Here at MB Accounting and Business Services, we specialise in all things tax – including helping you with your individual tax return. As experts on tax, we’ve put together a list of some of the simple things you can do to reduce your personal tax this financial year.
Claim your home office expenses
Keep track of the hours you spent working from home to qualify for the 67 cent per hour shortcut rate. For home-based businesses and situations where your expenses are higher, you can look at claiming these separately.
Job connected costs
You can typically claim expenses incurred in connection with your work that were not covered by your employer, like meals while you are travelling for work – be sure to keep your receipts. To find out what is reasonable to claim, consult the ATO’s industry-specific guidelines.
Reducing your tax with donations
Consider making a larger-than-normal donation to a deductible gift recipient (DGR) charity before June 30 if you anticipate paying a sizable tax bill this year as a result of earnings you have achieved.
Top up your super Make a voluntary superannuation claim
If your transfer balance threshold has not been reached, you may deduct up to $27,500 in after-tax income for contributions you directly pay to super. With your super fund, you must file a notice of intent to claim.
Pay in advance
Even if paying deductible expenses in advance doesn’t save you money, you can pay some of your deductible expenses for the following year by June 30 and still claim the tax deduction for that year.
Studying for work
Self-education costs that are directly relevant to your line of employment are frequently tax deductible, albeit there are restrictions. Therefore, you may be able to deduct the cost of the course as well as some other relevant expenses if you have been attending short courses to advance your skills. Please be advised that study expenses for starting a new business or finding new employment are not covered. The study must be relevant to how you now make money.
Building and managing your investments
The costs of making share dividends, income and interest on your investments is generally tax deductible. This includes account fees (for investment accounts), loan interest and the cost of attending investment seminars (that are directly related to investments that you already have). Investment advice fees, fees for ongoing investment management, subscriptions and specialist journals related to your investments can also be claimed. Initial investment plans, brokerage fees and transaction fees, etc aren’t generally deductible.
Avoiding penalties
If you fail to declare income in your tax return and there is a resulting tax shortfall, the ATO may impose a penalty. Penalties begin at 25% of the tax obligation due and soon increase if you were reckless (50%), wilfully trying to evade tax (75%), or both. The penalty basic amount can then be increased by 20% if they are truly unhappy with you. If there is no shortfall but you acted carelessly, recklessly, or intentionally disregard your tax obligations, there may still be consequences. Tax is still payable even if you don’t file your return, and penalties of up to 75% of the tax liability may still be assessed if the ATO determines that you owe more than you reported.
You are subject to taxation on all of your worldwide assessable income, including salary, wages, director or consulting fees, some allowances, bonuses, commissions, interest, pension income, rental and other investment income, and, if you are a content creator, gifts and other income. This is the case if you are an Australian resident for tax purposes (and are not considered a temporary resident). If you receive income from a foreign source and have paid tax on it there, you must include it on your tax return. However, you may be able to deduct the tax you have already paid abroad from your Australian tax obligation.
The ATO is fairly upfront about what their tax time targets are, so it’s less likely that they will view any omission as an honest mistake if you choose to ignore the warnings. It’s similar to hearing someone claim on border control programs that they were unaware that shellfish is a food item that needs to be declared.
If you’d like help with your individual or business tax returns this financial year, get in touch with the team at MB Accounting and Business Services. Our expert accountants are based in Ormeau and can help you to get the best tax return possible for your 2022/2023 tax.