Don't leave money on the table: An end of financial year checklist to boost your tax return.
The end of the financial year is an important time to review your finances and make the most of available tax deductions. Carefully considering your expenses and maintaining complete records will help ensure you aren't missing out on any deductions that you could claim. In this article, we'll provide a checklist of key areas to focus on when preparing for the end of the financial year.
1. Home Office Expenses:
If you work from home, you may be eligible to claim deductions for expenses related to your home office. These can include your utilities, internet bills and office equipment. In certain limited circumstances, it may even include a portion of your rent or mortgage interest. Ensure you have accurate records and calculate the proportion of these expenses that relate to your work activities. The Australian Tax Office has calculators to help you work out how much you may be able to claim.
2. Vehicle and Travel Expenses:
If you use your private vehicle for work-related purposes, such as visiting clients or travelling to different work locations, you may be able to claim deductions for vehicle expenses. Keep track of your kilometres, fuel costs, maintenance, and insurance expenses. Alternatively, you can claim a fixed rate per kilometre for work-related travel.
3. Clothing, Laundry, and Dry-Cleaning:
Some industries require specific uniforms or protective clothing. If you purchase, clean, or repair these work-related garments, you may be eligible for deductions. Ensure you keep receipts and maintain records of the expenses incurred.
Expenses related to self-education or professional development that directly enhance your skills for your current job may be tax-deductible. This includes course fees, textbooks, and travel expenses associated with attending conferences or seminars. Keep track of these expenses and ensure they are relevant to your occupation.
5. Industry-Related Deductions:
Certain occupations have specific deductions available based on the nature of their work. For instance, teachers can claim expenses related to classroom resources, such as books, educational materials, or supplies. Research the deductions applicable to your industry and ensure you have sufficient documentation to support your claims.
6. Other Work-Related Expenses:
There are various other expenses that may be eligible for tax deductions, such as mobile phone bills, professional subscriptions, and union fees. Keep a record of these expenses and ensure they are directly related to your work activities.
7. Gifts and Donations:
If you have made charitable donations, you may be eligible for tax deductions. Keep receipts and documentation to substantiate your claims.
8. Investment Income:
If you have earned income from investments, such as dividends or rental payments from investment properties you may be entitled to claim for costs related to this income. Keep records of income and expenses associated with your investments, including interest on loans, property management fees, and repairs. You may also be able to claim money you paid for investment advice.
9. Capital Losses
When it comes to claiming capital losses, it's essential to understand the tax implications and rules. Capital losses occur when the sale of an asset results in a decrease in its value compared to its original purchase price. These losses can be utilised to offset capital gains and reduce your overall tax liability. Examples of capital losses that can be claimed include selling shares at a lower price than the purchase price, selling real estate below its original cost, and selling cryptocurrencies at a decreased value compared to the purchase price.
Maintaining Complete Records:
Finally, regardless of the specific deductions you plan to claim, it's crucial to maintain accurate and complete records of all your income and expenses. Keep receipts, invoices, and bank statements organised and easily accessible. Consider using digital tools or apps to help streamline the record-keeping process and ensure you don't miss any deductible expenses.
» Note: It's important to keep in mind that everyone's financial situation is unique, and tax laws can be complex. While this checklist provides an overview of common deductions, it's advisable to consult with a qualified tax professional or accountant to ensure you fully understand the deductions applicable to your specific circumstances. They can provide personalised advice based on your situation and help you maximise your deductions while remaining compliant with tax regulations.
» Remember, seeking professional guidance can provide peace of mind and ensure that you make informed decisions regarding your end-of-year financial planning.
For further details on which expenses you can claim as income tax deductions visit the Australian Taxation Office website.
This information is general in nature and does not take into account your objectives, financial situation or needs, therefore, you should consider whether this information is appropriate for your personal circumstances before making a financial decision.