Tax time requires that we are all well informed about possible deductions and awareness of who the ATO is especially targeting. We have provided some helpful hints to assist your taxation planning.
Here are some important tips for tax time:
- Keep updated about changes.
There are some changes that may affect you this tax time, in particular:
- The mature-aged worker tax offset has been removed, which means it cannot be claimed on your 2015 tax return.
- You will be only eligible to claim the net medical expenses tax offset if you received it in your 2013-14 tax assessment. However, if you have out-of-pocket medical expenses related to disability aids, attendant care or aged care you are still able to claim them.
- You can no longer claim the Dependent spouse tax offset. If you have claimed the Dependent spouse tax offset by a withholding arrangement with your employer this may result in you having a tax debt this year. You will need to ensure you submit an updated TFN declaration (or withholding declaration) to your employer for 2015-16 to increase your withholdings.
- Be aware of personal deductions you can claim:
There are expenses you can prove are directly relevant to your job, or to your earnings. These include income protection insurance premiums, work-related travel, magazine subscriptions, professional memberships and work-related assets such as iPads, mobile phones, calculators and laptops. People who are new to self-employment should consult with accountants to ensure none of these items are missed. At issue is not only what you buy, but how you buy it. Remember, a claim-type that amounts to more than $300 in a year must be accompanied by written proof evidence.
3. Have a home office? Claim a deduction for the costs you incur in running your home-office
Many people are unaware that they can claim a deduction for costs incurred when running a home office, even if the room is not solely for work-related purposes. Examples of costs include Internet, stationery and computer equipment. Keep a record of the time that you work from home and claim a 34 cents per hour deduction for electricity, gas and depreciation of home-based furniture.
- Keeping good records, like a car log book, could save you thousands.
In order to prepare an accurate tax return and support the claims you make, you need to keep correct records. Remember that the ATO motto is no receipt = no deduction, so you could be losing money by not keeping your receipts!
If you use your car for work purposes then keep a logbook and claim deductions. Make sure that you keep all costs associated with the running of your car (such as petrol, insurance, registration) for the whole year. If it is the first time you have used a log book then you must keep track of your travel during the income tax year for at least 12 continuous weeks. These 12-weeks need to be representative of your travel throughout the year. The log book is valid for 5 years if there is no change in your work usage of car.
- Buy a new business asset
Small businesses can claim an immediate deduction for assets that cost less than $20,000 if they start to use or have installed it ready for use.
Seek advice from your accountant to minimise your tax payable: accountants can help find claims you did not know existed, organise your files, and make sure your tax returns are complying with ATO standards. Accounting fees are tax deductable too!
ATO CRACKDOWN
The latest ATO welfare and tax crackdown will see the financial records of over 10 million Australian taxpayers scrutinised in the coming months. Here are a few highlights of the recent ATO crackdown:
- Credit Cards: The ATO has requested taxpayers’ credit card records from 10 major banks, so they can learn more about your finances and spending.
- Vehicles: The details of anyone who has bought a vehicle for more than $10,000 in the past two years will also be handed over. Why? To help detect people who are able to spend much more than their reported earnings.
- Ebay Power Sellers: If you’ve earned more than $20,000 selling on eBay then your details will likely be handed over for the ATO to check whether you’ve paid tax on those earnings.
- Welfare Cheats: If you received government payments then your details will be under the ATO microscope, especially if you earned any income you haven’t reported.
- Property Investment: Property investors can claim deductions on depreciation, borrowing and interest expenses as well as council rates and agents’ fees. However, property investors need to ensure they are doing everything by the book as this year the ATO is cracking down. The ATO will be paying particular attention to holiday home owners to check they are not making false claims about the property being available for rent. Remember that ATO can cross-check with third party data such as property listing websites.
Tax time can be stressful but rewarding if you maximise your returns and are aware of ATO regulations.
If you have any questions or queries regarding any of the above information; please don’t hesitate to get in touch with the team here at Fortis Accounting Partners. You can reach us on 02 9267 0108, or via info@exemplary-financial.flywheelsites.com.
