On June 3, 2016

Tax Time Hints & Tips

Tax time is around the corner and for some it may be a daunting period. Here are some tips that will help you make the most out of your tax return.

Tip 1: Know what you can claim without receipts

The first and foremost thing that you need to know when it comes to completing your tax return is what expenses you can claim. It may be a mess going through the stacks of receipts, however if you are running out of time, keep in mind that you can claim up to $300 worth of work related expenses without receipts. Anything that exceeds this amount requires a receipt. Visit www.ato.gov.au to see examples of work related expenses for your occupation. You can also claim up to $10 worth of cash donations before requiring a receipt for every donation claim.

Tip 2: File your paperwork

If you are scrambling through your records year after year, then perhaps consider thinking about new ways you can manage your records. Storing your paperwork electronically is a great way to ensure your records are well tracked.

Some important documents to file include your payment summaries, statements from your financial institution(s) displaying interest earned during the year, shareholder dividend statements, summaries from managed investment funds and tenant/rental records of an investment property.

Some documents you will need for your 2015/2016 tax return include:

Income

  • Payment summaries these outline the income from your employer, super funds or payments from government agencies such as Centrelink or the Department of Veterans Affairs.
  • Bank statements – states any interest that you have earned during the period.
  • Shares, unit trusts or managed funds statements – to work out any dividend or distributions made to you.
  • Buy and sell investment statements – will be provided by your adviser and/or stockbroker if you bought or sold any shares.
  • Records from your rental property – includes information relating to a capital gain or capital loss from the sale of a property.
  • Foreign income details – details of foreign pensions or other foreign income.

Expenses

  • Private health insurance policy statement – this will be provided to complete the private health insurance section of your tax return.
  • Donation receipts – from any of the charities that you supported during the period.
  • Educational records and receipts – you will need to check the ATO’s self-education expenses for information as not all expenses are claimable.
  • Investment property receipts – these will assist you to claim the cost of repairs and maintenance on your investment property.
  • Your spouse’s income and expenses – if you have a spouse, you will also need details of their income and expenses to ensure that your entitlements are calculated correctly.
  • Union membership – you can deduct the cost of your union membership.
  • Work related expenses – you may be able to claim some work related expenses. For more information on what you can claim you will need to visit www.ato.gov.au.

Tip 3: Avoid the Medicare Levy Surcharge

Most tax payers pay a Medicare levy of 1.5% on their taxable income each year. However, you may be required to pay an additional Medicare levy surcharge (usually around 1% of your annual taxable income) if you or any of your dependents did not have appropriate private patient hospital cover and your income was above a certain amount. Families can avoid the Medicare levy surcharge by taking out private health cover and retaining it for the entire year.

Tip 4: Boost your superannuation

The Government will automatically make a deposit into your super fund for those who meet the income requirements, after you lodge your tax return. You have to be a low or middle income earner and make personal (after tax) super contributions to receive a maximum amount of $500 in 2015-2016 to boost your retirement savings. Visit www.ato.gov.au/boostmysuper to check your eligibility for the co-contribution to your super fund. Ensure that you have provided your tax file number to your super fund to avoid paying too much tax.

Tip 5: Think ahead

If possible, it might be worth delaying any further income from rolling in until the next financial year if your income is high and there are not many deductions. There are ways of dividing your investments to your lower earning spouse or adult children to reduce the taxable income, so seek financial advice if you think this may benefit you.

Talk to us today about better taxation planning.

 

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.

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