5 ways to get a bigger tax return
AS JUNE 30 fast approaches, we're all anxiously awaiting tax time and for most, the size of the refund we'll see is a bit of a guessing game.
Effective tax planning is key here, because we all know those people who get thousands back each year, while some of us are flat out breaking even.
We spoke to a chartered accountant and tax agent to find out how you can get the best return possible and ensure you're making the most of tax time.
Milan Taluja is the owner of Milan Accountants, a national accounting service aimed at offering specialised advice and services for all things tax.
According to Milan, there are five areas of focus that can help small business owners and employees claim what they're entitled to and maximise their tax refund.
1. Take advantage of the $20,000 small business package
This one applies to small business owners, and if you aren't aware that it exists, now's the time to act!
Any business with an aggregated turnover less than $2 million may be eligible to claim an immediate deduction for the cost of depreciating assets acquired for less than $20,000.
"This is worth taking advantage of if your business meets the requirements and it excludes GST, so if you're registered it could actually be something that's $22,000 once you factor that in," Milan said.
2. Make the most of allowances and work-related purchases
"If you receive a travel, meal, car or any other allowance, make the most of it and ensure you utilise it.
"Your work place provides it as it foresees the need for you to use it whilst deriving your income.
"When you're out on the road, keep a diary of expenses, it's good habit and can allow you to claim.
"Have your deductions and items in more places than one, as well as electronic proof, like a bank statement."
If you're self-employed, you probably keep receipts for everything from travel through to office supplies, but employees can also reap the rewards.
Up to $300 can be claimed, as long as the purchased items have added to your income-earning potential.
3. Use additional contributions to superannuation
By contributing additional income to your superannuation fund, you're able to reduce your taxable income.
"We're becoming more reliant on our super funds, and it's definitely something that should be thought of earlier rather than later.
"Utilising your super, whether it's a self-managed super fund or a retail fund, can lead to increased deductions and a retirement kitty you can actually rely on when the time comes."
4. Delaying income
Delaying income until July could reduce your taxable income and in turn potentially increase your tax refund.
"People tend to do their capital gains on settlement but it has to be based on contract date or initial signing if you plan on delaying it.
"If it's timed well with effective tax planning, you can basically have your ordinary income separated from your capitals gains income, which is relevant when selling assets or a business."
5. Prepay expenses for next financial year
In some cases you're allowed to prepay expenses up to 12 months ahead, acting as a deduction for the current financial year.
You're able to pay for memberships, insurance, and some work-related expenses like a subscription to your local newspaper.
"If it meets the small business test, you can prepay insurance, maintenance, servicing and repairs on work vehicles.
"You can also prepay a lease on an office, workshop or business space.
"This also applies to people who own a rental property, who are able to prepay council rates and repair work."
Effective tax planning is a great way to manage your taxable income and get the most back, so get planning before June 30 hits!