With a Federal election race on, your taxes are going to be a key battleground over the next few weeks. Thanks to the recent Federal Budget, we already have a fairly clear picture of the goodies on offer and some of them are essentially locked and loaded into the system regardless of who wins the election. So, here are some top tips for taking advantage of the tax breaks already announced.
#1 Lodge your tax return to get the new tax cut
The government announced substantial tax cuts for low and middle income earners in the recent Budget. The cuts (which the Labor party is pledging to match) are worth up to $1080 for individuals or $2160 per year for dual-income households. Up to 4.5 million Australians on middle incomes will enjoy the full tax cut. About another 5.5 million will receive a tax cut of roughly half those amounts.
The cut is to be provided in the form of a tax offset (a one-off reduction in your tax liability) and to get it, you need to make a claim in your 2018 tax return. Tax time is less than three months away so to get access to the tax cut as quickly as possible, be sure to lodge your tax return as soon as possible after the end of the financial year.
#2 Use your tax cut wisely
When the rate of tax is reduced, most people see the benefit through a reduction of a few dollars in the amount of tax that gets deducted each pay period. On a weekly or fortnightly basis, the saving is too small to make much difference, or even to be noticed. But this tax cut is different. Because it’s an offset, rather than a cut in the rates, you’ll get the whole value of the cut in one hit, which could see up to $1080 per individual hitting your hip pocket come tax time. So, try to use it wisely.
It might look like a good idea to blow the lot on a nice holiday but if you’ve got debts, think about using the money from the tax offset to reduce those debts. The amount you’ll save in interest (particularly on high-interest products like credit cards) will flow through to your hip pocket for months to come in lower repayments.
#3 Small business? Use the instant asset write-off
There was a dramatic extension of the instant asset write-off deduction for capital assets acquired by small businesses announced in the Budget. The scheme will now apply to all individual purchases of capital assets costing up to $30,000. In addition, the number of businesses eligible to participate will increase as the turnover threshold for qualifying is increased from $10 million to $50 million.
So, whether you need new IT equipment, a new car for your business or new tools for your trade, the taxman is offering you the chance to write-off the cost straight away against this year’s profits. Take advantage of End Of Financial Year bargains by making purchases by 30 June, hence locking in the tax deduction this year.
#4 Claim your work/travel expenses!
While illegitimate deductions are a big no-no, there are many work expenses you’re allowed to claim back. Here are 16 work expenses you might not know about and here’s a guide to maximising your travel expenses (without fibbing.) You can also read everything you need to know about claiming mobile phone and home internet costs here. You can check out more hints and tips in the articles below. Good luck lodging!
How well do you know Australia's tax rules when it comes to work-related expenses? If you claim a deduction this year, are you sure it's going to be legit? Test your tax knowledge with this multiple-choice quiz from the Australian Tax Office (ATO).Read more
Many people are required to travel as part of their job. Work-related travel might be something as simple as a short trip to see a client for an hour or two or a prolonged trip lasting several days interstate or even overseas. Some of these travel expenses can be claimed at tax time - but you need to know which rules to follow.Read more
If you haven't filled out your 2016-2017 tax return yet, you better get on it. But before you lodge anything, it pays to do some research on what you can actually claim. Depending on your line of work, you may be eligible for a refund on everything from pet dogs to Netflix! Here are five unusual deductions that you need to consider.Read more
If you want to reduce your tax bill, you need to claim as many legitimate deductions as you can. While most people know about travel expenses and charitable donations, there are many additional deductions you might be able to claim. Some of these items may surprise you - from video game consoles and Netflix subscriptions to pet dogs and sex toys.Read more