Refunds from taxes can seem like Christmas in the spring. You can anticipate going on a shopping spree, paying down debt, or stashing the refund away in savings with a sudden increase to your bank account.
Every year, many Australians lose hundreds of dollars simply because they forget to keep the receipts for things they can write off or deduct for work-related expenses.
Do you ask yourself, "How can I receive a greater tax refund?" when you compare your tax refund to that of your friends and family?
Thankfully, there are numerous ways for the majority of Australians to increase your tax refund. Every year, taxpayers who failed to maximise their tax returns lose millions of dollars, which are then turned over to the ATO.
The most important approach for obtaining the best tax refund is accurate tracking and claiming of tax deductions. Along the process, and this is important, you shouldn't embellish your tax return with fictitious or exaggerated claims.
The ATO is more adept than you could possibly imagine at using new technologies to identify errors in your tax return. But that's okay; in Australia, everyone has to contribute, and if we do it correctly, we can still receive wonderful, sizable tax returns.
Tax preparation is undoubtedly a "taxing" task. But taking a moment to review your finances now can help you save money and benefit from deductions more quickly.
There are billions of dollars in the Australian Taxation Office's coffers that they can return to taxpayers. All you have to do to increase your refund is use a little imagination. The ATO is equipped to find unreported wages, bank interest, dividends from shares, and other types of income. Unfortunately, it has no way of alerting you to a missed deduction for costs associated with your job, investments, or other things.
Do you head to the booze store or buy a plane ticket to Costa Rica to start getting ready for tax day? Taxes are a pain, but the solution isn't to drink too much or leave the country. If you approach your taxes head-on and prepare thoroughly, the process can end up being more enjoyable than you anticipated. Here are a few pointers to aid you in filing your taxes and improve your chances of receiving the most refund you are entitled to.
Utilizing the deductions you are eligible for is one of the simplest methods to increase your tax refund. Here is our top tax advice to help you maximise your tax refund.
Claim as many costs associated with your job as you can
On your tax return, you may be able to deduct a significant portion of the costs that you have incurred as a direct result of the career path that you have chosen. While many people are unable to, you may be subject to a fine from the ATO if you falsely claim that you are eligible for them. Some of these are more obvious than others, such the tools that an apprentice uses or the fees associated with travelling (as explained above).
However, were you aware that it's possible for journalists to deduct the costs of their pay-TV subscriptions? As long as these costs were expended in the course of performing their jobs, they are eligible for deduction (for instance, a sports journalist who needs access to the sports networks). There are an infinite number of things that could potentially be written off as expenses related to your company.
Here are some examples of things you might be qualified for:
- Equipment and clothing designed for the particular job. The item is required for you to do the duties associated with your occupations, such as the tools that are utilised by merchants and stylists respectively, or specialised footwear, such as steel-toed boots.
- Objects pertaining to security. Items that are important for self-defense or safety while doing your occupation, such as sunscreen and sunglasses if working outside is required, such as if your job requires you to be in the sunlight.
- Devices such as laptops and mobile phones You can deduct the cost of these items from your income taxes if you use them in the course of your employment. For instance, if you have a laptop that you use for both work and personal reasons, the part of its cost that you can deduct from your taxes must be related to the time spent working.
- Seminars and professional meetings. The money you spend on things like classes and certifications for furthering your education on your own should be clearly applicable to your field of work and should help you grow or earn more money.
Make use of tax deductions when working from home
You are qualified to claim this as a tax deduction whether you work from home full-time, part-time, or perhaps sometimes. For instance, you may be able to deduct some expenses if you operate a home-based business (full- or part-time) that necessitates the use of computers, phones, and other electronic equipment. Even the price of your household's internet and electricity bills was included.
Tax deductions for home-based work may include the following:
- The costs of cleaning. The expenses that are incurred in the upkeep of a home office.
- Office furniture. the expenses incurred in the process of purchasing and maintaining the office equipment that is essential for you to carry out your task.
- Your phone bill. Conversations held on traditional phones and cell phones regarding matters relating to business (you should obtain a phone bill that breaks out each call and highlights the ones linked to work)
- The cost of internet service for your home. It is possible that you will be able to deduct a percentage of the cost of your monthly internet service if your business use the internet on a regular basis.
- Bills for the use of electricity In addition, depending on how frequently you work from home, you may be eligible to deduct a percentage of the cost of your house's power.
- Amazingly, if you run your business exclusively out of your home and have a space designated for commercial activity, you can also deduct a percentage of your occupancy expenses, such as rent, mortgage, and home insurance. To avoid an ATO fine, make sure your work-from-home expense claims are accurate. To support the amount you're claiming, you'll need to provide supporting documentation and calculations. This can be done for you by a tax agent to make sure your claims are legitimate.
Use a tax professional—their price is tax deductible and they'll assist you maximise your return!
Using a tax agent to file your tax return is frequently the simplest approach to make sure you're deducting everything for which you qualify. Here is how tax professionals may assist you throughout tax season:
- Make a tax deduction for the cost of the tax advisor. It could come as a surprise to you to realise that paying a tax professional is entirely tax-deductible.
- Obtain extra tax breaks. Tax professionals are familiar with the ins and outs of the tax code, so they can assist you in making all of the claims to which you are entitled, including some to which you may not be aware.
- Claim correctly. The ATO may impose a fine on you if your deduction claims are incorrect. In order to provide you peace of mind after submitting your return, tax agents will assist in ensuring that you have accurately claimed everything.
- Please assist me with the computations. It can be both challenging and time-consuming to claim expenses for things like travel expenses and charges associated with working from home. When establishing how much you can deduct from your income tax, it is typical to be required to keep a logbook or produce proof of work. Because they are trained professionals in this area, tax agents can assist save you a significant amount of time and alleviate a lot of stress.
- Make tax advice available. Tax professionals are able to not only provide you with further tax assistance but also guidance about the management of your general finances.
Claim All The Deductions You Can
The simplest and most common strategy to increase your tax refund is to claim tax deductions for all work-related expenses that you are legally allowed to deduct from your income and that your employer hasn't already paid you for. These costs consist of:
- Vehicle and travel costs, including those for getting from work to home
- Expenses for clothes, laundry, and dry cleaning
- Internet, home phone, and mobile phone costs
- Extended meals
- Cost of self-education
- Equipment, including tools and other items
- Other deductions connected to the job
Save Your Receipts
We spend hours looking for purchase receipts from the previous 12 months during tax season. This is not only a waste of time, but it might also result in a tax refund loss of hundreds or even thousands of dollars. So, gather folders, give them labels, and save each pertinent receipt.
Keep a copy of every receipt you receive for business-related expenses, and place it in your tax folder.
Save your phone, power, water, internet, and office supply invoices if you work from home, even sometimes. Additionally, make sure to record how much time you spend working from home in a journal.
- Invested in real estate? Keep a copy of your payment receipts.
- Made a charitable donation? Place the invoices in a folder.
- Driving to a business meeting In a journal or diary, note your dates and distances; however, omit the distance from and to your house.
Save it as well if you are unsure of the deductibility of an expense. You should be able to get advice from your tax advisor.
Make Charitable Donations
Reduce your tax liability while also helping a worthy cause! Even though a $20 donation to a charity or a $10 book purchase might not seem like much at first, over the course of a year, these modest expenditures can add up to hundreds of dollars. Anything costing more than $2 is eligible for a deduction. Please remember to keep the receipt!
Prepay Your Bills
Even while paying your expenses on a weekly or monthly basis is more convenient, it's preferable if you can pay some bills, such as union dues and professional memberships, all at once. You can recoup these costs faster and will also get a bigger refund in the current year if you claim a tax deduction this year for expenses that are entirely or partially related to the following year.
Put Money Into A Super Fund
This is especially advantageous for couples where one partner is either unemployed or earns less than $40,000 per year, including fringe benefits and super contributions, as they can use their super contributions to lower the tax that the other partner must pay.
A tax offset of 18%, or $540, is available for contributions up to $3000 made to the non-working partner's super fund by the partner with the greater income.
Low-wage workers can also contribute extra funds to their super, and the government will match 50 cents of every dollar they donate. Anyone making up to $52,000 per year can gain by contributing more to super.
Sell Off The Loss-Running Investments
You will be required to pay tax on any earnings from investments or stock sales. Getting rid of any assets that are sitting at a loss is the easiest method to reduce the tax amount. The "capital gain" may be used to offset the "capital loss." However, if you want to sell shares that are sitting at a loss and then repurchase them in the next tax year, proceed with caution. The ATO has issued a tax judgement that states it will reverse any tax benefits in such circumstances and impose the proper penalties.
Review Your Health Insurance
On April 1, 2018, health insurance firms announced price increases and modifications to the policy' covered services. It is now time, if you haven't already, to determine what ailments and services you are insured for, if it is worthwhile to have coverage at all, and whether you ought to switch insurers. It makes sense to make the private health insurance premium deserving if you plan to claim it as a tax offset when you file your tax return.
Snare the same amount again
The typical Australian may use their refund as a free-kick to pay down a sizable portion of their $4090 median credit card debt, according to moneysmart.gov.au.
When compared to making merely the minimum monthly repayments of 2 or 2.5 per cent of your balance, repaying $2564 will save you $7109 and help you pay off your debt more than 20 years sooner. This is based on an average interest rate computed by Mozo of 17.21%.
However, I'm going to presume that readers of Money are aware that minimum repayment amounts are purposefully kept low to keep cardholders in debt for as long as possible and force them to make astronomical instalments.
However, even individuals who now manage to put $300 a month on their card stand to save $2713 in interest (and 10 months) by paying off the debt with their refund.
Boost your 'refund' by $500
Here's a fast, clever tip: If your income is less than $51,021, put $1000 of your refund directly into super and you'll receive a bonus from the government of up to $500.
The funds are promptly deposited into your super fund under the co-contribution programme, and you can access them after you reach preservation age, which ranges from 55 to 60.
Remember that you still have more than $1500 of your refund to use today.
Lift it by 50 per cent
You were successful with the credit card technique described above, but when you use your $2564 refund to a mortgage, you take that to a whole new level because of its size.
Stop allowing the tax department to use your money for the majority of a year before returning it.
You will save $6348 in interest (a nett savings of $3784) on the typical major bank stated rate of 5.23 percent for the typical $370,500 Australian mortgage. We apologise for making Sydneysiders and Melbourneites' mornings miserable.
then your repayments, which total more than $2,000 each month, become yours!
When you utilise the money to pay off any debt, there is another wonderful thing that happens: because you only "effectively" earn returns, they are not only risk-free but also tax-free (you are saving money).
Double your moolah
You can make 3% annually by stashing $2564 in an online account, but you'll need to be a rate-tard.
Without spending another penny on top of that, you can double your money in 23 years at those pitiful rates (and hopefully rates will increase over the period).
Finding an investment, however, that would yield an average annual return of 8% will allow you to double your money in less than nine years (keeping in mind that investments carry a risk of losing money).
Get protected, which is priceless
Did you pay the Medicare Levy Surcharge last year as a result of not having health insurance? So that you get reimbursed for the expense, think about purchasing some early in the tax year.
By age 31, you must complete this or you will pay extra.
Get smart with ATO
Finally, be wise this year by ceasing to let the tax office to use your money for the majority of a year before returning it. Fill out a PAYG withholding variation form right away if your annual tax refund stays at a consistent amount.
By doing this, you can start receiving your tax refund right away, rather than having to wait a full year. How does $214 more per month seem to you?
It's preferable to leave complicated tax matters in the hands of experts. You might be able to complete your taxes correctly. However, a skilled tax expert might be able to locate you enough refunds to cover the cost of their services and then some. Even if they can't, you can have more peace of mind knowing that you won't have to deal with the tax paperwork yourself.
Do your homework before choosing a tax practitioner; do not rely solely on advertising (certainly not on promises of the highest refunds). Verify their credentials, expertise, and internet testimonials for their work. Keep in mind that professionals like accountants and lawyers may be permitted to sign tax returns even if they lack prior experience.
When to Expect Your Refund. Refunds are generally issued within 21 days of when you electronically filed your tax return or 42 days of when you filed paper returns. If it's been longer, find out why your refund may be delayed or may not be the amount you expected.
When can I file my tax return? The official end of the 2021 financial year falls on Wednesday 30 June 2021. That means that you can begin lodging your tax return from Thursday 1 July 2021.
Your refund is determined by comparing your total income tax to the amount that was withheld for federal income tax. Assuming that the amount withheld for federal income tax was greater than your income tax for the year, you will receive a refund for the difference.