Be organised to ensure you receive the best refund this year
It’s great to get a good refund each year, so to get the best outcome, early planning is vital.
It’s great to get a good refund each year, so to get the best outcome, early planning is vital. Tax is paid on your “taxable income” which is the amount of income left after deducting your allowable expenses.
The ATO has identified a “Tax Gap” of $11.1 billion and is under a mandate to close that Gap, so it’s imperative to ensure that you are claiming what you’re entitled to and have the required substantiation.
The “Tax Gap” is the difference between what tax has been collected, and what the government expected to collect!
Let’s take a look at the basic requirements to obtain a deduction:
- The items must be used 100% in your employment or to generate your business income. If an item is partly used for private use – you must adjust for the private use percentage
- You must be able to substantiate the expenditure – a receipt, a logbook or diary are some examples.
- The expense cannot be personal or domestic in nature. This covers private clothing, grooming, drivers’ licence etc. although these are used for work, they are considered personal, and not deductible.
The ATO publishes fact sheets for different occupations to provide a guideline as to what is deductible. However, the basic principle is “if the expenditure is made in earning your taxable income – it may be deductible”. Keep a record of the expense.
Car expenses are one of the most claimed expenses, and there are several ways to claim for the use of your car. The use must be for work, and can be claimed in the following ways:
Per kilometre – up to a maximum of 5000kms @ 68c
- Per Logbook percentage of business use
Clothing expenses – these are for compulsory uniforms, occupation specific uniforms, or protective clothes.
Self education – if the course is directly attributable to your current work activities.
Telephone, union fees, professional associations.
Negative gearing from rental properties is a way to maximise your refunds. The excess of expenses and depreciation over the rental income is a deduction.
Personal superannuation contributions are now available to employees as well as the self-employed. If you’re getting close to retirement or have a higher income this year, consider topping up your super with an eligible deduction.
Defer income from investments where possible. Money lodged in term deposits can be set to mature in future financial years, which means the interest from the investment will be assessed in the next financial year.
We can assist you maximise your refunds, so consider a pre end of year appointment to make sure you have all you need ready for the end of the financial year.