HAPPY New Year! Well, almost. With only 24 hours left until the end of financial year, what should you be doing today to ensure that you don’t end up with a big tax hangover tomorrow?
“Don’t forget to pay your expenses,” says Tracey Nicholson, the Assistant Commissioner of Taxation.
“Ensuring that expenses are paid and claimed in the correct tax year can save a lot of headaches in having tax returns amended down the track.”
Ms Nicholson suggests that some top-priority things for taxpayers to do prior to lodging their return include:
• Go surfing! The ATO website, that is.
“There is a wealth of information on the ATO website, both general as well as information that’s specific to various professions,” says Ms Nicholson. “It’s a great place to start your research on what you may be able to claim as a deduction.”
• Spring clean the house to find your receipts.
“At the end of the day you need to keep your receipts to substantiate your claims,” says Ms Nicholson.
• Lodge online.
If you are DIYing your tax, Ms Nicholson recommends the online e-tax process as a great way to complete your return.
“It’s free, and has a great step-by-step process that will help remind you of anything that you have forgotten,” she says.
It can be worth getting professional advice as well though. Bill Keays, founding director of WA-based Hales Keays Chartered Accountants says that in his experience there are a number of tax-related benefits that people sometimes overlook.
“Motor vehicle expenses are often overlooked,” he says.
“You can claim up to 5000 kilometres of work-related use based on a reasonable estimate of business kilometers, without needing to keep a log book. But some people think that if they haven’t kept a log book, they can’t claim.”
Another forgotten area, according to Mr Keays, is depreciation on a rental property.
“Sometimes clients are not aware of how much depreciation they can claim,” he says.
“For taxpayers who have a relatively modern rental property, engage a quantity surveyor to prepare a depreciation report. They will typically save you many times more than their fee due to the deductions they identify.”
But lest you get carried away with all the potential deductions out there, remember that you do need the paperwork to back it up.
“We conduct plenty of audits,”says Ms Nicholson.
“We’re going to have a special focus on truck drivers, sales and marketing managers, sales reps and electricians this year – but any taxpayer has the chance of being audited.”
And while it may be too late for this financial year, consider getting some professional advice for next year’s tax return because sometimes you don’t know what you don’t know.
“There’s usually always some way in which we can save clients extra money, either by identifying deductions or simply getting their tax structures right to start with,” says Mr Keays.
“The Small Business CGT concessions are a great example.
“One of my clients was expecting to pay capital gains tax of approximately $240,000 when he disposed of his business and he ended up paying nothing by applying these concessions.”
Your tax time checklist
To help you get the best tax return possible, here’s a few things to tick off your “to do” list today:
1. Are you eligible for the Superannuation Co-contribution? If so, it’s up to $1,500 of free money.
2. If you use your car for work, don’t forget to estimate your motor vehicle expenses.
3. A 20% tax offset is available for out of pocket medical expenses over $1500.
4. Donations of over $2 made to a deductible gift recipient are tax deductible.
5. The cost of having your tax return prepared is also an allowable deduction.
6. Income Protection insurance premiums can also be a tax deduction.
7. Small business owners who are selling business assets can take advantage of extremely generous “small business CGT concessions.”
8. You can claim up to $300 of work related expenses without the need to have written receipts. However once your claim exceeds $300 you must have receipts for the full amount.
9. Don’t forget all those miscellaneous work expenses such as union fees, seminars, trade journals, software and home office expenses. Even an appointment diary can be deductible.
10. Check the deductions fact sheet for your specific occupation to ensure that you are claiming everything that you are entitled to.
Source : www.news.com.au
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