Taxes. Every year you have to unearth all the documents necessary, figure out how to make sure you don’t owe anything and perhaps are getting some back, and then lodge them with the Australian Taxation Office before 30 June each year.
Even if you feel like you’re doing everything right, there’s usually something you’re missing that could make your taxes decrease and your return increase. According to a 2015 article in the Adelaide Advertiser, “an analysis by tax accountants H&R Block found that close to a third of Australians are under-claiming tax deductions by an estimated $1 billion, while a separate survey from Officeworks has found that more than half of taxpayers don’t take advantage of tax time opportunities because they do not collect receipts.”
The following are five simple tips that could help you keep more of that money you work so hard to earn.
1. Manage your receipts
One of the easiest thing to do is keep track of your receipts so when it comes time to make your deductions you can easily show evidence. For example, any time you cover a work-related expense or make a purchase that you need for work, you need to keep track of it. Does your office take care of all your supplies or do you provide some?
If you provided anything from pens to a coffee machine, make note of it. In addition, you’ll need receipts when you are showing a donation made, membership fees paid, home internet costs and even the bill for hiring a tax professional. All of these are part of deductions you could be missing out on if you don’t keep track of your receipts.
An easy way to help yourself is to download an app that logs and keeps track of receipts. The ability to take a quick picture of receipt as soon as you make the purchase or finish an online transaction will help you be able to find them come tax time. One such app is Etax, which is easily downloaded for both iPhones and Androids. The app allows you to categorise, record and add notes. Plus, it’s all in one spot come tax time.
2. Keep a mileage log
Lots of people understand that you can claim mileage on your car, as long as you don’t already get reimbursed at work. However, you might miss some of the other expenses that also are tax deductible, such as depreciation of the car, registration, insurance and cost of keeping it running including fuel, oil changes and other services. But in order to take all these deductions as well as mileage, you’ll need records to back up what you claim. Keeping an extremely detailed logbook is the best way to get “mileage” out of your miles.
3. Find all the claims
People miss opportunities all the time to claim deductions. There are those for your career — for example, most people know about education deductions, but what about theatre and film tickets for an actor? And don’t forget about the deductions for working from home, even if it’s only some of the time. For instance, you can look into deductions for office furniture, phones, a portion of monthly bills (such as heating and electric as well as internet) and even part of the mortgage payment. However, keep in mind some of these deductions depend on having dedicated office space that you claim to use when working from home.
4. Track those donations
Don’t forget to track any and all donations made throughout the year. Obviously, throwing some change in a donation jar doesn’t count, but full-fledged, write-the-check donations to charities do, even if they aren’t huge amounts. Make sure you get a receipt or letter noting your donation amount and where you donated. It might be a good idea to check into whether the charity has Deductible Gift Recipient status and, most importantly, if you received any benefits from the donation. The following charity-related purchases do not count for donations:
- Raffle tickets
- Purchasing tickets for fundraisers
- Buying items sold as a fundraiser
- Membership fees
- Winning and paying for auction items at a charitable event.
There could be even more, so it’s best to check before you try to claim it as a donation.
5. Seek the advice of a professional (or at least consider software)
The last piece of advice will help you more than anything else — consider using a professional, or at least tax software. The accountant (or even software) knows the right things to ask for, where to look for additional deductions, how to handle any tricky tax issues you might have and how to plan for the coming years.
Seeking the help of a professional will allow you to just turn over all those receipts, paperwork and records you keep and let their experience guide you in the best way to complete your taxes. Trained professionals know how to maximise the claims and get you the biggest tax return. And don’t forget peace of mind!
Should you run into a situation and you owe money to ATO that you didn’t anticipate, don’t worry. If you feel like you want to skip the ATO payments, then consider taking out a secured medium-term loan to bridge the gap. However, hopefully, following tips like the above and seeking professional advice might save you from any surprises and perhaps even give you a bit of a larger tax refund. Happy claiming!