This article was published in Cosmopolitan magazine and can be seen on their website: http://www.cosmopolitan.com.au/get_a_holiday_out_of_your_tax_return.htm
We’re approaching tax time, and if you follow Cosmo’s easy three-step guide, you could be splurging your return on a great break…
1. The dead-set basics
Well, the first thing you need to know is that the financial year begins on July 1 and concludes on June 30. Seems simple, is actually quite important. Why? “Because Australia’s tax system is based on self-assessment,” says Tracey Collins from personaltaxspecialists.com.au, “So it’s your responsibility to keep all records required to calculate both your income and your deductible expenses for the year.”
Some of these documents include:
As a general rule, if you don’t own a business or have considerable investments, you probably don’t need an accountant. If you’d rather enlist a professional number-cruncher, expect to pay from $50 up to $200 or more. Whatever you do, do it on time. “The ATO can fine you up to $550, and they’ll also charge interest on any tax owed to them. So you’re better off lodging your returns on time, even if you can’t afford to pay any tax owing, so you won’t get charged a penalty,” says Collins.
2. Things you can claim
Hoorah! Apart from the standard $300 worth of work expenses everyone can claim without receipts (which will increase to $500 in the 2012-13 period), here are a few other things worth noting:
You can claim on items that cost under $10 “If you keep a track of small items you buy during the year in your diary, you can claim up to a maximum of $200 for these expenses without keeping any receipts,” says Collins.
It’s worthwhile to get private hospital insurance “If you’re single and earn more than $77,000 a year and don’t have private hospital cover, you’ll be charged an extra 1 per cent Medicare Levy. Usually the cost of private cover will be less than the surcharge, so now’s the time to organise your insurance.”
Receipts are the Vaseline of the tax world: they’re not only universally helpful but also help to lubricate the taxation process. If you don’t know what you can claim, you should keep receipts for everything. Paper or electronic, as long as the ATO can read it, you’re covered. “There are even free iPhone apps available that allow you to take a photo of your receipt and then file it away ready to retrieve at tax time,” says Collins. “The records can even be converted to a spreadsheet file to be sent straight to your accountant. Just make sure you keep a backup.” And if you still have any questions about receipts – or any niggling tax-y things – you can contact the ATO at any time throughout the year.
Collins also points out that the tax office provides a free tax preparation service for people earning $40,000 or less – available from July to October each year at various locations throughout Australia. Contact the ATO on 13 28 61 for more details or to make an appointment.
This article appears in the May 2011 issue of Cosmopolitan, on sale now.