As we approach the end of the financial year, it’s a great time to look at how you can maximise your tax return. With careful planning and strategic decisions, you can ensure you’re getting the most out of your tax situation.
One of the most effective ways to increase your tax return is by claiming all the deductions you’re entitled to – not less, not more. This includes work-related expenses, charitable donations (preferably made by the highest income earner in the household), and costs associated with managing your investments. Keep in mind that to claim a deduction, you must have spent the money yourself and weren’t reimbursed, it must be directly related to earning your income, and you must have a record to prove it.
With more people working from home, it’s important to understand what home office expenses you can claim. These may include a portion of your internet and phone bills, office supplies, and equipment depreciation. Ensure you keep detailed records of your expenses to substantiate your claims. The documentation required varies based on whether you use the actual cost method, which requires detailed evidence, or the fixed rate method, which simplifies record-keeping by allowing set rates per hour for home office expenses.
If you own an investment property, consider getting a Property Tax Depreciation Report. This report can help you claim the maximum amount of depreciation and building write-off deductions on your property, potentially reducing your taxable income.
Another strategy to consider is the timing of your bonus income. If you anticipate a lower income in the next financial year, you could ask your employer to defer any bonuses until 1 July instead of paying them before 30 June. This could be beneficial for various reasons, such as:
Conversely, if you expect a higher income next financial year, you might want to bring forward any bonus payments to the current financial year. This can help balance your taxable income across years and potentially reduce your overall tax liability.
If you’re expecting a refund, lodge your tax return early. This is your money, and it has real-time value. By lodging as soon as possible after the financial year-end on 30 June, you can avoid penalties and put your refund to work by investing it or depositing it into your home loan offset account.
Making voluntary concessional contributions to your superannuation can reduce your taxable income and build your retirement savings. Just be sure to stay within the contribution caps to avoid extra tax.
Tax laws can be complex, and the best strategies for maximising your tax return will depend on your individual circumstances. It’s always a good idea to seek advice from a tax professional who can provide guidance tailored to your situation. Reach out to us if you have any questions.
By taking proactive steps and utilising these strategies, you can work towards maximising your tax return. Remember, every little bit counts, and the savings you make now can have a significant impact on your financial future.
Next week, we’ll explore the importance of reviewing and rebalancing your investment portfolio to ensure you’re all set for the upcoming financial year. Stay tuned!
