Maximising Your Tax Return – Geelong Accounting l Canny Group
It’s that time of year again, Tax Time! For individuals who have a tax agent, like our team at Canny Group and their accounting team on hand, we will lodge your tax return for you on your behalf and you have until 15 May 2021 to do this. However, if you lodge your own tax return you have until 31 October 2020 to have it lodged. We’ve put together invaluable tax tips and strategies for you to consider when it comes to your tax returns, introducing; Maximising Your Tax Return – Geelong Accounting l Canny Group.
Either way, we have put together some tax tips that you should consider before 30 June 2020 to help; reduce your taxable income, maximise deductions, take advantage of tax offsets, accessing free money from the Government as well as COVID-19 in many different ways, and we have put together these tips to help you be as prepared as possible and hopefully empower you to maximise your refund when it comes to lodge your tax return.
TAX TIP #1 // WAYS TO REDUCE YOUR TAXABLE INCOME
- SUPER CONTRIBUTION // make a personal deduction superannuation contribution. Check with payroll to determine how much has been contributed so far. The concessional contribution cap is $25,000 for the 2019/20 income year.
- UNUSED CONTRIBUTION // do you have any carry forward unused concessional contribution from the 2018/19 income year? If your total superannuation balance is under $500,000 at 30 June 2019, you may benefit from making a catch-up deductible super contribution. This may be especially beneficial to those who have additional income due to sale of investments such as shares or property.
- DEFER INCOME // are you nearing retirement? It may be worthwhile to defer you income until after 30 June if your income will be smaller in the subsequent year.
TAX TIP #2 // MAXIMISE DEDUCTIONS!
- MOTOR VEHICLE EXPENSES // individuals who use their car for work related travel can claim 68 cents per kilometre up to 5,000km for business travel or claim under the logbook method of car expenses. Canny Group’s team of accountants will be able to determine which method yields the greatest deduction for you.
- WORK-RELATED EXPENSES // consider if you need any work-related items such as tools for trade, computer, subscriptions or work clothing and whether you could purchase or pay for those expenses before 30 June to increase your deductions.
- DONATIONS // or gifts of $2 or more to a deductible gift recipient are tax deductible. Where spouses are on different marginal rates, consider making donations by the spouse that is in the higher tax bracket to maximise the benefit of the deduction.
- HOME OFFICE // if you have been working at home due to COVID-19, you may be eligible to claim a rate of 80 cents per hour for all of your running expenses from 1 March to 30 June. Multiple people living in their house could each individually claim the 80 cents per hour rate.
- PROTECTIVE CLOTHING // did you buy protective items such as gloves, face masks, sanitiser to use at work due to COVID-19? If your specific employment duties require you to have physical contact or be in close proximity to customers or clients while carrying out your duties or you are involved in cleaning premises, you can claim a deduction for protective items. The ATO considers those that work in the following industries or occupations are exposed to the risk of illness in the course of working:
- Medical Industry
- Cleaning Industry
- Airline Industry
- Hairdressing + Beautician Industry
- Retail, Cafe + Restaurant Industry
TAX TIP #3 // TAX ADVANTAGE OF TAX OFFSETS!
- SPOUSE OFFSET // receive a $540 tax offset by making a person contribution up to $3,000 to super on behalf of your spouse. Only available if your spouse’s taxable income is less than $37,000. A lower offset may be available if you contribute less than $3,000 or your spouse earns between $37,000 and $40,000.
- LOW + MIDDLE INCOME OFFSET // individuals on a taxable income of $37,000 or less will receive up to $255 tax offset and those on taxable incomes between $48,000 and $90,000 will receive the maximum of $1,080 offset. Incomes between $90,000 and $126,000 will receive partial offset. This is not a tax refund but a tax offset.
TAX TIP #4 // ACCESS FREE MONEY FROM THE GOVERNMENT!
CO-CONTRIBUTIONS // receive a Government co-contribution of up to $500 paid into your superannuation by making an after-tax superannuation contribution of $1,000 or more. Full amount is available to those with taxable income less than $38,564 and a reduced amount is available to those with taxable income less than $53,564.
TAX TIP #6 // RETIREES!
- REDUCE PENSION // the minimum drawdown requirements for account-based pensions has been halved for the 2019/20 and 2020/21 income year. This will benefit retirees with account-based pension by reducing the need to sell investment assets to fund minimum drawdown requirements.
- SOCIAL SECURITY // in light of the low interest rates on savings, the Government has reduced social security deeming rates from 1 May 2020. You could be eligible for Centrelink entitlements such as the age pension or Commonwealth Seniors health care card with the lowering of deeming rates.
You can book directly via our website to see one of our accountants to complete your income tax return, or even just to have a chat to make sure that you’re on the right track!
Now that we have your sorted for maximising your tax return outcome, let’s talk about what you’re going to be doing with the hard-earned money you’re hopefully on the way to receiving back!
Did you know that the average Australian received a tax refund of $2,381? That’s enough to splurge on some new furniture or an LED Smart TV, right? Well, before you head down to your local shopping centre with your tax refund in hand, take a look at three ways we’ve come up with to spend your tax return. We’re confident that the following strategies will help you make the most out of your tax return and create positive change in your life.
STRATEGY #1 // SET UP AN EMERGENCY FUND
Research conducted in the last year’s Financial Consciousness Index found that a concerning 13.4 million Australian’s do not have emergency savings to fall back on if they were unable to earn an income for more than three months. The study also found that 7.5 million Australian’s struggle to pay their bills and are not saving money regularly.
So, with this in mind, why not use this year’s tax return to set up an emergency fund and make this the start of your savings plan?
STRATEGY #2 // MEET WITH AN ESTATE PLANNING LAWYER
As the saying goes, there are only two certainties in life; death and taxes. Unfortunately, more than half of Australian adults do not have a Will.
So, with this years tax return, why not protect your loved ones and sit down with an estate planning layers to draw up a Will or Testamentary Trust?
STRATEGY #3 // STARTING YOUR SIDE HUSTLE
If you have an idea of starting a side business, use this year’s tax return to kick-start this one and for all. It doesn’t take much more than $2,381 to get started these days: a basic website and some Facebook and Instagram paid advertising campaigns to attract your first paying customers.
So, why not make this the start of your side hustle and see if you can generate a return on investment and get your business off the ground?
The question is, how will you spend your tax return this year after you’ve put into place our tax tips on maximising your refund?
Get in touch with our team today, to make sure that you’re putting your best foot forward and making the most of your situation!