Top Tax Tips for Individuals
With 30 June 2013 only 3 weeks away it is perfect time to review your situation to make sure that you take advantage of any planning opportunities to ensure that your financial situation is maximised.
- Document and claim all work-related expenses, you can automatically write off $300 a year in work-related expenses. With documentation it is possible to claim more.
One of the biggest things that I hear is that I spent money but have lost the receipt. The ATO’s requirements are “Documents that you are required to keep can be in written or electronic form. If you make paper or electronic copies they must be a true and clear reproduction of the original.” Therefore take a picture of the receipt with your phone as a backup or if you have lost the receipt contact the place where you purchased the item to see if they can issue you a replacement.
- Maximise superannuation concessional (tax deductible) contributions, if you have the cash flow, it makes sense to make the most of concessional contributions to super without breaching the current $25,000 cap.
As superannuation contributions are taxed at 15% this can be significantly lower than personal rates of up to 46.5% hence saving you a significant amount of taxation and increasing your wealth.
- Pre-pay deductible expenses, expenses such as premiums on income protection insurance and interest on loans can be paid up to 13 months in advance. This will reduce your income in the current year and in turn reduce your tax liability.
- Maximise property investment expenses, make sure you take advantage of all the expenses you can claim from a property investment. For instance, did you know that aside from rates and mortgage payments, you can also claim cleaning and pest control?
- Manage Capital Gains, if you've made a capital gain this year, review your portfolio to see whether it is worth realising a capital loss to offset the gain, You can't carry losses back. So if you've made a capital gain, you may want to trigger a loss to offset it against.
Please note, you can't just sell an asset to trigger a loss, then buy it back. The Tax Office regards this as a form of tax avoidance - known as a wash sale - and has been focusing on picking such sales up in recent years.
- Motor vehicle deductions, if you have used your motor vehicle for work-related travel, and your claim for kilometres travelled for the year doesn’t exceed 5,000 km, you can claim a deduction for your car’s expenses on a cents per kilometre basis to the extent you have used your car for work.
As an alternative, if you have been using your car for a significant amount of work-related travel then you may well be able to claim a deduction for your total car running expenses to the extent you have used it for work. However, you must have the logbook.
- Deduct home office expenses, when part of your home has been set aside primarily or exclusively for the purpose of doing work from home costs such as heating, cooling and lighting and depreciating your office equipment or professional library may be allowable.
To claim the deduction you must have typically kept a diary for at least four weeks of the hours you worked at home. This amount is then used to work out your total hours worked for the year and a deduction claimed at a current rate of $0.34 cents per hour.
However, no deduction is available for occupancy expenses such as mortgage interest, rent, and insurance and rates unless you conduct a business from your home.
- Take advantage of co-contributions, While the amount of co-contribution has now dropped to a maximum of $500, it is still money for nothing for those earning less than $46,920.
By making a $1000 non-concessional contribution to your super, those earning $31,920 or less will get a government co-contribution of $500 which tapers down till it cuts out at $46,920.
- Prepay private health insurance, If you are expecting a pay increase which could put you into a higher heath insurance tier (ie reduce the Private Health Insurance rebate that you will receive) then prepaying is well worth considering to ensure that you rebate is maximised.