Top tips to maximise your tax return

Let’s face it – nobody enjoys filling out their tax return. But in the rush to get it out of the way for another year, it’s all too easy to miss out on deductions you’re entitled to.

With the end of the financial year fast approaching, this article look at various tips to ensure you maximise your tax return and claim as much back as possible from the ATO.

Find your tax bracket

The first way to maximise your tax return is by checking you’re in the right tax bracket. These can change from year to year, so it’s best not to make assumptions.

This page on the ATO website will help you determine where you should be. Once you know your tax bracket, you’ll be in a better place to review your deductions.

Research which tax deductions you can claim

As all working people know, the government takes a portion of your income as tax. Boo! However, you can reduce this amount by claiming certain expenses incurred during the course of earning money as tax deductions.

As you might imagine, the ATO won’t just take your word for this. You will need to provide evidence of these outgoings, typically in the form of receipts.

Here’s a list of work-related expenses you might be able to claim for:

Work-related travel expenses

If your employer requires you to drive or otherwise travel as part of your job, there are several expenses you may be able to claim for.

Sadly, travelling to work from home isn’t of them. Valid deductions include:

• Petrol and other car-related expenses.
• Accommodation and meals (if your employer isn’t reimbursing you already).

Working from home

With more of us working from home than ever before,it’s good to know what you can claim for. Valid WFH expenses include:

• Home office equipment like computers, desks, and chairs.
• Decline in value of the above.
• Heating, cooling and lighting of your home office room.
• Stationery, telephone and internet costs.

Other work-related expenses

You might be surprised to discover how much you can claim for as long as it’s work-related. Other possible work-related deductions include:

• Uniforms
• Trade publications
• Union subscriptions and fees
• Studying expenses (if connected to your current employment)

Investment property expenses

If you rent a property for income, the interest on your mortgage repayments plus some expenses like body corporate fees might be eligible for tax deduction.

Save tax with your superannuation

Putting extra money into your super before the year ends could help you reduce the amount of tax you have to pay, while also helping you prepare for your retirement. Here are some of the ways you can benefit.

Salary sacrifice your pre-tax salary

This is when your employer pays money into your super using your pre-tax salary. Expecting an end-of-year bonus? Ask your employer about salary sacrificing all or part of it so you save on tax.

If they’re not sure how to go about it, refer them to this page of the ATO website.

Make a one-off contribution to your super

Putting any spare (after-tax) cash you have into super could mean you pay less tax than you would investing it in other ways. There are a couple of things to bear in mind before you do this though.

One is that there is a cap on what are known as ‘concessional contributions’ of this kind. The other is simply to be careful that you don’t leave yourself short. Tax deductions are all well and good but they’re not much use if you can’t afford to pay the bills.

Spousal contributions

If your spouse is on a low income, any after-tax contribution of up to $3,000 you make to their super account can entitle you to a $540 tax offset.

Remember, the amount you can pay into super before the end of the financial year using before or after-tax income is capped. You can check these limits on the ATO website.

Take advantage of EOFY sales to purchase big ticket items

If you’re on the lookout for a new car (or any big-ticket purchase), the end of the financial year can be a great time to go shopping. Lots of car dealers and other retailers drop their prices to clear stock and boost sales before the year ends.

And because lots of consumers are out looking for a deal, retailers competing with each other may offer a better price to get your business. If you don’t have the savings set aside and you’ve seen a great deal, you could consider a personal loan to grab that bargain.

Donate to charity

Did you know that some donations made to eligible charities can be used to reduce the amount of tax you pay? To receive a tax deduction, the donation must be $2 or more, be made to an eligible charity, and be claimed in your tax return for the income year in which you made the donation.

You can use this handy online tool to check that the organisation you’re donating to has 'deductible gift recipient (DGR)' status with the ATO.

Review your private health care situation

If you earn more than $90,000 a year as an individual or $180,000 as a couple and you don't have private health cover, you’ll be hit with the Medicare Levy Surcharge. This can be as much as 1.5% in addition to the 2% Medicare Levy that most taxpayers are liable for.

The good news is that this is easily avoided If you have even the most basic private hospital cover. In fact, it’s often possible to find cover for less than the cost of the Medicare Levy Surcharge, so you could even save money by doing this.

Use an accountant or tax agent to ensure you get the best out of your tax return

Filling out tax returns is complicated, boring, and time-consuming. So why not let someone else do it for you? While you’ll obviously have to pay for the services of a professional, there’s a reasonable chance they’ll end up saving you more than they cost – and you might even be able to claim all or part of their fee as a tax-deductible expense.

Make your money work for you!

As we’ve seen, it pays (literally) to be smart about your tax return. But once you’ve got that lovely refund from the ATO, what are you going to do with it? If you want to continue being clever, our recommendation would be to put it in a high-interest savings account.

That way, it’ll continue to accumulate without you having to think about it. But if you do find yourself thinking about it, particularly if you have a tendency to splurge, you could always hide it away in The Vault. Your regular payments and transfers will still work as normal, you just won’t be tempted by your ever-increasing balance.