With just a few weeks to go until the end of the tax year, you might think it’s too late to knock your taxes for the year into shape. However, even this close to EOFY, there are still some planning opportunities to maximize your refund for the year. So, what should you be doing as we head towards June 30?
Gather your records
Take some time out to gather together all the information you will need to help you prepare your tax returns, including invoices and receipts for work-related expenses and any bank/credit card statements that contain items of work-related expenses that you no longer have (or never had) receipts or invoices for.
If you’re not sure if it’s claimable, collect together the receipt or invoice anyway and discuss it with your tax agent. If you don’t have the paperwork, you can’t claim a deduction so it makes sense to set aside this time in advance of the end of the financial year to spare yourself a stressful document hunt whilst you’re actually in the process of getting your return prepared!
In addition, if you’re claiming any expenses that have a work-related element and a private element (such as for the use of a personal mobile phone) set some time aside to work out what a reasonable apportionment is for the work-related bit.
Prepay some expenses
You can claim a tax deduction this year for expenses that wholly or partly relate to next year. So, if you have some spare cash, consider paying things like union fees, professional subscriptions, and annual insurance premiums in advance in order to accelerate the deduction.
Buy a new handbag
If you use a bag for work, to carry papers or a laptop perhaps, you can claim a tax deduction for the cost. That could include a briefcase, a backpack, or a handbag, whichever suits your needs
Offset capital gains against capital losses
If you’ve disposed of shares or any other form of investment and you know you’ve made a capital gain, take a look at your investment portfolio and consider disposing of any assets which you own which you know are sitting at a loss. The resulting capital losses can be offset against the capital gain.
Be careful though if you sell shares sitting at a loss and then buy them back in the new tax year. The ATO takes a hard line against so-called “wash sales”. This refers to the sale of an asset before the year-end and the purchase of a substantially identical asset immediately after the year-end. The ATO regards the purchase and the sale as effectively the same asset and have issued a Tax Ruling which states that they can apply the anti-avoidance provisions to cancel any tax benefits and apply penalties.
Make a tax-deductible super contribution
If you have some spare cash, look at making a personal contribution to your super fund. 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. The payment must be made by June 30th and you need to advise your super fund that you’ve made the payment by the time you lodge your return (your super fund or accountant can give you guidance on how to complete the form and theirs a standard form on the ATO website here.
Plan for next year!
When you’re busy trying to get this year’s tax return right, it might seem a little premature to think about getting next year’s return right…but the secret to making Tax Time easy is to plan ahead. If you end the financial year with all your receipts, invoices, and other records tidily arranged, you’ll immediately be ahead of the game. So, as we head towards the start of the new tax year, remember if you spend money on anything as part of your job, get and keep the receipt. Even if you’re not sure if it’s deductible, if you at least have the paperwork you can get your accountant to advise you when the time comes to do your return.
Seek expert help
Speak to a tax agent like H&R Block. They can identify exactly what you need to do to get into shape for the 2022 tax season and maximize your deductions.
About the author: Mark Chapman is the Director of Tax Communications at H&R Block Australia.
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