Top 5 Tax Tips
Tax time can be painful, which is why some people use a tax specialist. However, if you’re new to tax or would prefer to figure it out for yourself, then this tax tip guide is just what you need. Learn which deductions and benefits are currently available and make the most out of your tax return this year.
1. The tax-free threshold
All Australian residents receive a tax-free threshold. That is, the first $18,200 of your yearly income is not taxed. However, the rules differ if you are not an Australian citizen or you live or work overseas. Check with the Australian Tax Office or a tax specialist if you’re unsure.
2. Car allowance
If you use your car for work, you might be eligible to claim for some running costs. There are four methods to calculate car allowance deductions, but you can only choose one. Be aware that you must own the car you are claiming for, and you cannot include the commute between home and work in your calculations.
- Cents per kilometre
Claim a set amount for each kilometre you drive for work, up to 5,000 kilometres. With this method, there’s no need to provide formal evidence, but keep a diary or records just in case.
Claim the business-use percentage of each car expense, based on the logbook records of your car’s usage. You must keep a logbook for at least 12 weeks and keep written records of expenditures.
- One-third of actual car expenses
If you’ve travelled over 5,000 kilometres in the tax year, you can claim one-third of your total costs. However, you will need to provide written evidence of all expenditure.
- 12% of the original value
An alternative for travel of more than 5,000 kilometres a year, is to claim 12% of your cars initial value. However, there are limits for luxury cars.
3. Home office expenses
It’s becoming increasingly common for people to work either partly or wholly from home. If you fall into this category, then there are certain expenses you can claim for, such as:
Depreciation costs on:
- Mobile phones
Work-related expenses for:
- Phone calls
- Furniture and fittings
- Printer consumables
To make it easier, you can also use a fixed rate of 45 cents per hour to calculate general expenses. Record the number of hours you use the home office, then multiply that by 45 cents per hour.
4. Salary sacrificing
Salary sacrifice is an agreement with your employer, to ‘sacrifice’ a part of your salary to pay for goods or services. This process effectively reduces your taxable income and, in turn, reduces your taxes. Sacrificed salary can be used for:
- Health insurance
- School and childcare fees
It’s important to note that the agreement needs to be in place before the work commences.
5. Superannuation co-contributions
To help you save for retirement, the Australian Government has an incentive program. This program rewards you for making eligible personal contributions to your superannuation fund. Subsequently, you may be eligible to claim a tax deduction for the contributions you make.