With the start of the new tax season, the most common question is what can I claim? Listed below is an in-depth look at what the most common tax deductions you can claim on your tax return along with links where available to more information.
1. Super
Super is an expense where you only receive the deduction if it is paid and received by the superfund before 30 June 2024. Given you have to pay it anyway, why not make it deductible in the same year it was incurred?
If you make any additional personal super contributions you can check what is left of your super concessional cap and then take into consideration whether or not you have any caps brought forward (which you may if your Total Super Balance is less than $500,000). This information can be found via your myGov or with the assistance of your accountant. Make sure you tell your Superfund that you are claiming the contribution before attempting to lodge your tax return by completing a Notice of Intention to Claim form and submitting to your super fund.
2. Capital Purchases
If you are a small business entity (SBE) from 1 July 2023 - 30 June 2025, only assets under $20,000 will continue to be deducted in full. All items costing more than this will be added to the small business pool and deducted as 15% in the first year and 30% in subsequent years.
3. Tax deductible expenses
Go through your bank statements, credit card statements, receipt pile, emails, etc. Did you incur any expenses that helped you to earn taxable income? (Just FYI, your car that gets you to and from work unfortunately doesn't qualify-unless you had to drive it for work purposes - see my Blog for more information). The ATO has an exhaustive list of what you can deduct and the records you need to keep. If you don't use accounting software, such as Xero, start putting together a list of what you can deduct in preparation for your tax return. It's much easier if you download the ATO MyDeductions App and record these (as well as eligible motor vehicle trips) throughout the year so you're not scrambling in June/July every year. Some online banking apps provided by your bank also allow you to categorise your expenses throughout the year just to help you with your records for tax.
4. Donations
Feeling generous? Want to give back to a worthwhile cause? Just remember to check the Deductible Gift Recipient list to see if your donation to your nominated charity is tax deductible. If it's not, you can't claim a deduction - for instance, gofundme is not a listed charity and can't be claimed - that's not saying you shouldn't give to these worthwhile causes, just don't include it in your tax return.
5. Spouse Offsets
If your spouse earns less than $40,000 taxable income, you can claim up to $540 offset if you make an after-tax super contribution to their superfund of up to $3,000. More information about how to do this and who is eligible can be found on the ATO Website. This site also has calculators to assist you - make sure you tell your accountant and your spouses Superfund, or it will be missed otherwise.
6. Property Deductions
If you have an investment property, have you considered getting a quantity surveyor report to maximise your deductions? The surveyor won't charge for the report unless you will receive the equivalent or more in reduced tax. This is especially beneficial for those with new or recently renovated properties. If you got this report sometime ago and have made significant changes, contact the surveyor to update the report. Refer to my blog for more information.
7. Self-Education
Now is the time to invest in yourself. If there is a course or seminar that could benefit your current position, the cost of this is tax deductible.
8. Consider Health Cover
Honestly, you're too late now, but consider it for next year. If your Single with reportable taxable income over $90,000, or in a family with reportable taxable income over $180,000 (you're allowed an additional $1,500 with each child after the first), consider private hospital cover (extra's don't count). If you have higher income, you will be liable for Medicare Levy Surcharge of up to 1.5% of your total taxable income (not to be confused with Medicare Levy, which we all pay at 2% unless you're a very low income earner) unless you have Hospital Cover (not to be confused with Extra's Cover). Sometimes health cover is more expensive than the Medicare Surcharge, so make sure you take that into consideration when making your choice.
To discuss any of the above further, especially for yourself personally, please contact me directly on 4021 2801
‘Planning is bringing the future into the present so that you can do something about it now’ – Alan Lakein