End of Financial Year Primer for your taxes
Are you one of those people that dreads tax time when it rolls around each year? You’re definitely not alone, the stresses of sorting out your deductibles, and knowing exactly what you can and can’t claim can turn into quite the fiasco if you’re not careful (no one wants to be on the bad side of the ATO).
If you start sorting out your finances in the months leading up to EOFY, it can make it so much easier to breeze through July and prevent paying more tax than you need to. Here are a couple of things to keep in mind over May and June for your tax return…
Do you work from home?
Then you’re in luck! The amount of claimable expenses from around your home increases the more time you spend working there. Some things you can claim include:
- Heating, cooling, and lighting
- Cleaning costs
- Depreciation of home office furniture and appliances for items over $300
- Computer consumables (like phone and internet costs)
- Equipment less than $300 can be written off in full immediately
Make sure you’re wary when working out your expenses here, they’ll need to be substantiated if the ATO asks. The amount you claim needs to be proportionate to the amount of time you spend working at home, and the floor area of the space you’re using as a home office.
Are you saving for your first home?
Apparently not many people know about the government’s new scheme helping first home buyers save for a house deposit quicker by diverting money into their superannuation. After July 1, 2018 the savers will be able to access their super contributions that have been taxed at a lower rate than if they were saving their earnings after tax.
To qualify you’ll obviously need to be a first home buyer (no investment properties under your belt already), must be over 18, and need to live or intend to live in the property you’re buying. For more information and an estimator on how much you can benefit from the scheme, click here.
Do you make charitable donations?
Any donations over $2 are claimable as deductions (as long as you have the receipt). Making donations will lower your tax bill and assist a great cause at the same time (plus you’ll feel really good about yourself), it’s a win-win.
Do you pay bills all at once?
If you’re in a position where you can pre-pay bills in a lump sum, it can help you reclaim expenses earlier. Paying for things like union fees and professional subscriptions in advance can accelerate your deduction for this year.
Do you put money in your superannuation?
People on low incomes or in a relationship where only one partner is employed can benefit from putting money into super. The money can obviously not be touched until you reach retirement, but can give a few tax benefits if you’re comfortable with the situation. Anyone earning up to $52,000 can benefit from putting extra money into their super. The rate sits at 50c for every dollar voluntarily contributed, and is capped at a certain amount depending on your income.
Have you bought a bag for work?
If you’ve previously bought a bag for work (and still have the receipt) you can claim a tax deduction for the cost. It has to be large enough to hold an A4 sheet of paper (no clutches ladies!), and can be a briefcase, handbag or backpack.
For more information on deductions you can claim, visit the ATO website here, they even have an app now!
The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate seek professional advice from your accountant or a registered tax agent.