(Australian Associated Press)
The end of the financial year is just around the corner and there are several easy steps that can fatten your tax return and help avoid run-ins with the tax office.
H&R Block tax communications director Mark Chapman says people can hit trouble if they don’t have adequate proof to back up their deductions, or incorrectly attribute personal or private spending to a work expense.
Bank or credit card statements can be used as evidence to back up work related deductions in some cases, but often the details aren’t specific enough, meaning receipts are best.
They can be paper, or stored on your phone as photos.
If you’ve been lax on the receipt front this year, the Australian Taxation Office has a myDeductions app that allows you to easily store documentation for next year.
“The biggest mistake that people make is they just don’t keep records to support the things that they want to claim deductions for,” Mr Chapman said.
He said the tax office will have a particular focus this year on businesses operating in the cash economy, as well as Uber drivers, people doing odd jobs through Airtasker and those that rent out of rooms through Airbnb.
For small business owners, it’s worthwhile taking advantage of the $20,000 instant asset writeoff before the end of June.
“That means that you can go out and purchase any items of capital equipment for your business like computers, laptops, mobile phones, printers, or tools if you are a tradie, and get an immediate tax deduction for those this year rather than having to depreciate over several years,” Mr Chapman said.
Employees can still claim an immediate deduction on equipment used for work that costs less than $300.
Mr Chapman advises those earning more than $180,000 to ask their bosses to defer any bonuses until after June 30, to take advantage of the expiration of the two per cent budget repair levy introduced in 2014.
Caps on pre-tax superannuation contributions will change after June 30, so making up to $30,000 of pre-tax contributions (or $35,000 if you are aged over 50) before then will not attract any tax penalties.
The cap will drop to $25,000 in the new financial year.
“It really makes good sense if you have got the cash available to make some additional contributions this financial year to take advantage of that higher cap,” Mr Chapman said.
People salary sacrificing into superannuation should also check they won’t exceed the new cap, he said.
TOP TAX TIPS
– Small business owners can claim an immediate tax deduction of up to $20,000 for any equipment purchased before June 30
– High income earners should defer bonuses until after June 30
– Make concessional super contributions before June 30 to take advantage of higher caps
– Check current salary sacrifice superannuation arrangements won’t tip you over the new caps
– Donate to charity and pay memberships to professional associations and unions in full before June 30 to claim as a tax deduction