Tax Time Tips!
For many Australians, navigating the tax system can be quite overwhelming.
But like death, tax time is inevitable – as the saying goes. So to help take the stress out of tax returns and maximise your return, H&R Block Director of Tax Communications, Mark Chapman had some tips for our listeners on The Daily Drive this week.
- If you have a simple tax return with not many deductions, lodge it through MyTax.gov.au yourself. If it’s any more complex than that, say you have a rental property, business, investments or lots of deductions - it’s best to use an agent.
- The cost for engaging a tax agent starts from around $100 and will go up from there depending on how complex your return is but remember the cost is tax deductible.
- 96% of small businesses in Australia use an accountant because it can get complicated when you have to deal with GST, BAS and payroll. Also don’t send out invoices until after July 1 and you’re moving the tax liability to next financial year.
- If you’re part of the Sharing Economy, ie you drive for Uber or do odd jobs, you do have a tax obligation. Many people wrongly believe it’s just a hobby but it’s not, it’s taxable and there is no threshold. If you are advertising your services through a commercial website like Uber or AirBnB, that’s considered assessable income.
- Charity donations of $2 or more are deductible but always check on the Australian Business Register if you’re donating to a deductible gift recipient as some not-for-profits are not deductible.
- $22 billion Australians claim work related deductions each financial year. The vast majority of these are legal but some people over claim and some don’t claim at enough. If you’ve incurred expenditure as part of your job you can usually claim.
- Remember to keep your tax records for 5 years. These days the ATO accepts electronic copies so scan your paperwork onto your phone or computer to save having boxes of receipts all over the house.
- The penalties for over-claiming can be severe. You’ll have to pay the money back at around 9% interest and could be fined between 25%-90% of the unpaid tax. Plus there’s the stress of dealing with the ATO, the possibility of an audit. Audits are not common though, no more than 1% of taxpayers will be audited.
- And finally, if you earn over $180,000 you should consider deferring your taxable income as there is a tax cut coming into effect on July 1. If you’re expecting a bonus, defer it to next financial year and you’ll pay less tax….