezytaxback.com and they will assist you in getting the most of your personal income tax return.