Here are some excellent tips for you to get your house in order and increase your tax refund.
1. Car logbook
Deductions can be in the thousands if you use your car for work purposes and keep a log book for 12 weeks. Keep all costs associated with the running of your car.
2. Super co-contribution
If your income is under $31,920 and you contribute $1,000 post-tax into super, the Government will match it dollar for dollar. It amazes me how few people actually take advantage of this extra $1,000. Whilst the co-contribution is less generous this year, it is still free money!
3. Education Tax Refund
Don’t miss out on this tax rebate which gives a 50 percent refund on certain education expenses up to $780 expenditure for each primary school child and $1,559 for each secondary school student. You must be eligible for Family Tax Benefit Part A to receive this.
4. Minimise Capital Gains Tax (CGT)
The stockmarket had a bumper year this year so you may have made a nice capital gain or two. Reduce CGT by selling any non-performing shares that you may be holding. Any unrealised gains should be sold after 1 July to defer tax for another year. And remember that if you hold shares for more than 12 months, you reduce CGT by half.
5. Salary sacrifice into super
For those under 50 years of age, you can contribute up to $25,000 per year into super and only pay 15 percent tax. This figure increases to $50,000 if you are over 50. Build your wealth quicker rather than paying up to 46.5 percent.
6. Prepay interest
Prepaying interest 12 months in advance before year end on your rental property or margin loan, is an excellent strategy for those that will have a lower income next year due to factors such as maternity leave or redundancy.
7. Keep your receipts
With the ATO increasing its audit activity this year, yet again it is important that you keep your receipts. The ATO motto is no receipt = no deduction so you could be costing yourself dollars by not keeping those dockets!
8. Spouse super contribution
If one spouse’s income is less than $10,800 then the other can put up to $3,000 into the spouse’s super fund and receive an 18 percent rebate ($540) in tax.
9. Get a great accountant
Great accountants are like quantity surveyors: they know where the boundaries are. Avoid paying too much in tax or leaving yourself open to a visit from the ATO. And their fees are tax-deductible!
10. Just do it!
Now you’ve got some great tax tips, it’s time to take action. Times are tough so every dollar saved counts. Remember that effective tax planning should be over 365 days of the year, not merely the few weeks before 30 June.
Source: Dynamic Business E-Newsletter 9 August 2010