Top tips for tax time
Does your tax planning usually involve joining a queue to buy stationery on June 30? If yes, there’s still a few weeks to think ahead. In the final countdown to financial year-end, here are some things to consider.
Bring forward tax-deductible spending
If you are hunting for deductions look beyond office supplies, uniforms, and tools. Overlooked deductions can include membership fees for professional associations and unions; subscriptions for work-related magazines and periodicals; and fees paid to a financial planner, accountant, or tax agent. Check for deductions that are specific to your job or industry. Work in the fitness or sporting industry, for instance? Sunglasses, sunhats, and sunscreen may be deductible if you are required to work outside. Investors could prepay property expenses such as insurance, advertising fees and maintenance up to 12 months in. But the ATO has reminded investors they must also declare all income earned from their rental including short-term rental arrangements, insurance payouts, and any rental bond money that is retained. Got work-related expenses in your sights? So does the ATO. In 2021 about 8.4 million Australians claimed almost $19.8 billion in work-related expenses. The figures reflect the shift to a hybrid working environment since the pandemic. That means there should also be a corresponding reduction in car, clothing, and other work-related expenses such as parking and tolls, according to the ATO. A common mistake made by those claiming a deduction for working from home expenses is to use the short-cut (all inclusive) method and then double-dip and claim additional deductions for mobile phone and internet bills, and the decline in value of equipment and furniture. If your expense – such as a mobile phone bill - was used for private use, you can only claim the work-related portion. In 2021 almost 3 million people claimed work-related car expenses. The ATO reports a common mistake is using the inclusive cents per kilometre method to make a claim and then claiming expenses separately such as fuel, car insurance, and registration. It is also concerned about people claiming expenses that have been reimbursed by the taxpayer’s employer. Another possibility is prepaying the tax-deductible premium for income protection insurance.
Prepay interest expenses
To bag an extra deduction, prepay 12 months of interest expenses on tax-deductible loans. This may include loans for investment properties or margin loans. Make sure your financial institution directs it to the interest, not the principal.
Contribute to super
Making a voluntary contribution to your super – or your spouse’s super – could be another way to secure a deduction.
If you have any questions or would like to make an appointment, please contact the Propel Financial Advice team.