Maximise the value of this year’s tax refund by preparing well in advance
With the end of the financial year almost upon us, it’s time to knuckle down and begin planning your tax return.
All too often, people leave doing their return until the very last minute. Not only can this result in omissions, errors and other problems, it can also mean you miss out on part of your refund.
With a little organisation and effort, however, you’ll be in a far better position to minimise your tax liability and maximise your deductions – meaning more money in your pocket.
Here a few simple strategies to keep you on the right track at tax time:
1. Know what you can claim
Knowing what you can and can’t claim is the first step to maximising your tax refund, as well as to minimising any problems due to an inappropriate claim.
This is particularly important when you have an investment property – while there are plenty of tax benefits you need to know what they are and how to use them to your advantage.
Deductible expenses also vary between occupations so it’s not surprising that thousands of Australians find themselves in hot water each year.
The Australian Taxation Office (ATO) has full details of allowable deductions online, broken down by individual occupation.
The user-friendly guide is free to download and should be the first stop for all who are unsure about what they can and can’t claim.
2. Keep track of all expenses
As a rule of thumb, you should save receipts for every work or education-related expense you incur during the year. You’ll be surprised at what you can claim, and will only cut yourself short by throwing away receipts.
You should also keep all important financial statements, including those for bank accounts, credit cards and home loans.
This will also help highlight other areas where expenses can be claimed –especially if you have an investment property.
3. Bring in the experts
To ensure you claim every deduction available, using a professional tax accountant would be a good investment – especially if you have any sort of investments, property or otherwise.
While a professional tax accountant will charge a fee, you can rest assured that every deductible expense has been included.
Moreover, the chances of being called up before the tax man will be dramatically decreased.
This is also a good opportunity to begin planning your tax return for the following year. Speak to your accountant about any tax incentives you should be aware of and expenses you should take note of over the next 12 months.
Your final question should be, ‘What will I do with my tax refund?’
It would be wise to use a majority of the refund to put towards paying off your home loan or any other outstanding debts you might have.
Consider your return as an annual savings payment that can be used to offset any rising debt and drive your mortgage down more quickly, saving you thousands of dollars over the longer term.
