It’s tax time and we’re all crossing our fingers and toes hoping for a big return – well at least better than last year’s, which was so low we’re sure we did something wrong. If you’re determined to get it right this time, read on!
Provided your employer has been deducting the right amount of tax, these tips will ensure you’re on the way to a decent return.
1. Avoid the Medicare levy surcharge
There are a few reasons why last year’s tax return might not have been as hefty as you would have liked, including that nasty medicare levy. Unfortunately the medicare levy looks like it’s here to stay, so there’s no corners to be cut. But you can avoid the extra medicare levy surcharge by taking out a private health insurance policy. It’s obviously too late to assist with this year’s return, but is definitely worth investigating for FY17.
2. Know your deductions
Although deductions only reduce your taxable income, your deductions will assist you with lowering your tax. Tax accountants, however, can’t conjure a big tax deductions unless they know what you spent your money on and you can prove it.
To avoid missing out on legitimate deductions, it’s up to you to be diligent with collecting and filing away receipts throughout the year. If you’re unsure if you can claim an expense, keep the receipt anyway and your accountant can advise whether or not it’s a valid claim. It’s important not to go overboard here, as the ATO may audit overly generous estimates and you don’t want to end up with a big tax bill years down the track!
3. Be organised
People lose money at tax time simply because they haven’t kept great records. If you’re spending countless hours tracking down receipts, you’re likely to give up all together and move on. That can mean potential tax refund dollars down the drain. To prevent missing out, try dedicating 10 minutes per week to filling in log books and organising receipts.
4. Remember the small stuff
Remember that $1+$1+$1+$1 can eventually total hundreds of dollars! A $5 donation here and a few more dollars to a charity there can add up over 12 months – all money that you can claim as deductions on your tax return. If you’re not diligent about recording and claiming all of the “bits”, you lose the opportunity of lowering your taxable income and boosting your return.
5. Use a professional accountant
Chances are if last year’s tax return was lower than normal than it may have been because you didn’t use the services of a tax agent. An accountant is someone working on your side to help increase your tax refund, and more importantly, help avoid any ATO trouble.
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