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With just a few weeks to go until the end of the tax year, you might think it’s too late to knock your taxes for the year into shape. But even this close to EOFY, there are still some last minute planning opportunities to maximise your refund for the year. So, what should you be doing as we head towards June 30?
Here are 10 tax tips to help point you in the right direction.
1. Gather written evidence
Make sure you have written evidence of everything you intend to claim:
receipts
invoices
bank or credit card statements.
The ATO might well ask to see this verification as part of an audit and without it, your deductions will be struck out.
2. Home office
If you work from home, either occasionally or all the time, you are entitled to deductions for costs arising from working at home. The expenses that you can claim include:
heating, cooling and lighting
cleaning costs
decline in value (depreciation) of home office furniture and fittings, office equipment and computers (for items over $300)
computer consumables, stationery, telephone and internet costs
items of capital equipment (for eg furniture, computers and associated hardware and software) which cost less than $300 can be written off in full immediately.
You can claim actual costs but you’ll need copies of all invoices plus a reasonable estimate of the percentage split between work-use and private-use. Or, alternatively, the ATO fixed rate of 67 cents per hour.
To claim the fixed rate, you must be able to prove the number of hours that you worked from home during the entire tax year, so you’ll need a diary, copies of timesheets or rosters.
3. Car expenses
If you use the log-book method, now is the time to check that your log-book is up-to-date and that you have all the receipts, invoices and records of journeys which you will need to calculate and substantiate your claim.
If you use the cents per kilometre method, you will still need a record of all work-related journeys during the year.
Be aware: you can only claim 5,000km per year if you use the cents per kilometre method. The ATO will be looking particularly closely at car claims this year, as they suspect many people are over-egging their deductions. For example, claiming the maximum 5,000 km for the cents per km method without actually doing 5,000 km or... doing any work-related kms!
4. Mobile phone
If you used your personal mobile phone for work purposes, you can claim a deduction for the business related use. Make sure you have your phone bills collected together and have kept a log of your business/personal use over a four-week period. That percentage can then be applied to the whole year.
Important: you can’t make a claim for mobile phone use if you have claimed the fixed rate method for working from home. Mobile phone calls – wherever they are made – are included in the 67 cents per hour rate.
5. Charitable donations
Make a last minute charitable donation. You can claim a deduction for donations of more than $2 to a registered charity provided you have a receipt for the donation.
6. Prepay some expenses
You can claim a tax deduction this year for expenses which wholly or partly relate to next year. So, if you have some spare cash, consider paying things like union fees, professional subscriptions and annual insurance premiums in advance to accelerate the deduction.
7. Make a tax deductible super contribution
If you have some spare cash, look at making a personal contribution into your super fund. Provided the total amount of your contributions, including the contributions made on your behalf by your employer, does not exceed $27,500, this can be a great way to boost your retirement savings and claim a tax deduction for the personal contribution.
The payment must be made by 30 June and you need to advise your super fund that you’ve made the payment by the time you lodge your tax return. Your super fund or accountant can give you guidance on how to complete the form and there’s a standard form on the ATO website.
8. Buy a new handbag
If you use a bag for work, to carry papers or a laptop perhaps, you can claim a tax deduction for the cost. That could include a briefcase, a backpack or a handbag, whichever suits your needs.
9. Offset capital gains against capital losses
If you’ve sold shares or any other form of investment and you know you’ve made a capital gain, take a look at your investment portfolio and consider selling any assets you own which you know are sitting at a loss. The resulting capital losses can be offset against the capital gain.
Be aware: If you sell shares sitting at a loss and then buy them back in the new tax year, the ATO takes a hard line against so-called “wash sales”.
This refers to the sale of an asset before the year end and the purchase of a substantially identical asset immediately after the year end. The ATO regard the purchase and the sale as effectively the same asset. They have issued a Tax Ruling which states that they can apply the anti-avoidance provisions to cancel any tax benefits. Penalties also apply.
10. Seek expert help
Reach out to a tax agency like H&R Block. They can identify exactly what you need to do to get into shape for the 2024 tax season and maximise your deductions.
Bottom line
EOFY will be here before you know it so now’s a great time to get your paperwork ready. Tax rules often change so keep these tax tips handy and see which ones may apply to your situation. You could discover some new ways to help get the best out of your return. Happy EOFY!
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