Tax time – you either love it or you hate it. Some people can’t wait to lodge their tax return each year so they can get their annual refund and spend it on a holiday, shopping spree or just paying off the credit card. Others hate having to get all of the records sorted out and find time to visit their accountant. But there is one thing we all have in common – we all want to pay as little tax as possible.
So how do you legally minimise your tax?
Tracey Collins, from Personal Tax Specialists, says “lots of people miss out on claiming legitimate tax deductions each year because they just don’t know what they can claim. The Tax Office statistics show that the average claim for work related expenses in Australia is $1,920 per year, but plenty of people claim a lot less than this.”
So to help you get the best refund possible this year, Personal Tax Specialists have put together their top tax time tips.
1. Maximise your work expenses tax deductions – if you are claiming less than $300 because you don’t know what else you can claim, you may be missing out on a great tax refund. Make sure you know what you are allowed to claim for in your occupation and then keep the right records so that the Tax Office can’t disallow your claims.
If you’re not sure what to claim, have a look at the Personal Tax Specialists’ website http://personaltaxspecialists.com.au/what-deductions-can-you-claim where you can find the specific tax deductions for over 30 occupations.
This year the Tax Office will be paying close attention to tax returns lodged by:
as well as anyone who has large or unusual tax deductions for their occupation. So if this relates to you, it’s even more important that you do your homework and get advice to make sure you don’t make any mistakes.
2. Take photos of your receipts – most people find it hard to keep track of their receipts for work expenses, so they don’t get to claim as much as they should when it comes to tax time.
You can only claim for expenses that you can prove you paid for. So instead of keeping a shoe box full of receipts try taking a photo of them. There are even free Smart Phone apps available that will file your photos away ready to retrieve at tax time and give to your accountant.
Just make sure you keep a backup copy of your photos!
3. Beware of E-Tax – the Tax Office is encouraging everyone to lodge their returns using E-Tax this year, but unless you really understand the tax system it’s easy to make mistakes. E-Tax won’t tell you if you have forgotten to claim for something or if you have filled in a box incorrectly and this could result in you not receiving the refund you are entitled to or being penalised if you are audited.
Even though you will have to pay a fee to your Tax Agent for lodging your tax return, their skill and knowledge can save you much more than it costs (in time, stress and in dollars).
4. No receipts are needed for items costing less than $10 – it’s sometimes difficult to get (or keep) receipts for all of your minor purchases during the year. Rather than having to worry about them, just keep a diary with the information that would normally be shown on a receipt (date, business name, item purchased, price). Then you can claim up to $200 a year for these small expenses, without keeping any receipts.
5. Claim for your donations – if you have made donations of $2 or more to charities during the year you can claim a tax deduction on your return. You don’t even need to have kept receipts if you donated into a box or bucket and your donation was less than $10. But if you received anything in return, for example a pen, badge or raffle ticket, then you can’t make a claim.
For more information about any of these tips or to get help with preparing your tax return this year, contact Personal Tax Specialists Pty Ltd at email@example.com or 1300 335 675.
As a special offer for ‘Family Capers Employment Hub’ readers, Personal Tax Specialists will give every new client who joins us before 31st August 2011 a $25 credit to be used towards their 2011 tax return fee. To take advantage of this special offer, go to http://personaltaxspecialists.com.au/become-a-client-now and complete the New Client Form today. Don’t forget to mention ‘Family Capers Employment Hub’ referred you. (Note – there is a limit of one $25 credit per client)
Tracey Collins, for the Personal Tax Specialists team
Personal Tax Specialists Pty Ltd
Your time and tree friendly tax accountants