Happy New Year
Welcome to the Personal Tax Specialists 2014 Tax Time Update.
Your 2014 tax return
It’s hard to believe that another financial year is nearly over, but that means it’s time to start getting your records together again for this year’s tax return. We will be emailing your ‘2014 Quick Update Form’ to you early next week to make sure that we have all of your details up to date. On this form you can also indicate which month you would like us to get started on your tax return this year.
Major changes in 2014
This year there haven’t been too many changes in the tax world. But some of the things that you might need to be aware of are:
1. Medical expenses – make sure you claim this year if you are eligible
You will generally only be able to claim for medical expenses if you claimed for them last year. And you will only be able to claim next year if you claimed in BOTH this year and last year. So if you are eligible, make sure you claim this year.
For the 2014 financial year, if your adjusted taxable income is more than $84,000 for singles or $168,000 for couples or families, then you will only be allowed to claim the Medical expenses tax offset once you have spent $5,000 on eligible medical expenses. The offset is then calculated at 10% of the eligible expenses above $5,000.
If your income is below these thresholds you will still be able to claim the medical expenses tax offset once your eligible expenses exceed $2,162 and the rate you can claim remains at 20% of the excess expenses.
Please also note that if you have to pay for disability aids, aged care or attendant care you will be able to claim for these costs even if you didn’t claim them last year. If you are not sure, make sure you complete a Medical Expenses Checklist and we can advise you what you are eligible to claim.
2. Your employer super contributions rate is on hold
From 1st July 2014 your employer was going to be required to contribute 9.5% of your salary to your superannuation fund. HOWEVER, the government has announced that it plans to put a hold on the increase for this year so you will continue to receive 9.25% of your salary. The legislation hasn’t been passed yet, but it is likely to.
3. Superannuation contributions caps
This year the government has slightly increased (for some) the amount you can contribute to super each year without paying excess contributions tax. In the next financial year (2014-15), if you are under 50, the maximum tax deductible (or concessional) contributions that can be made into your super fund are $30,000. If you are 50 or older, the maximum you can contribute this year is $35,000. These limits include any compulsory superannuation contributions made by your employer or salary sacrificed contributions you make.
If your concessional contributions exceed these limits, this year you will receive an amended assessment from the Tax Office after your return is lodged. You will be taxed on the excess contributions in your personal tax return (rather than in your super fund). You will then be entitled to claim up to 85% of your excess contributions from your fund. This can be used to cover your tax bill and you can have the rest paid to your personal account.
If you think this may apply to you, it may be worth speaking with your financial adviser about your options.
This year’s audit targets
The Tax Office hasn’t announced their audit targets for 2014 yet. But if you claim for a large amount of work expenses or for any unusual deductions for your occupation, you may be on the Tax Office’s radar this year. So no matter how much you plan to claim, make sure you have records to prove all of your expenses.
At the very minimum, the records you need to keep for your work expenses are:
- receipts for all work expenses costing $10 or more
- a diary record of any minor work expenses (costing $10 or less and up to a total of $200 for the year) where you haven’t kept the receipt
- a diary record of any work related trips you have made in your personal car
- a diary record of your internet use for work for one month during the year
- a diary record of your telephone use (mobile and home) for work for one month during the year
If you are unsure about what expenses you can claim for in your occupation have a look at the updated ‘what deductions can you claim’ page on our website or organise a time to speak with one of our accountants.
If you know of anyone who might find any of the information in this email useful, please feel free to forward it on to them.
Thanks for your support over the last year and as always, if you have any tax related questions, please just ask. We look forward to catching up with you over the next few months.
The Personal Tax Specialists team