Tax Tips
As we start the new financial year, many people are focused on their tax return, aiming to get the best possible refund.
Here are some simple tips to help you during tax time.
1. Keep Accurate Records
During the financial year staying organised and maintaining accurate records helps make tax time much easier. Keep all receipts and statements for any income and expenses. Set aside time each month to update records, ensuring you don’t miss any deductible expenses.
Maintaining accurate records is important for not only meeting your tax obligations but also for ensuring that you maximise your deductions. A well-organised system can help you track your income and expenses efficiently. For instance, using digital tools such as expense tracking apps or spreadsheets can significantly simplify the process. Many businesses and individuals overlook small deductions because they may lack proper documentation.
Another option to consider is cloud-based software that allows for digital copies of receipts and invoices to be held, ensuring they are easily accessible when needed. The ATO can request evidence for any claims, so having clear and organised records will make the audit process smoother, if necessary.
2. Understand Your Deductions
Knowing what can be claimed can significantly impact your refund. Here are some common deductions for example:
Work-related expenses
Self-education costs
Charitable donations
Investment expenses
Expenses vary for each occupation and whilst this is a general overview it may not apply to each individual.
3. Superannuation Contributions
If you have made contributions to superannuation during the financial year, check with your fund that the contributions have been received and allocated appropriately. There may be additional paperwork required as part of this process, which the ATO/accountant may also require copies of as confirmation of the contribution.
4. Understand Capital Gains Tax
If an asset has been sold during the financial year, this may have triggered a CGT event. It’s important to keep accurate records of asset purchase prices, dates, expenses incurred and sale prices. Capital Gains Tax (CGT) is often seen as complex, but understanding it can be crucial for those who have sold assets like shares or property. CGT is the tax you pay on the profit made from selling an asset, and it’s calculated as part of your taxable income in the financial year the asset was disposed of. There are certain exemptions and discounts that can reduce the amount of CGT owed which can be discussed with your financial advisor or accountant.
5. Review your Investment Strategy
Tax time is a great opportunity to review your investment portfolio and strategies. This can involve considering the tax implications of selling assets or rebalancing a portfolio. This can also be an opportunity to assess the performance of your investments and ensure that your financial goals are on track. A financial advisor can help you determine the most tax-effective strategies for your investment goals.
6. Consider Personal Insurance Premiums
Certain personal insurance premiums, like income protection, may be tax-deductible if the policy is held outside of superannuation. Income protection covers a portion of your income if you are unable to work due to sickness or injury, and the premiums paid for this cover may be claimed as a tax deduction.
7. Book a Time With Your Accountant
Professional advice can make a big difference. An accountant can help to review your financial situation and check that you are claiming all eligible deductions.
Frequently Asked Questions (FAQs)
Q1. What is the deadline for lodging my tax return?
A1. The deadline is generally 31 October each year. If you use a registered tax agent, you may have an extended deadline. If you are using a registered tax agent, they still need to be engaged before 31 October.
Q2. How do I know if a charity is eligible for tax-deductible donations?
A2. Check the charity status on the Australian Charities and Non for profits Commission (ACNC) website.
Q3. How do I lodge my tax return?
A3. A return can be lodged online via the ATO myTax portal, by using a registered tax agent or completing a paper tax return form.
Q4. What is the medicare levy surcharge (MLS)
A4. The MLS is an additional levy for those who don’t have private health cover and earn above a certain income threshold. It is best to speak with a professional to understand if you are over or approaching the threshold and how to best manage the levy.
Q5. What should I do if I made a mistake on my tax return
A5. If you realise that you made an error on your tax return, you can amend it by lodging a request to the ATO directly or by contacting your tax agent who can amend it on your behalf.
Final Thoughts
Tax time can be stressful, but with the right preparation and professional support, it can be a lot easier. By following the above tips, you can work towards getting the most out of your tax return and staying compliant with the ATO. At Unified Wealth, our team is highly experienced and provides goals-based advice and solutions for a range of strategies. Whether you’re an individual or a business owner, we’re here to help you every step of the way.
After working as an advisor for a decade, Joel founded Unified Wealth.
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At Unified Wealth we are highly experienced and provide goal-based advice and solutions for a range of advice strategies.