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Do you want to get more from your tax return this financial year, but you’re not sure where to start? It could be as simple as knowing which tax deductions and offsets you’re eligible for.
With the end of financial year fast approaching, you might be hoping to claw back some of your hard earned cash when you lodge your tax return this year.
The Australian Taxation Office refunds billions of dollars to individual taxpayers each year, so it’s worth taking the time to maximise your return.
How do I get a tax refund?
A tax refund is a reimbursement of any excess tax you’ve paid to the government during the financial year. The ATO will work out whether you’re eligible for a tax refund based on the details you supply in your annual tax return.
Generally, a refund comes about when you claim deductions for expenses related to earning your income. You may also qualify for certain tax offsets, which directly reduce the amount of tax payable on your taxable income.
You’ll need to keep written records to prove your claim, so stay on top of your paperwork throughout the year. Here are some of the more common deductions and offsets you might be eligible for.
Working from home
If you’re working from home, you’re eligible to claim deductions for certain work-related expenses. The easiest way to work out your deduction is using the temporary ‘shortcut method’ introduced last year. It allows you to claim a deduction of 80 cents for each hour you work from home. You’ll need to keep a record of the hours you worked, in the form of a roster, diary, timesheet or similar to prove your claim.
If your spouse or partner earns less than $37,000 this financial year, and you contribute $3000 to their superannuation account, you could be eligible for a $540 tax offset. If your spouse earns up to $40,000, you may still be eligible for a part-offset amount.
For some people, making top-up concessional super contributions is an effective way to reduce your taxable income. It works like this: You’re allowed to claim a tax deduction for the amount of any personal, ‘after-tax’ super contributions you make in a financial year (e.g. from your take home pay), up to your concessional contribution limit. The contribution is then taxed at 15 per cent in your super fund, instead of at your marginal tax rate. So depending on your income, this could mean a tax saving.
There are eligibility requirements and you need to let your super fund know in advance using a Notice of intent to claim form. Speak to a financial advisor to find out if this strategy is right for you.
Not a tax refund as such, but this is a great way for low-income earners to top-up their super balance at tax time. If you earn less than $39,837 and you make an after-tax contribution of $1000 to your super, the federal government will provide a $500 co-contribution. If you earn up to $54,837, you’re still eligible for a part contribution, provided you meet all the eligibility criteria.
Last, but not least, it’s worth mentioning that costs associated with preparing your tax return are tax deductible – so don’t hesitate to consult a professional tax adviser.
If you’re wondering what to do with your tax return this year, or just need some advice on reaching your financial goals, a CERTIFIED FINANCIAL PLANNING® professional can help. You can find one near you using our Match My Planner tool.