As you’re probably quickly learning, tax time is here. Accountants are preparing, business owners are getting aligned and freelancers are probably wondering what the hell they should be doing (at least I was when that was me).
To help get you effectively sorted ahead of tax time this year, we’ve pulled together a guide that will cover all your burning questions about claims, deductions, the ATO’s rules and anything else you might want to know. Because this stuff can be kind of overwhelming, and you want to ensure you’re getting your tax return right.
Let’s dive in, shall we?
When is tax time in Australia?
Okay so as a basic starting point, the Australian financial year runs from July 1 through to June 30 the following year. So, tax time tends to kick off at the end of the financial year (or EOFY).
Per the ATO website, in 2021 they began processing tax returns from July 7. However, the cut-off for lodging your tax return is October 31. If October 31 falls on a weekend, the cut-off date will be the next business day after October 31.
If you’re using the services of an accountant they will have a later final deadline.
Top 5 ways to maximise your tax return
Mark Chapman, Director of Tax Communications at H&R Block has shared a list of useful tips that may help you maximise your tax return this year. Here’s hoping it helps get your next financial year off to a strong start.
Utilise the ‘temporary full expensing’ measure
Chapman shared that if you’re running a business, the ‘temporary full expensing’ measure “allows you to claim an immediate tax deduction for all capital purchases (irrespective of the cost), rather than depreciating the cost over several years, as used to happen.”
This, he explained, can be used for tech purchases, tools or even office furniture – depending on your business.
“The allowance is available to all businesses with an aggregated turnover of less than $5 billion,” Chapman shared.
“Remember, as well as making a purchase, the asset you acquire also has to be used or available for use in your business, so realistically you need to get the item delivered and installed by 11:59PM on 30 June.”
Make tax deductions for your home office
With work-from-home setups being more common than ever before, it’s important we all understand the tax support available with respect to that.
Chapman explained:
“If you are in employment but work from home, either occasionally or all the time, you are entitled to deductions for costs arising from working at home.”
You can claim the following expenses:
- Heating, cooling and lighting
- Cleaning costs
- Decline in value (depreciation) of home office furniture and fittings, office equipment and computers (for items over $300)
- Computer consumables, stationery, telephone and internet costs
- Items of capital equipment (such as furniture, computers and associated hardware and software) that cost less than $300 can be written off in full immediately
If you want more detail on this, check out our complete guide to WFH tax claims.
Don’t forget car deductions
On this one, Chapman shared that car claims will be getting a lot of attention from the ATO this year as it’s generally expected that these expenses will be lower than in previous years due to the lockdowns.
“If you use the log-book method, now is the time to check that your log-book is up to date and that you have all the receipts, invoices and records of journeys which you will need to calculate and substantiate your claim.
“If you use the cents per kilometre method, you will still need a record of all work-related journeys during the year,” he said.
Either way, be extra diligent in getting this information right.
Make a tax-deductible super contribution
For those who happen to have a little spare cash lying around right now (good on ya), Champan suggested “making a personal contribution into your super fund“.
He explained:
“Provided the total amount of your contributions (including the contributions made on your behalf by your employer) does not exceed $27,500, this can be a great way to boost your retirement savings and claim a tax deduction for the personal contribution.”
If you choose to take this option, he shared you must do so before June 30 and you will need to alert your super fund of the action, too.
Seek out an expert’s advice
The best thing anyone can do if they’re feeling unsure about tax time is to reach out to an accountant. Chapman shared that “they can identify exactly what you need to do to get into shape for the 2022 tax season and maximise your deductions”.
Planning on lodging your tax return yourself this year and want more advice? While, of course, a financial expert or accountant is your best source of information, there are some other nuggets of information that may help you out this tax time.
Determine your tax bracket
Simple but very useful, the ATO offers a clear guide to tax brackets on its website which will give you a general guide to the kind of tax your salary is required to pay.
The below information is sourced via the ATO.
| Taxable income | Tax on this income |
|---|---|
| 0 – $18,200 | Nil |
| $18,201 – $45,000 | 19 cents for each $1 over $18,200 |
| $45,001 – $120,000 | $5,092 plus 32.5 cents for each $1 over $45,000 |
| $120,001 – $180,000 | $29,467 plus 37 cents for each $1 over $120,000 |
| $180,001 and over | $51,667 plus 45 cents for each $1 over $180,000 |
Useful apps for receipts and more
If you’re kind of forgetful (like me) and need a good place to store all your relevant tax time information, we’ve pulled together a list of 5 useful apps designed precisely for that.
Tax tips for freelancers
If you’re a freelancer or sole trader, this tax time business can be confusing. You’ll need to keep track of all your earnings and the many expenses you incurred across the year – it looks a little different to salaried employment.
Lucky for you, however, we have an entire guide prepped for you here.
What happens if you forget to lodge your tax return?
While we hope you have your calendar alerts set and your paperwork in order, there is a chance that someone somewhere may forget to file their tax return this year. If that’s the case, be warned that you may face financial penalties.
Read more on that whole situation here.
How to file my return
Assuming you’d like to avoid the aforementioned messiness, here are some simple steps to keep in mind when lodging a tax return with the ATO.
In a nutshell, your tax return will detail how much money you earned in the past financial year and what expenses or offsets are relevant to you.
The ATO website reads as follows:
You can lodge online using myTax, through a registered tax agent or complete a paper tax return. Your tax return covers the income year from 1 July to 30 June. If you need to complete a tax return you must lodge it or engage with a tax agent, by 31 October.
The latest update in this space is that the ATO is warning folks to avoid risking their tax return being delayed by ensuring you only submit your return once your income statement is marked as ‘Tax ready’.
In a statement on this, Assistant Commissioner Tim Loh explained:
“You can lodge on 1 July, but you are punting with your tax return by risking delays to any refund you are owed. If you forget to include everything, you may end up answering questions from the tax office,” Loh said.
“We pre-fill some of the information in your tax return to help you to get it right the first time. We pre-fill information such as your wages, health insurance and interest from banks, this process is usually finalised by late July.”
“Thanks to pre-fill, waiting a few extra weeks can make lodging your tax return online quicker and easier.”
In short, don’t rush the process!
This article on tax time has been updated since its original publish date.
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