Six top tips that mustn’t be overlooked at tax time

There are multiple ways to help maximise your super at tax time.

There are multiple ways to help maximise your super at tax time. Photo: Getty

The end of the financial year is upon us, and with the tax office keeping a close eye on expense claims this year Australians are being urged to get their ducks in a row.

H&R Block’s Mark Chapman said it wasn’t too late to get returns into shape to maximise this year’s refund despite Monday marking the start of a new financial year.

Australians are also being urged to think about their superannuation ahead of July 1 – but you’ll have to be quick. Government programs are available that could mean you’re eligible for tax offsets or taxpayer co-contributions, particularly if you’re able to save extra into your nest egg.

Aware Super head of advice Peter Hogg said programs such as the low-income super tax offset and super government co-contributions were available, alongside the first-home super saver scheme.

“It’s not just the end of the tax year, it’s the end of the super year as well,” he said.

“We know there’s a lot of pressure on people with the cost of living and inflation.

“One of the ways to combat that is to take advantage of any government concessions and incentives that give you more money back in your pocket.”

1. No rush

The first thing to keep in mind is that there’s no rush to file a tax return, with the Australian Taxation Office actually saying that those who file early will be under more scrutiny.

“We see lots of mistakes where people who rush to lodge early have forgotten to include interest from banks, dividend income, payments from government agencies and private health insurance details,” ATO assistant commissioner Rob Thomson said.

‘We know some prefer to tick their tax return off the to-do list early and not think about it for another 12 months, but the best way to get it right is to wait just a few weeks to lodge.”

2. Prepaying expenses

Before July 1, you’ll want to take care of annual expenses that you can claim deductions for, Chapman said.

“If you have some spare cash, consider paying things like union fees, professional subscriptions and annual insurance premiums by 30 June in order to accelerate the deduction,” he said.

Last-minute charitable donations can also reduce your overall tax bill, with deductions available for donations of more than $2 to a registered charity – as long as there are receipts.

“Make sure you have written evidence, such as receipts, invoices and bank or credit card statements, for everything you intend to claim,” Chapman said.

3. Working from home

A much larger proportion of the labour force is working from home post-Covid, and the rules around how expenses related to this work can be claimed have changed repeatedly in recent years.

The ATO offers two methods for submitting remote work expense claims: Fixed rate or by actual costs.

Chapman said the fixed rate method allowed remote work to be claimed as a flat 67 cent an hour rate, provided there was a real-time record of these hours.

“You must be able to prove the number of hours that you worked from home during the entire tax year, so you’ll need a diary, copies of time sheets or rosters,” he said.

H&R Block says eligible expenses in work from home claims include:

  • Heating, cooling and lighting
  • Cleaning costs
  • Decline in value (depreciation) of home office furniture, fittings and equipment
  • Computer consumables, stationery, telephone and internet costs.

Equipment that costs less than $300 can be written off in full immediately.

Alternatively, taxpayers can calculate their expenses using actual costs. Chapman said that required copies of each and every relevant invoice and a “reasonable” estimate of the percentage split between work and private use.

4. Consider a super contribution

Chapman said Australians “with some spare cash” could consider making a voluntary contribution into their super fund.

That’s because the government takes less tax from income deposited into super. You might even be eligible for co-contributions up to $500, depending on your income level.

“The payment must be in your super fund’s bank account by June 30th and you need to advise your super fund that you’ve made the payment by the time you’ve lodge your tax return,” Chapman said.

“Your super fund or accountant can give you guidance on how to complete the form and there’s a standard form on the ATO website here.”

5. Low-income super tax offset

Australians with taxable incomes up to $37,000 are also eligible for refunds into their super of the 15 per cent tax paid on earnings from their employers.

In other words, if you’re working on a low income or part-time, then the government will refund the income tax it charges on the portion of your wages that goes into your superannuation.

Thankfully, Australians don’t need to apply for the LISTO and will benefit automatically if eligible.

6. First-home super saver scheme

Another program available to those saving a house deposit is the first-home super saver scheme, which differs from the policy proposed by the Coalition that would allow people to raid their super for a home deposit.

This program works as a salary sacrifice-style arrangement in which you save a certain amount of money towards a house through additional contributions to your super fund.

The government taxes those savings at 15 per cent, which is much lower than income tax, while savings will have the benefit of compounding a larger retirement fund when earning returns.

It’s important to carefully consider entering into such an arrangement, though, because it does have tax implications and there are conditions on the release of the funds for a deposit.

The tax office has more information about the program, as well as all the rules, on its website.

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