How to Maximize your Tax Refund
Everyone would want to legitimately maximize their tax refund. Who wouldn’t?
I scoured through the Australian Tax Office’s website on my first job. I checked every single line there to check for my eligibility. I loved doing it.
So, I listed a few of more generic ones below. However, please please please do check the Tax Office’s website for your eligibility. And also, who knows, you discover a unique tax deduction for your line of work ^.^.
It pays you dividend to be on the err side in claiming offsets and/or tax deductions.
The Tax Office can conduct a tax audit and may request you (if you are audited) to substantiate your expenses, and they may disallow unsubstantiated expenses, which may cause a tax shortfall. What you need to be aware of is there may be hefty penalties on tax shortfall. So, it pays you dividend to be on the err side when you are claiming deductions and offsets.
The more generic Tax deductible expenses:
- Home Office Expenses, check your eligibility on www.ato.gov.au
- Tax deductions for managing your own tax affairs.
- Tax deductions for expenses necessary to be incurred from working in your occupation, such as uniform, sunscreen & sunglasses (for tradesperson)
- Donation to endorsed charities
- Studying expenses, if you are eligible
- Travel expenses if you are eligible
- Car related expenses (if used for working purposes)
- Investment Property tax expenses:
- property manager
- repairs and maintenance
- landlord insurance premiums
- Income Protection insurance premium that is paid not through your superannuation.
- Think through of all expenses that you incur in order to gain income that could be deducted - check in ato.gov.au, because personal expenses generally are not deductible, however some are (sunscreen and sunglasses for tradesperson could be deductible)
How to Track your Invoices/Receipts
During the year, focus in tracking all of your expenses, if you are a salaried worker.
- Take a photo of the receipts
For every receipts, invoices, emails, etc which form proofs (substantiations) for your tax deductible expenses >> take pictures of them!
- Mail the photos to your email
Email yourself (into your gmail, hotmail, yahoo mail, work mail, etc) the photos.
Put it into one email with the right title, for example “Printer Ink September 2015”, “Donation to Monash October 2015”, etc.
- Label it & ‘folder it’ Income Tax Return FY20xx
Once the email of the photos is in your mailbox, label it with the appropriate Financial Year (FY) for example Financial Year 2015 (FY2015) or Financial Year 2016 (FY2016).
In my Gmail, I created labels and folder named ITR FY2015 in which I put all relevant tax documentations for FY2015 affairs.
- Save it into your Google Drive Folder Income Tax Return FY20xx
In your google drive, create Income Tax Return folders, name it Income Tax Return Financial Year 2015, or 2016, etc.
Download the attachments, from your gmail, into the corresponding Income Tax Return folder in your google drive.
- Save it into your harddrive folder Income Tax Return FY20xx
Save another backup into your computer’s or laptop’s or mobile’s hard-drive.
- Save it into box.com, if you want.
At the end of the financial year, you have all of your tax expenses ready to be lodged in the Tax Return.
Tax Return will be a breeze.
More general tax offsets that could be applicable to wider community. For more specific ones, check the ato website.
- Private Health Insurance tax offset
- Housekeeper tax offset
- Low income tax offset
- Medical tax offset
Note: tax offsets reduces your taxable income dollar to dollar.
On the other hand, tax deductions only reduces your taxable income by your marginal tax rate.
This means tax offsets reduces your tax more than tax deductible expenses.
Check for your eligibility before claiming by visiting the Australian Tax Office website on www.ato.gov.au.
If you are unsure, call the ATO Helpline and seek advice, and record the advice (get the receipt ID with time and date of the call, and the ATO Office who assisted you). The purpose is for you to have proof that you are following their advice.