Top 10 Tax Time Tips for a Better Tax Result
It is that time of year again where we gather our receipts and statements ready to prepare our tax returns.
This year make sure you are claiming all tax deductions you are entitled to by following our top 10 tips:
1. Income Protection Insurance
Income protection insurance can protect your income whilst you are unable to work, it is also 100% tax deductible.
2. Prepay tax deductible expenses
If you have had a spike in your income this year that will unlikely be the case next year consider prepaying some tax deductible expenses such as interest on investment property loans.
3. Logbook for motor vehicle
If a considerable percentage of your motor vehicle use is work related then using the ‘Logbook method’ to claim a tax deduction for the use of your vehicle may give you a better tax result.
It is important to remember that the logbook needs to be completed for a continuous 12 week period and must include all trips of the vehicle. Once completed the logbook is valid for five years.
4. Private Health Insurance
Consider Private Health Insurance if you are single and earning over $90,000 (Adjusted Taxable Income) or a family with combined income over $180,000 (Adjusted Taxable Income). If you fall into these categories and do not have appropriate Private Health Insurance cover you are required to pay up to an additional 1.5% tax on your income.
5. Reduce Capital Gains Tax (CGT)
If you have incurred a capital gain during the year you may wish to sell non-performing investments as the capital loss can be offset against the capital gain.
You are also entitled to a discount of 50% on any investment sold if the asset has been held for a period greater than 12 months.
6. Salary Sacrifice into Superannuation
Monies contributed into superannuation as a concessional contribution are taxed at 15% at the same time reducing your income by the contribution amount effectively saving your rate of tax on the contributed amount. For an individual earning over $37,000 the tax rate applicable is 34.5% rising to 39% for every dollar over $80,000 and 49% for every dollar over $180,000.
7. Claim home office (running) costs
If you perform work from home you may be able to claim a tax deduction for the costs incurred including heating, cooling and lighting if a diary is kept over a four week period showing the amount of work carried out from home over that period. A fixed rate of 34 cents per hour can be claimed as a tax deduction.
8. Depreciation Schedule for Rental Property owners
One of the most overlooked but most beneficial negative gearing opportunities is the ability to claim a percentage of your rental properties construction costs as well as fixtures and fittings.
A quantity surveyor report is required to determine what can be claimed but the tax savings may be in substantial every year.
9. Donate to charity
Donations made to charities listed as deductible gift recipients over $2 are fully tax deductible. It is important to keep the receipt of donation in order to claim the tax deduction.
10. Have AJD Accountants prepare your tax return
A great accountant can save you more in tax that the cost to prepare the return. As well as the tips above there are several occupation specific costs that you may be entitled to that AJD Accountants are aware of and can help you save even more!
Don’t forget the cost to prepare the return is also tax deductible!
