Learn how to get the most out of your tax return with our guide to preparing expenses, understanding what tax deductions you can and can’t claim, and the benefits of voluntary super contributions.
Whether you do your own taxes or pay a professional, a little advance preparation can save you time and money in both the short and long term. Here’s three key steps to take before you embark on tax time:
1. Work out what you can and can’t claim
One of the easiest ways to boost your tax return is to take advantage of the tax deductions you can claim. To claim a work-related expense, it must directly relate to earning your income and you must have a record (like a receipt) to prove it.
The deductions you can claim on taxes might include travel costs (such as operating a work car), home office expenses, self-education expenses and tools or equipment. You might also be able to claim a deduction for gifts and donations, personal super contributions and investment income deductions.
One of the benefits of using a tax accountant vs a DIY tax return is being 100% confident you’re claiming everything you’re eligible for.
2. Create a record of all your expenses
Once you know what you can and can’t claim, it’s time to get organised for taxes. Ideally, you would have kept copies of your expenses throughout the year, but if not, this is the time to do it. You’ll need to locate records of all your expenses, including work-related expenses, charitable donations, self-education expenses, investment property expenses and any costs relating to last year’s tax return.
You’ll also need a copy of last year’s tax return, private health insurance details, a list of all your income and records of any sales or purchases of any shares, business or property.
If you’re not using one already, an accounting system can make it easier to track all of the above, as well as deal with the legal requirements of running a business. We’re more than happy to help put this in place for you.
3. Consider making a voluntary super contribution
Making a personal super contribution before the end of the financial year will not only boost your retirement savings, it also comes with a tax deduction to sweeten the deal.
Any contribution you make must come out of your after-tax salary (for example, this could come from your savings, an inheritance or from the sale of property) and there’s currently a $25,000 annual “concessional contributions cap,” which also includes any income that your employer might have paid into your super.
Best of all, concessional contributions are taxed at 15%, which, for most people, will be lower than the tax rate you’ll pay on income.