From Melissa Browne – SMH
The end of the financial year is only a few weeks away and the key to getting a better return this year is to do something rather than hope that it happens. So if you’re like me and would rather spend your money on shoes, then here are my top 10 tips to save tax and to have more cash in your bank account.
1. Working from home
Work is no longer the domain of the office so make sure you keep a diary for four weeks to track your internet usage and the hours you are working from home.
2. Make a donation to charity
Some tax savings can make you feel good. Make sure any donations to charity are made before June 30 and ask for the receipt to be issued in the name of the highest-income earner.
3. Organise insurance
Most people are covered for an injury when they’re at work, but forget about the weekend. Income protection insurance protects you away from work and it’s also a tax deduction. If you don’t have private health insurance and are approaching 30 or the Medicare levy surcharge limits, then you might want to ensure you are covered for the 2014 year by taking out hospital cover by July 1.
4. Deductions and income
It makes sense that, where possible, deductions are claimed by the highest-income earner and income by the lowest. So if you’re earning a lot of interest on your bank account and your partner is in a low tax bracket, consider keeping the earnings in their name (with both of you as signatories of course).
Make sure your logbooks are up to date. For motor vehicles this means your logbook needs to be less than five years old.
6. Claim everything you are entitled to
Make sure you know what you can claim. For example, if you are on the road for work (or work outside) you can claim sunscreen. So if your foundation, lip-balm or moisturiser has an SPF factor then you may be able to claim it.
7. Use a credit card or eftpos for your expenses
If you are an individual taxpayer the ATO now recognises bank statements as proof of a claim. So if you are shocking at keeping receipts then make sure you use credit card or eftpos for your tax-deductible expenses.
8. Wealth creation strategies
Consider borrowing to invest in shares or property to reduce tax and build wealth, or salary-sacrificing to superannuation.
9. Rental property
If you have a rental property and also a mortgage on your home then it is usually wise to pay interest only on your rental property to maximise your deduction. If your property is less than 40 years old, you should also be claiming depreciation on the building and the fixtures.
10. Capital gains
If you made a capital gain this year on the sale of shares or property and are carrying some poor-performing shares (which many of us are) then consider selling them prior to June 30 so your capital loss can offset some or all of the capital gain.
Saving tax is a little like trying to find the perfect pair of jeans – it requires research and a little bit of legwork, and even though it can be a struggle, you’ll always be happy you did. My suggestion is to pick one or two things you can easily do before June 30 and then, as a modern-day philosopher once declared, just do it. After all, as the late Kerry Packer once famously said, ”Pay your taxes, just don’t tip them. They’re not doing that good a job.” Of course, if you need more help, make sure you phone your accountant.