Do you receive the entire tax refund you are entitled to each time you file your taxes? Are you seeking a larger tax refund but unsure of where to begin or concerned about running afoul of the ATO?
Millions of Australians fail to take advantage of legal tax deductions. People consequently do not receive the tax refund they are due. Are you there?
There are many restrictions on what you can and cannot claim under Australia's complex taxes system. Tax deductions are tricky, but there are ways to seek assistance and do it correctly.
How do tax refunds work in Australia?
Australia has roughly 14 million tax return filers annually, and of those, about two-thirds get refunds that total more than $3 billion. The average refund is slightly over $4,000 per individual. So making sure you're taking every possible step to maximise your refund absolutely pays off.
Your tax return must be filed by October 31. (or you may be eligible for an extension beyond this date if you are registered with a tax accountant by 31st October). The processing of the return will take about two weeks; your agent can keep you updated on its status.
These dates and the usual procedure for filing your tax return will not be altered by COVID-19. Due to the Low and Middle Income Tax Offset, which is accessible to many taxpayers, you might get a bigger tax return this year.
How to maximise your tax return?
Here are our top tips for getting your refund as quickly as possible and for making the most of it this year:
BE ORGANISED AND CLAIMED WHAT YOU'RE ENTITLED TO
The Tax Office appreciates documentation to support any claims you make. So gather all of your payment summaries, bank statements, and related receipts and invoices. Then take a seat, unwind, and get to work on your tax return.
Prepare all of your paperwork with care, including paystubs, bank statements, logbook entries, and receipts for business-related expenses. Maintaining a spreadsheet outlining your expenses makes working out your spending easier, whether you're using a tax agent or doing it yourself. Download the Tax Checklist to remain up to date on the information you need to gather to ace your return in order to ensure accuracy from the outset.
Claim your reimbursement if you have the necessary documentation and have spent money on something as part of your work. Typical deductions that many of taxpayers make include:
Have you travelled to work?
You are not permitted to deduct your travel expenses between home and work by the tax man. But that doesn't completely disallow you from deducting expenses for travel for business. The expense of travelling between several locations, such as from a head office to a different branch office, or visiting clients, may be tax-deductible. If you work two jobs, you can typically deduct your travel expenses from your taxes.
Costs associated with driving to and from work in your car for work purposes are not included here.
travel expenses for job. If you must travel for work and spend money on meals and lodging, those expenses are frequently deductible.
tools and other equipment costs. Items that cost $300 or less are instantly deductible. Items that cost more than $300 can be deducted over a number of years. Tools for a tradesperson, a laptop for an office worker, or even a handbag or briefcase used to carry work papers are examples of things you could claim.
Additionally, the ATO is fine with unedited scanned versions, so don't worry about maintaining disorganised stacks of paper receipts. Just keep in mind to keep your records for the full five years as required by the ATO.
DETERMINE YOUR TAX BRACKET
Making sure you calculate your tax bracket appropriately is the first step in maximising your tax return. You won't be able to fully comprehend the scope of your tax obligations until you are aware of your tax bracket.
The tax rates don't remain constant from year to year. Review the Australian Taxation Office's individual and married income tax rates for a quick overview of your situation. You'll also be in a better position to analyse your deductions once you've determined your tax bracket.
MAKE SURE YOU PROVIDE ACCURATE INFORMATION
Only the amount you spent may be claimed. Therefore, don't overstate deductions to increase your refund and only claim expenses you can support with an invoice, receipt, or bank statement.
Make careful to accurately record all of your income, including gains from investment property, any overseas income, and profits from bitcoin trading. Be cautious when providing information because the ATO can verify it using a wide variety of data sources.
You can ask the government, banks, and other financial entities for clarification of your claims. The ATO will doubt your tax return if the sums don't add up.
Be honest about your income
Okay, it makes sense to assert your rights to everything. The taxman, on the other hand, is interested in learning every detail of your income. Your tax return must include all income, including interest on savings accounts, dividends on stocks, and even capital gains on the sale of an investment.
You can receive penalty costs and interest on any unpaid tax, along with a "please explain" from the taxman, if the Tax Office employs data matching to detect neglected revenue.
Create a Receipt System
You're not the only one who hides their receipts in a drawer or a big envelope. Having stated that, there is a superior approach. Because receipts are so simple to misplace, you must create a system. Additionally, the ink may occasionally fade with time, leaving you with nothing on the page!
One of the easiest methods to save money during tax season is to track and save receipts. You'd be astonished at how much you can say that you may not even be aware of.
Going ahead, make an effort to save every pertinent receipt and consult with your accountant to determine exactly what you can deduct. Thank goodness, there are now apps that can help you digitise receipts if you'd like a more cutting-edge way to store them.
DON'T RELY ON PRE-FILLED DATA FROM THE ATO
Many of your income details can be prefilled directly from the ATO's systems. But don't assume that this income information is accurate or comprehensive. Early filers who use the ATO's myTax system frequently discover that a significant amount of information is missing from their prefill because many third parties, such as banks, don't provide information about you to the ATO until late July or early August.
Even though you used data directly from the ATO's computers if you remove income and the ATO questions you, the legal burden is on you.
Most tax accountants will work from your source documents rather than pre-filled data. This reduces the likelihood that income data will be missing for those who wish to lodge early.
WORK EXPENSES - KNOW WHAT'S AVAILABLE
A wide range of work-related expenses, including everything from sunscreen for outdoor employees to the cost of launderating business clothes, may be claimed on taxes if you spent money in the course of earning money. For a comprehensive list of costs that are tax deductible, visit the Tax Office website.
If the sum of your work-related expenses exceeds $300, you'll need to provide receipts for each individual expense. Also keep in mind that you cannot claim back expenses that have already been paid by your employer.
DON'T OVERLOOK WORK-FROM-HOME COSTS
One in three Australians work from home at least some of the time each week. If it describes you, you may be able to at least partially claim
your phone, internet, and electricity expenses, as well as possible depreciation of furniture like a desk and chair.
Go to the Tax Office's home office expenditures calculator if you're unsure of how much you can deduct.
If you're willing to prepare your own tax return, the government's new online filing tool, myTax, has replaced the outmoded e-Tax.
Even better, a lot of information is prefilled by myTax, including wage and salary payments and interest from savings accounts. It can shorten the time it takes to finish your tax return and expedite the distribution of your refund.
We need services that can accommodate us because the majority of us are attempting to cram more and more into our 9–5. Because life can get even more hectic around tax time, we are open after hours so you can file your taxes online or in person at any of our 470 locations.
Use our Online Tax Adviser to connect with a professional online and file your return as soon as possible. Upload your tax documents and pertinent information once you've properly examined all of them, and an online tax advisor will get to work preparing your return to maximise your refund.
Our experts will keep in touch with you through our safe and secure online platform while they work so you can stay informed about the status of your return. Or, if you feel a little more at ease behind the wheel, you can use our self-service Online Tax Express Return and submit it whenever you want, wherever you are.
CLAIM WORK-RELATED MOBILE PHONE EXPENSES
You can deduct a percentage of your monthly mobile phone cost from your taxes if you use your phone for calls related to your job.
You'll need a monthly account statement from a "typical" month and a calculator to determine the percentage of the mobile phone cost you can deduct. Calculate the percentage of calls that were made for work purposes, and then deduct that amount from your annual charge.
Read this article on calculating your mobile phone tax claim for detailed advice on how to claim mobile phone expenditures.
Your tax return may receive a significant boost if you claim your cell phone charges. You can write off $264 of work-related mobile phone charges on your tax return if 40% of your calls are business-related and your annual phone bill is $660. That may result in a refund increase of more than $70 for someone making $60,000.
HERE'S HOW TO CLAIM WORK CLOTHING CORRECTLY
It's crucial to get this properly because the ATO has recently cracked down on persons who make inaccurate claims regarding work clothes. Your job must specify the type of attire you must wear, and it must be needed. Contrary to popular belief, not everyone is qualified to deduct laundry costs from their taxes. Before deducting clothing from your taxes, be sure it satisfies one or more of the following requirements:
- It must be registered with AusIndustry or have a logo.
- That item must be required to be worn according to a strict policy that is enforced. For instance, it is not detailed enough to claim a deduction if you only have to wear black.
- It must only be used for work-related activities; it cannot be worn for leisure or other purposes.
- You must wear the apparel for your protection at work (e.g. safety glasses)
- The attire is tailored for the job (e.g. black and white checked pants for chefs)
As with all other deductions, it is best to confirm your eligibility with your tax advisor before claiming anything to prevent an ATO fine.
THINK BACK TO CHARITABLE DONATIONS
The feel-good element of charity donations can start to work during tax season. Tax deductions are available for donations to registered charities of $2 or more. For significant donations, you'll need a receipt, but if you gave some change to a street vendor, you can still claim the donation without one as long as it was less than $10. Donations for any workplace-giving initiatives you participate in should be included.
PUT YOUR MONEY IN A SUPERFUND
One of the best methods to maximise your tax return may be to make super contributions. This is particularly valid for those making less than $52,000 a year. The government will put in 50 cents for every dollar you contribute to your super.
Additionally, if you're married and one of you earns less than $40,000, the higher-earning spouse can make a contribution to the lower-earning spouse's super fund of up to $3,000. As a result, there is an 18% tax offset. Long-term savings like this one are beneficial!
REVIEW YOUR DEDUCTIONS
It's astonishing how many Australian employees fail to claim their deductions, despite the fact that this seems to be one of our more apparent tax return advice. During tax season, you can claim a variety of things, including:
- Business travel
- Work training events
- ATO interest
- Educational courses
- Work-related supplies
Check with ATO to determine what you are eligible for since the list is extensive. Additionally, dealing with a tax expert can assist you in claiming all of your allowable deductions.
GET PAID TO READ NEWS AND MAGAZINES
Do you read online trade journals or magazines? You may qualify for a deduction. It's very possible that you can claim a deduction if you subscribe to an online or offline publication that keeps you current in your line of work and you can demonstrate a connection between the subscription and your taxable income.
A writer or journalist who subscribes to internet news sites would also cut, as would a chef or maître d' who reads a food magazine. The good news is that you can immediately deduct the subscription fee if it was less than $300.
GET EXPERT HELP
If you file your tax return incorrectly, you could face penalties from the ATO or a smaller refund. The majority of people (74 per cent of all Australians) believe it to be far less stressful to let an agent handle their return. This guarantees the return will be precise and thorough, and a seasoned agent is typically adept at uncovering esoteric tax deductions you weren't aware you might claim.
Additionally, we take great care to ensure that our paperwork is in top condition because of our maximum guaranteed refund. In the extremely unlikely event that you find out you're entitled to a different refund amount, we'll reimburse your preparation cost and file an amendment with the ATO. After you've filed, log in online to get a status update on the status of your return; being able to do so from anywhere makes tax season less stressful.
Ask your tax agent questions
Are you aware of all the write-offs and work-related expenses you are able to deduct from your taxes?
The majority of us will respond "no" to this question. According to ATO data, almost 74 percent of Australians hire a tax agent like Hillyer Riches because of this.
Ask your tax professional about tax-deductible expenses and what you can deduct; they may be able to recommend additional deductions you weren't aware of.
For instance, did you know that you can deduct the premiums for your income protection insurance unless they were paid by your superannuation?
Additionally, you might be eligible to write off charges for your mobile phone, car, union dues, and more for work-related expenses.
There are techniques to increase the amount of your government tax refund. It's all about making the most of your credits, deductions, and claims. Even the state of your tax return can increase your refund. Use the greatest tax filing software you can find if you want to earn the biggest refund possible. A good tax service will assist you in claiming all the credits and deductions for which you are eligible. Additionally, it will direct you through the procedure so that you won't have to worry about becoming lost or confused as you complete your return.
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.