As the tax year draws to a close Australia’s leading professional tax association, The Tax Institute, has revealed how to maximise your tax return and avoid being targeted by the Australian Taxation Office (ATO) ‘hit list’.
Work-related deductions are an excellent way to maximise your tax return, particularly for those who work from home and incur business expenses associated with running a home office.
“If you’ve been spending money to make money, be savvy about claiming the right deductions and maximise your return come June 30,” said Thilini Wickramasuriya, Tax Counsel for The Tax Institute.
“Self-education expenses, mobile phone and internet usage, and travel costs are often deductible expenses, depending on your occupation. Individuals should speak with a professional tax agent to ensure they are across any industry-specific expenses they may be able to claim,” she said.
“Those who carry on a business from home may be able to claim additional deductions for a home office including a portion of rent, interest, repairs, house and contents insurance, rates and property taxes.”
However Ms Wickramasuriya warned against pushing the boundaries with work-related expenses saying the ATO would be comparing your expenses to others within your industry. Individuals trying to claim a deduction in relation to holiday homes and rental properties were another sore point for the ATO and risked landing themselves on the ‘hit list’. The ATO has expanded the number of taxpayers who are eligible to use MyTax this financial year, however The Tax Institute recommends individuals who have used employment termination payments or lump sum payments from their superannuation consult a professional tax agent.
“MyTax is great for self-preparing a straightforward tax return, however advice from a professional tax agent can be invaluable as the law concerning termination and lump sum payments is complex,” said Ms Wickramasuriya. Small business owners should think about any purchases they want to make for their business before year end, in order to benefit from the instant asset write-off announced at last month’s Federal budget.
“Recent Budget changes mean you should consider buying that piece of equipment you have had your eye on before year-end. The instant asset write-off caps have yo-yoed in recent times from a proposed $6,500 to $1000, to $20,000 which was announced in the Budget and has just passed through the Parliament.”
Ms Wickramasuriya noted that the write-off could also apply to existing depreciation pools, not just new assets.
The Tax Institute also encouraged small business owners who are hoping to benefit from the package of incentives announced as part of the Federal budget to speak with a registered tax agent prior to 30 June. This will help to ensure eligibility for deductions in the current financial year and also to factor in the recent package of changes when planning for the financial year ahead.
“Taxpayers who access business assets for private use are of particular interest to the ATO this financial year.
“The Tax Institute recommends keeping up-to-date records of the extent to which you use assets for a business purpose. If you’re not sure whether this applies to you, and the extent of the deduction you should claim for an asset you are using for both business and private purposes, consult a tax professional.”
Ms Wickramasuriya noted the services of a tax professional are tax deductible, and encourages taxpayers to seek help in preparing their tax return if they need it.
Publication date: 16 Jun 15
Source: The Tax Institute