Things to do before July 1 to save money
MANY find doing their taxes a chore but if you take the time now to look over your finances it can end up help you save money and reap the benefits of deductions sooner.
Director of Tax Communications at H&R Block Mark Chapman said the main advantage of taking action now was so you can get your money back from tax deductions sooner.
"If you incur the expense now you can claim your deduction as soon as you get around to completing your tax return," Mr Chapman told news.com.au.
"If you wait until July, you've got to wait another 12 months before you can claim the tax deduction."
It's also a great time to look at your other bills and consider how the get the most out of your money. If you haven't been keeping track of receipts or other potentially tax deductible expenses, you've still got time to get on top of this and reclaim some of your costs. It's never too late to start.
Here are some things you should look at.
DO YOU WORK FROM HOME AT ALL?
Even if you only do the occasional shift at home, you can claim some of the expenses of setting up a home office and powering it. Some expenses you can claim include:
• Heating, cooling and lighting;
• Cleaning costs;
• Decline in value (depreciation) of home office furniture and fittings, office equipment and computers (for items over $300);
• Computer consumables such as stationery, phone and internet costs;
• Equipment that costs less than $300 can be written off in full immediately, for example furniture, computers and associated hardware and software.
Many shops run End of Financial Year sales so it can be a good time to buy equipment.
"Any purchases you make now can be deducted in your tax return from July 1 onwards so from a cash flow point of you, you can minimise the time between purchase and tax deduction," Mr Chapman said.
Just be careful to work out the right proportion of expenses. It is based on the amount of time you spent working from home and also the floor area of the home office you use to work.
You can only claim the costs that relate to when you were working from home and for the part of the home you were working from. You need to be able to substantiate how you worked out your claim if asked by the Australian Taxation Office.
PREPAY YOUR BILLS
For some people it's more convenient to pay your bills weekly or monthly but if you can pay some bills in a lump sum it can help you reclaim some of your expenses earlier.
"You can claim a tax deduction this year for expenses which wholly or partly relate to next year. So, if you have some spare cash, consider paying things like union fees and professional subscriptions in advance in order to accelerate the deduction," Mr Chapman said.
BUY A NEW BRIEFCASE
If you use a bag for work, to carry papers or a laptop perhaps, you can claim a tax deduction for the cost. That could include a briefcase, a backpack or a handbag, whatever suits your needs.
PUT MONEY INTO YOUR SUPER
Those on low incomes or in a relationship where one spouse is not working can benefit from putting money into super.
"In the superannuation space there may be some opportunities, provided you are comfortable with the money you contribute being locked up until you're at least 60 years of age," financial planner Paul Benson told news.com.au.
Couples where one member is either not in the paid work force, or earns less than $40,000 (inclusive of super contributions and fringe benefits), can use super contributions to reduce the tax paid by the other partner.
The higher earning partner can make a contribution of up to $3000 to the non-working partner's super fund and claim a tax offset of 18 per cent, which equates to $540 if you do the maximum contribution.
Those on low wages can also put extra money into their super and receive money from the government. Anyone earning up to about $52,000 can benefit if they put extra money into super.
For each $1 that's voluntarily contributed to super, the government will contribute 50 cents.
IF YOU'RE SAVING FOR YOUR FIRST HOME
The government's new scheme to help first home buyers save for a deposit by putting money into superannuation started on July 1, 2017. Savers will be able to start withdrawing their money on July 1, 2018 after parliament passed the legislation in December 2017.
The First Home Super Saver Scheme allows buyers to put money into super (which means the money will be taxed at a lower rate unless you are low income earner) and then take it out to buy a house.
Super contributions are taxed at the rate of 15 per cent, compared to 45 per cent if you are a high income earner.
To qualify you must be over 18 and not have previously owned property in Australia, either live or intend to live in the property you are buying as soon as practicable, and intend to live in the property for at least six months of the first 12 months you own it, after it is practical to move in.
The amount of money you can take out of super to buy a house is $15,000 from any one financial year and $30,000 in total across all years.
But beware, high income earners may be limited in how much extra money they can put in each year as you're only allowed to put a total of $25,000 into superannuation each financial year. So it may take higher earners longer to gain the full benefit from the scheme.
If you want to top up your super, the easiest way is to make the payment to your super fund before the end of the financial year and you can then claim a tax deduction for the payment through your tax return.
To estimate how much benefit you could get from this scheme, click here.
IF YOU'VE MADE MONEY FROM ANY INVESTMENTS
If you have sold some shares or made money from other investments, you'll have to pay some tax on this.
But you can try and minimise this by getting rid of any assets that are sitting at a loss. The "capital loss" can be offset against the "capital gain".
"Be careful though if you sell shares sitting at a loss and then buy them back in the new tax year," Mr Chapman said.
"The ATO takes a hard line against so-called 'wash sales'."
He said the ATO had issued a tax ruling to cancel any tax benefits in this situation and apply penalties.
It's a great time to donate to your favourite charity as you can claim a deduction for anything over $2 as long as you have a receipt. This will help lower your tax bill and assist a good cause at the same time.
IF YOU USE YOUR MOBILE OR CAR FOR WORK
If you want to claim work-related expenses you need to keep a record of how much you use your devices for work.
When it comes to your mobile phone, you can claim a deduction for business related use. Make sure you have your bills and have kept a log of your business/personal use over a four-week period. That percentage can then be applied to the whole year.
If you claim car expenses, take the time to check your logbook is up-to-date and that you have all the receipts, invoices and records of journeys to substantiate your claim.
CONSIDER INCOME PROTECTION
Many of us have basic income protection provided through super but it's a good thing to get on top of whether you need it, as it is tax deductible.
For those that aren't covered, financial planner Paul Benson advised looking into it now because good quality cover generally required a medical questionnaire as a minimum, and sometimes a blood test and reports from doctors.
"If you can get it done quickly, you could pay the annual premium prior to 30 June, and then get a significant portion back via your tax return only a few months later," he told news.com.au.
REVIEW YOUR HEALTH INSURANCE
Many health insurance companies have announced price increases from April 1 as well as changes to what services will be covered, so if you haven't already, now is a good time to check what you're covered for, whether you should change insurers and even whether it's worth being covered at all.
"Talk to your health insurer about what options they have got because new products come into market regularly and some health insurers have loyalty benefits, so the longer you stay with them the more benefits you get,'' Jan O'Keefe, general manager of Insurer AHM told NewsCorp earlier this year.
BONUS: FOR NSW DRIVERS
Some motorists in NSW are eligible for a cash refund of between $10 and $125 after changes to the state's compulsory car insurance scheme.
You only have until September 1 to claim your refund.
If you were the registered owner of a private vehicle as at midnight 30 November 2017, you may be able to claim the refund for insurance policies bought or renewed before 1 December 2017.
Go to the Service NSW website to make your claim.