Seven ways to get a bigger tax refund this year
The end of financial year is just around the corner.
Here are seven steps to getting more money back in your tax refund.
1. Count the cost of a home office
If you work from home, your electricity bill is a deduction that you can legitimately claim in order to boost your tax refund. It falls under the category of a home office expense.
To work out what deduction you may be entitled to, simply multiply the number of hours you work from home by 45 cents.
That's the fixed rate that the tax office allows you to claim. Under this method you can also include the decline in value of office equipment such as computers and faxes but not furniture.
Keep a record of the number of hours you work from home as proof. Let's say you work a total of 10 hours a week from home - at 45c an hour for 10 hours over, say, 48 weeks you're looking at a tax deduction of $216.
2. Split the bill for work phone calls
You don't need to document every work-related call but you do need to keep records for at least a four-week period.
And, of course, you can only claim your work-related calls, not your personal ones.
Let's say, for example, you pay $69 a month for your mobile phone plan. You estimate that 50% of your monthly calls are work related, so you'll be able to claim $414 on your tax return as a deduction.
3. Buy a car for an immediate benefit
If you're self-employed and are in the market for a new or used car, you may be eligible for an immediate tax deduction if it costs less than $20,000. But hurry - you only have until June 30 to take advantage of this deduction.
After this date the old rules (which require assets to be written off over their effective lives) will come back into force. This instant tax break applies to any items of machinery or equipment that are used in your business.
But remember that deductions are only useful to offset against tax. If your business makes a loss, then a tax deduction is of little benefit because you're not paying any tax.
4. Remember expenses for an investment property
If you're buying a microwave or range hood for your investment property, choose one that costs less than $300 - that way it's an outright deduction. Don't forget to include any shared assets.
Quantity surveyor Washington Brown says most investors overlook this.
For instance, say an electric motor for the garage door costs an apartment block $2000.
If there are 50 units in the block, your portion is $40. You can claim that $40 outright as your portion is under $300. If it costs more than $300 you'll have to write off the cost over the life of the asset.
5. Top up super and get a $500 gift
If you earn $36,021 or less the federal government pays 50c for every dollar you contribute to your super fund up to a maximum of $500 a year. So pop $1000 into your account and you'll receive a $500 tax-free contribution. Put in $600 and the government will pay $300 into your super fund.
If you earn more than this then your co-contribution entitlement reduces by 3.33c for every dollar you earn over the threshold. It cuts out at $51,021.
It's worth visiting the tax office's online calculator to work out what you're entitled to.
6. Prepay your subscriptions
When it comes to generating a quick tax deduction, prepaying expenses may be an oldie but it's a goodie. You can claim a deduction for prepaying any deductible expense that you will incur in the next 12 months. This could include subscriptions, membership of professional associations and contracts for property repair and maintenance.
Tax agent fees for preparing your return can also be an immediate deduction. And if you have an investment loan, prepaying next year's interest is another way to generate a quick deduction.
7. Take cover before your 31st birthday
If you don't take out hospital cover before July 1 following your 31st birthday you may be stuck with a 2% loading on top of your premium each year for every year you're aged over 30 and do not have private hospital cover, up to a maximum loading of 70%.
The good news is that if you were a little late getting basic hospital cover initially, once you have had it for 10 continuous years your health insurer can't continue to charge you the loading.