3 Min Read
As the end of the financial year approaches, so does tax season. For many, this period brings a mix of emotions—eager anticipation for those expecting refunds and a touch of apprehension for others who may be bracing for a bill.
In Australia, over 14 million people lodge a tax return each year, with roughly two-thirds anticipated to receive a refund, averaging around $2,800. This can be a significant boost for households nationwide. However, it's crucial to recognise what a tax refund represents. Often perceived as a bonus or a gift from the government, it is actually your hard-earned money being returned to you—essentially, you’ve given the government an interest-free loan and now it’s time to get it back working for you. So, if you do receive a refund, treat it as you would your everyday income and make wise financial decisions to improve your life and long-term financial health.
Now, let’s focus on getting organised and maximising those deductions
Preparing your tax return doesn’t have to be an overwhelming task. With the right approach, you can handle it efficiently and even maximise your benefits.
If you plan to lodge your tax return directly with the Australian Taxation Office (ATO), remember that the submission deadline is 31 October. However, if you're working with a registered tax agent, they may have extended deadlines. Just ensure you engage their services before 31 October regardless.
Tip: While being proactive is great, submitting your tax return too early can be problematic. The ATO pre-fills tax returns with income data, such as salary, interest, dividends, and government payments, which might not be complete until late July or even August. Filing your tax return prematurely can result in missing or inaccurate information, potentially requiring later amendments—increasing your workload rather than reducing it. Be sure to review the pre-filled data carefully and correct any discrepancies before finalising your submission.
Here are some key tips to consider as you prepare:
Review and Maximise Deductions: Ensure you claim all eligible deductions, including work-related expenses, investment costs, and educational expenses, to significantly reduce your tax liability. An accountant can help you identify what you can claim based on your income.
Prepay Expenses for Tax Deductions: Consider prepaying eligible expenses such as insurance premiums or loan interest to secure additional tax deductions for this year.
Gather and Organise Receipts: Simplify your tax return preparation by collecting and categorising all receipts related to work expenses, charitable donations, and other deductible costs. You can do this manually, in a spreadsheet, or using an app—whatever helps you stay organised.
Make Super Contributions: Boost your retirement savings and potentially reduce your taxable income by making additional superannuation contributions.
Submit a Notice of Intent to Claim: If you've made super contributions throughout the year and intend to claim a tax deduction, ensure you submit a Notice of Intent to Claim form to your super fund before submitting your tax return. Timing is crucial!
Check Health Insurance Coverage: Verify your health insurance status to understand its impact on the 1.5% Medicare Levy Surcharge, which applies if your earnings exceed certain thresholds. Ensuring you have adequate coverage can help you avoid this additional tax.
For small business owners:
Small Business Concessions: Maximise benefits by exploring available concessions and deductions, such as the instant asset write-off if you run a small business.
Update Bookkeeping Records: Keep your financial reporting efficient and accurate by ensuring your bookkeeping records reflect all income and expenses.
With these strategies, you can approach your tax preparation confidently and efficiently. Remember, it’s never too early to start getting organised, even if you need to delay your submission until all your pre-filled data has been confirmed.