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McKinley Plowman’s Tax Time Tips
June 30 is fast approaching, and with it – tax time. While this isn’t a time of year many people get excited about, the potential for a tax refund may be something to look forward to. Even if you aren’t likely to get a refund, legally reducing your taxable income to minimise your tax liability is always a bonus. As we ramp up for tax season, here are McKinley Plowman’s Top Tax Time Tips.
Calculate Your Work-Related Deductions
An oldie but a goodie – this one’s simple. For any deductions you wish to claim, make sure you’ve got the requisite paperwork to substantiate it – physical receipts or other proofs of purchase. Gather all relevant receipts for purchases made that relate to earning income over the financial year, even small purchases. Everything adds up and can potentially knock a decent chunk out of your taxable income. It is important to remember, however, that even if you have receipts for purchases made over the year, they must be in relation to earning income.
Working from Home (WFH) expenses are relevant for many Australians. Remember, to claim working from home expenses, you must:
- be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls
- incur additional running expenses as a result of working from home (e.g. internet, electricity)
- have records that show you incur these expenses.
The ATO’s revised fixed-rate method for calculating WFH claims is a simple solution, or you can use the “actual cost” method. This is typically more time-consuming to calculate but you may find additional deductions to claim not covered by the fixed-rate method. You can see more info on WFH deductions on the ATO website.
Ensure Your Records are Complete
Records like receipts and logbooks are very important at tax time, particularly if you’re planning on claiming travel expenses. There are many apps available for smartphones and other devices that are great for keeping track of these sort of things over the year, including Dext (formerly “Receipt Bank”) and Driversnote. If you’ve not been able to take advantage of these in the past financial year, consider doing so in future years as it will cut out a lot of time in the lead-in to 30 June. If you have physical copies, double-check that they are complete and current before you start the tax return process so it goes as smoothly as possible.
Track your Donations
Donations to charity are not only a generous way to spend additional income, often they are tax deductible (for donations of $2 or more). You can deduct the value of the donation in your tax return, providing the donation was to a “deductible gift recipient” (DGR), and meets the ATO’s definition of a gift – ‘a voluntary transfer of money or property where you receive no material benefit or advantage’. More information on that can be found here.
Get Professional Advice
The sure-fire way to get the best result from your tax return is to engage tax professionals, such as the tax team at McKinley Plowman. We work hard to keep our eye on the ever-changing tax landscape, ensuring we are on top of the most effective ways to legally minimise your tax obligations, maximise your deductions, and help you keep more money in your pockets. To find out more about getting your tax return done with McKinley Plowman, or to book in, don’t hesitate to call us on 08 9301 2200 or visit www.mckinleyplowman.com.au.
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