End of year tax tips 2011
Here is a definitive guide to tax planning that will take the stress out of claiming your tax return.
The financial year is drawing to a close and taxpayers are gearing up for anxious times. With tax reporting and filing returns not getting any easier, most of us get caught up with paperwork to the exclusion of a number of possible hidden benefits.
Keeping this in mind, here is a definitive guide to tax planning that will take the stress out of the procedure and will also help you claim a larger chunk from the Australian Tax Office.
Who Needs to File Returns:
Most people need to lodge a tax return by June 30 each year barring few exceptions. According to the ATO website, you do not have to file a return if:
Your only income at 30 June was salary and wages, you earned less than your tax-free threshold ($6,000 for most people) and your payer did not take any tax out of your pay
The only income you received for year end 30 June was from Centrelink (including CDEP payments) and you did not have any tax taken from it all your income for 30 June was exempt income
You were under 18 years of age on 30 June, you received not more than $1750 from sources other than salary or wages.
You must have paid the expense in the year you're claiming it, so they have to be between 1 July 2010 and 30 June 2011.
What Can You Claim?
According to the ATO, approximately 7.3 million Australians claimed an average of $2,008 in work-related expenses last year, making them one of the most commonly claimed deductions.
The expense must be related to your work and not personal use and should have been made before Friday. You can claim up to $300 of work-related expenses without receipts.
However, for claims exceeding that amount, you must produce receipts.
"If you're claiming more than $300 of deductions you need evidence" warns financial expert David Koch, "It's really important you keep records of these expenses throughout the year."
Kochie also advises against claiming home internet connections and electricity bills when you don't really work from home. Also if you were reimbursed by your employer for a work-related expense then you can't claim it in your tax return, you've already got your money back.
Work out your income tax liability according to the ATO's personal income tax scales by using our Income Tax Calculator.
Remember if you were reimbursed by your employer for a work-related expense then you can't claim it in your tax return, you've already got your money back.
It's worth checking your medical expense rebate as changes have been made to the claiming limit. Also make use of the education tax refund (rebates differ for primary and secondary school students).
Foreign Income:
A resident of Australia must declare all foreign income-but they may get a credit for overseas tax paid. if you worked overseas get payslips.
Investments Can Boost Refunds:
Many services that relate to maintenance and upkeep of investment properties can be claimed as a tax deduction. This includes expenses such as lawn mowing, pool maintenance and certain financial advice and other professional services related to an investment property.
Deferring Income Helps:
Put off receiving income until next financial year if you're likely to earn less in FY 2010-11. This will also allow you to take advantage of the Government's last round of personal tax cuts for low and middle-income earners. Kochie suggests if you have your own business, try to hold off invoicing your clients until July.
Super is Super:
Making a contribution to your dependant spouse's superannuation is a big way of getting a tax offset.
Self-employed people aged under 50 years can put up to $25,000 into their super fund and claim a tax deduction.
Those aged over 50 may be able to contribute up to $50,000. The money going into super is only taxed at 15 per cent rather than the person's marginal tax rate.
Business Owners Beware:
New business owners often do not understand taxation and end up losing out. Therefore, it's best to business and personal expenses separate and use a dedicated business card.
Final Reminder:
"You need to keep your all tax records, including expense receipts, for five years incase the ATO wants to take a second look" adds Kochie, "If you are a tradesman, flight attendant or work in real estate I strongly encourage you get your hands on one of the new ATO guides for your profession to help you get your claims right. The taxman will be paying you extra attention this year."
Visit the ATO website for more information on what you can and can't claim
Courtesy of http://au.pfinance.yahoo.com/moneyandyourlife/money-tips/article/-/9755503/end-of-the-year-tax-tips/
