Things to Remember When Doing Your Tax
Taxes are one of the things in life that never change. What can change about taxes, however, is how you pay it. Do it smartly and you’ll save time, effort and, more importantly, money. But to make those savings, you need to be properly informed. Today, we give you some tips in preparing your taxes. After all, every dollar you save is another dollar for your goals.
1: Save your tax agent’s time
Try to stay organised with your tax record throughout the year and make sure they’re complete. To check if you’ve missed anything, compare your current tax records against the ones last year. That way, you would save your tax agent time, which in turn would minimise your bill.
2: Try salary packaging
Salary packaging is an approach approved by the Australian Tax Office for restructuring your income, allowing you to purchase items out of your pre-tax salary instead of your after-tax salary. But first, ask your company about their salary packaging policies. Items you can salary package commonly include cars, laptops and mobile phones. There are even some companies that allow employees to salary package household utility bills.
3: Work-related tax deductions
Did you know that you can get up to AUD300 in deductions for work-related expenses even without receipts to back it up? A few possible deductions include:
- Up to AUD150-worth in eligible laundry claims, which can still be deducted even if you’re already over the AUD300 limit.
- Education expenses for studies related to your discipline can be deducted. Yet, if the study gave you additional qualifications in a different discipline, you can’t get the deduction.
- If you’re a homeowner, you can get a deduction for cooling, heating, lighting and depreciating your office equipment or professional library. There’s a catch though: You need to keep some sort of diary to keep track of your hours worked at home. You need to accumulate at least four weeks’ worth to validate your claim.
4: Non-work related deductions
You can also claim full or partial tax deductions for non-work related costs, such as:
- Fees for your accountant for preparing and lodging your tax return.
- Bank fees or interest payments on funds borrowed for buying investment assets.
- Fees for your financial planner specifically for advice on income-producing assets.
- Charity donations and membership fees for unions and professional associations.
5: Super tax deductions for the self-employed
If you’re self-employed, then know that your superannuation contributions from pre-tax income are fully tax deductible. However, there are some limitations:
- You have to be less than 75 years old.
- Excluding “certain limited circumstances”, there’s a contributions limit—if you’re under 50, it’s AUD50,000 a year. If you’re over 50, it’s AUD100,000 a year.
- You can’t earn more than 10 per cent of your income from other employment.
Tip #6: Savings for couples
Place your savings in an online high-yield savings account with no bank fees. Open this account in the name of the partner with the lower income so that the interest’s tax is lower.