Hanging out for that end of financial year (EOFY) tax return in hopes that you will feel cashed up? Knowing how to minimise your tax and maximise EOFY benefits can give your bank account a boost. There’s nothing like opening your bank app to see a large cash injection courtesy of the ATO.
Whether you’re working on your own start-up or still doing the nine to five grind for a boss with a side hustle, there’s nothing worse than overpaying tax just because you simply aren't aware of what you can claim. After all, who wants to pay more tax than they have to? Seeing a financial advisor or a specialised taxation accountant could mean the difference between a tax bill and still be swimming in debt up to your eyeballs from student loans to shouting your friends to a weekend away.
Salary Sacrificing Tax Offsets
Salary sacrificing is an arrangement you can set up with your employer to help reduce the amount of tax you pay. You can opt to receive less money each payday and have it contributed to your superannuation. Alternatively, you can use salary sacrifice for fringe benefits. Common fringe benefits include vehicles, property (lands, buildings, shares or bonds), loan repayments or even child care costs. It’s important to note this agreement is not going to affect your EOFY entitlements, so talk to a financial advisor to be aware of the tax offsets, how it may affect your Medicare levy and any amounts you must pay against any outstanding student loans.
Claimable Working Expenses
In the age of the global pandemic, it’s not unusual for most people to have a side hustle or a hobby that generates a secondary income such as creating art or crafts for sale at the markets or using web development skills. Any expenses acquired like tools/equipment, working from home expenses, training and education expenses, mobile devices, even a portion of rent or electricity may be tax-deductible. All expenses must be work-related with proof of purchase. Talking to a taxation accountant will help ensure you claim for everything you’re entitled to.
Gifts And Donations
If you get behind your favourite charity and donate, you may be entitled to claim a deduction (excluding crowdfunding). Donations of $2 or more are claimable providing the donation was voluntary. Make sure you get a receipt for donations over $10.
Personal Super Contributions
If you have contributed extra to your super fund you may be entitled to claim deductions on those contributions if you get a regular salary or wage, income from investments, own a business (or freelance), partnerships or trusts. However, it’s important not to exceed the limits of super contributions. How much you can contribute to your super fund and whether your fund is allowed to accept your contribution may also depend on your age and total super balance.
To maximise your tax return and get everything you’re entitled to claim at the EOFY, I highly recommend seeking the advice of a proven professional well before June 30, 2022.
Tax Entitlements For Property Investors
If you are entrepreneurial-minded and focused with the end goal to work less and provide for your family, you may want to consider the tax perks that come with property investment.
When drawing a passive income from rentals, property owners are entitled to claim ongoing repairs and property maintenance providing the property is listed on the market for lease or tenanted. Regular lawn upkeep, pest control and gardening are all considered tax-deductible, just to name a few. Make sure you keep accurate records and receipts. A taxation accountant will ensure you’re claiming everything you’re entitled to and use those entitlements to offset your tax liability—more in your bank account come tax return time.
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Image credit: Urban List
Gerry Incollingo is the Managing Director of LCI Partners in 1998, an established accounting, finance and legal firm based in Parramatta. Since that time, the firm has expanded with six divisions and is now based in Sydney, Parramatta, and southern Sydney.