1. Use the electronic payment method for receiving your tax refund
When lodging your tax return with the ATO, your refund will be directly deposited to you rather than by cheque. Generally, it will be deposited into your account much faster and you can immediately use that money to start earning interest or for other investment opportunities. A cheque comes via the post and takes at least 3 days to clear. You can also set up banking alerts with some accounts and have it notify you when the amount arrives.
2. Consider salary packaging items instead of purchasing them yourself
There are certain tax advantages in doing so, depending on your employer and your income tax bracket. Check with your employer regarding FBT (fringe benefit tax) policy and items you can salary package as there may be existing policies in place. Consider items like cars (this will become more tax effective the more kilometers you drive), superannuation, computers, mobile phones, and gym memberships. Using pre-tax dollars rather than post-tax dollars can represent significant savings!
3. Monitor Superannuation and consolidate to save on fees
Super is often overlooked by many people. In fact, most people have more super in their accounts than in their bank accounts. However, we only tend to check it once a year when the super statement comes out! Regularly reconcile your super account with your payslip to ensure the amounts are correct. It is estimated that there is in excess of $10 billion in lost or unclaimed superannuation. Check out the following site to see if you have any unclaimed super. You may also have super spread out amongst several funds. This is not ideal. Consolidate all your super into one account to save on the fees.
4. If you owe money to the ATO, beware that there are general interest charges & penalties for late payment
The general interest charge (GIC) also incorporates a high “penalty” rate of interest. Late payment attracts the attention of the ATO (audits!!!), which is not good!. Regularly pay on time and note the due dates in your calendar. If you have a valid reason, you can ask for remission of interest or penalties by writing a letter to the ATO.
5. Ensure you have a good record keeping approach for tax deductions
Regularly file tax receipts and avoid using the shoe box approach. You will be surprised by how many tax deductions get missed. Use a separate credit card for work related expenses. Did you know that your credit card statement can be used as a “receipt” to substantiate expenses being claimed for tax purposes? A nice rule of thumb is to use a single credit card for all your work related expenses.
6. Consider the timing of lodging your tax return
If you are in tax refund position, do your return as soon as possible. The sooner you do your return, the sooner it will be processed and you will get your tax refund. However, if you are in a tax payable position, lodge as late as you can (within the lodgement dates of course!). As you can put the money to better use than the ATO! Consider using a tax agent as the due date for lodgement will be extended.
7. Check the specific deductions for occupation types
The ATO has prepared a deduction guide for 20 occupation types. The Guide shows what the ATO considers to be reasonable deductions for each individual occupation. Have a look as you will be surprised at what you could have claimed.
8. Net medical expenses tax offset
You can claim 20% of medical expenses over $1,500 as a tax offset. There is no upper limit on the amount that can be offset. So, if your medical expenses were $10,000, the tax offset would be $1,700 or ($10K – $1.5K) x 20%. Note that cosmetic surgery without a medicare benefit is not allowed to be claimed.
9. Income protection insurance
If you have income protection insurance, the ATO allows you to claim this as a work-related expense.
10. DIY tax planning (income tax)
Around May or June, take the latest copy of your payslip and calculate roughly what your total Taxable Income will be by the end of the year.
If your taxable income is border lining between two tax brackets, then it may be in your interest to claim some deductions to move to the lower tax bracket. Have a look at the individual tax tables from the ATO as follows.
http://www.ato.gov.au/individuals/content.aspx?doc=/content/12333.htm
If your taxable income is border lining between two tax brackets, then it may be in your interest to claim some deductions to move to the lower tax bracket. Have a look at the individual tax tables from the ATO as follows.
http://www.ato.gov.au/individuals/content.aspx?doc=/content/12333.htm
Example
If you will have a taxable income of $82,000 by June 09, that will put you in the 40% tax bracket. Your employer should have been taking out tax during the year at the rate of 40%.
Now, you know that you need deductions of at least $2,000 to drop to the lower 30% tax bracket. You may decide to use various tax strategies like salary sacrificing to super, attending a work-related course, or other tax deductible expense.
So, the tax withheld on $82K by your employer should be $20,076 (based on ATO monthly PAYG withholding tables). But, if you reduce your taxable income to $80,000, the tax payable is only $19,200.
11. DIY tax planning (HELP / HECS repayment)
As per No.11, you can also assess your taxable income as at June 2009 to determine whether you are border lining the repayment thresholds for the Higher Education Loan Programme (HELP).Have a look at the HELP repayment thresholds for the year ended 30 June 2009.
No comments:
Post a Comment