June 30 has arrived and that means it’s tax time and you could be in for a nice little refund if you play your cards right.
The Australian Tax Office is getting more savvy and is using technological smarts to work out who’s getting a bit too extravagant with their claims and who’s not.
This year the ATO has used new software to speed up its comparisons of tax deductions against occupational averages.
Nastasha Janssens founder of Women with Cents reckons the most common mistakes people make when doing their tax starts with claiming things you’re not entitled to.
Here’s what’s catching people out:
- Dry cleaning for your suit/work attire
- Travel to and from work
- Parking at work
- Business lunches
- Costs involved with getting a new job or making a career switch (eg new course)
Of course, there are cases where work-related car expenses and dry cleaning are allowed but you’ve got to make sure that this actually applies to you and your ability to do your job. Get advice if you’re in any doubt.
Ms Janssens’ top tips for getting the most back on this year’s tax return include using a tax agent, particularly when figures from the Australian Tax Office show the average refund is three times more for those who do use a tax agent.
And just an a FYI, the average tax refund for individuals is around $2464.
To make sure you’re less likely to get caught out by the ATO’s new computer smarts, it’s a good idea to look up the ATO guides for deductions for specific occupations and industries.
The other important point is not to chase tax deductions. This means don’t just buy something you don’t need just to reduce your tax bill, you will be financially worse off.
Remember a tax deduction is not a refund for purchase.
Be strategic – the time to plan your tax return is July not the last week of June!
It may also be helpful to use the ATO’s MyDeductions app to track your deductions and avoid missing out on a claim because you forgot about it!
Taxcalc.com.au is another easy tool for estimating your tax bill.
Ms Janssen’s other top tips include:
- Investigate salary sacrificing with your employer – if nothing else, you can get the tax advantage sooner by salary sacrificing a work related expense instead of waiting until post 30/6 to claim it.
- Plan for Centrelink – look ahead to your income for the year and see if you can still be eligible for Centrelink payments such as Family Tax Benefit. Remember: Centrelink use your Adjusted Taxable Income (not your taxable income) to determine your payments, so don’t get the two confused!
- Get your income protection sorted – hit two birds with one stone, be insured and reduce your tax bill.