The tax season is a time some people look forward to as they have paid their taxes all year and are looking to get a nice refund to compensate for all the tax deductible expenses they have paid throughout the year.
There are a few new changes in legislation that can help the common Australian get some well earned tax relief.
Deductable expenses depend on your industry, however a general rule is that is your expenses has a directly correlation with earning your income then you are able to claim it as a tax deduction.
Mobile Phone deductions
If you use your mobile phone to make work calls, text messages or use the data for work purposes then you are able to make a claim. To substantiate the claim you will need to have a record that justifies the work related percentage of your mobile phone expenses that you intend to claim. Please note that you are not able to claim mobile phone expenses if your employer reimburses you or pays your bill.
Motor Vehicle deductions
You can make a claim for work related travel and vehicle expenses provided they meet the eligibility criteria, such a keeping a log book or a log of work related km’s. An important point to note here is that you can’t claim travel from work to home or vice versa. Click here to refer to our help section for more information on this.
Contribute to your super fund
Superannuation contributions are a great way to both save tax and ensure a comfortable retirement. If you earn over $20,000 then you will start to pay tax at the lowest bracket of 19% per dollar, this rate will gradually progress with the more you earn.
You can contribute up to $25,000 as a concessional contribution, however this amount includes the amount that your employer contributes as a part of your employment. In brief, the main advantage of doing this is that you will be able to claim a tax deduction for the amount you contribute. So basically you will get a tax saving at your marginal rate, however a tax of 15% will be applied in the superannuation fund. Click here to see our article on personal super contributions.
Ensure your health insurance is at the correct level.
If your income is $90,000 as a single adult or $180,000 for a family and you don’t have private health insurance then you will be required to pay the Medicare Levy Surcharge (MLS). The MLS is at least 1% of your adjusted income and basic private health insurance is usually less than 1% of your income.
Based on this information, it could be cheaper for you to take out private health insurance instead of paying the Medicare levy surcharge.
Have a look into what private health insurance is relevant to your circumstances and then work out if it would be cheaper for you to have it than not have it.
Ensure you a covered with income protection insurance
Income Protection Insurance is an insurance that will replace your income if you are unable to work due to injury or sickness.
A great benefit of having Income Protection Insurance is that it is Tax Deductible if it covers your regular income!
Claim your donations
The ATO allows people to claim a tax deduction for any donations given to a deductible gift recipient (DGR)!
You are allowed to claim a tax deduction for a gift as long as it meets the following conditions:
• The gift must be to a DGR
• The gift must be money or property
• The gift must be a gift, which basically means you receive nothing in return
Click here for more information
Check our our previous blog ‘Common Deductions that could increase your tax refund’ that lists many other common deductions that could also increase your tax refund.