Tax time is always exciting for us here at Rowe Partners but we understand that it can often create stress and anxiety for our clients. That’s why we work so hard all year round to make the End of Year process as easy for you as possible and provide you with the highest quality and most up-to-date tax advice.
In this blog, Dylan Cammarano, a senior accountant and Associate from our Rowe Partners office in Port Augusta, offers some handy advice in “5 Key Tips to Managing Your Taxes” that will ensure you maximise every deductible dollar, improve your financial position and minimise tax time stress!
1. Personal Super Contributions
Individuals can contribute money into their superfunds as a personal concessional contribution and may be able to claim as a deduction their tax returns. The concessional contribution cap for the 2020-21 financial year is $25,000. Be mindful to not exceed this cap as you could be at risk of not being able to claim it as a deduction. The cap includes superannuation guarantee payments from your employer as well as any amounts you may have salary sacrificed. Remember, the funds must be received into your superfund prior to the 30th of June and you need to advise your superfund that you’re intending to claim as a deduction. Please seek out financial advice from one of our expert accountants or your financial advisor before making this decision as your circumstances may differ.
Do you have a financial plan? Are you on track to achieve your goals? Your superannuation is not the only wealth creation strategy available to you. Talk to your Rowe Partners accountant about the extensive range of financial planning services we offer through Rowe Partners Financial Planning.
2. Keep your Receipts!
Remember to keep your receipts! Even if you are not sure whether you can claim or not. One of the most common problems our accountants come across in tax season is clients forgetting to file or store away their receipts for tax time. The ATO requires individuals to have legitimate tax invoices to be able to make a claim in their tax returns. Therefore, losing the receipts means not being able to deduct the expense in their tax returns and missing out on precious tax dollars. Our solution is to have a filing system that works best for you. Whether that means placing it in one of our Rowe Partners envelopes or even taking a photo and storing in your photo album, a system ensures you don’t miss out on tax deductions that you could be claiming. Also, a key reminder, hold your receipts for 5 years in case of an ATO audit.
Want a better way to manage your receipts? Ask us about DEXT.
3. Avoid the Medicare Levy Surcharge!
For those that don’t have private health insurance, it may be worth getting it now not only for the additional health advantages but also to avoid the Medicare Levy Surcharge. Individuals whose income exceeds $90,000 and families with a combined income greater than $180,000 will have to pay the Medicare Levy Surcharge if they don’t have basic hospital cover. The surcharge can be up to another 1.5% of your income which is on top of the 2% Medicare levy. Be aware, the surcharge is based on the number of days in the financial year you are not covered and therefore you cannot purchase private health insurance late in the financial year to avoid the surcharge. Also, private health extra’s such as dental, physio and chiro doesn’t avoid the surcharge, only basic hospital cover.
4. The Short-Cut Home Office Deduction
Due to the Covid Pandemic, working from a home office has become the norm in some industries. You may be able to claim a deduction for home office use for items such as electricity, office equipment, phone, and internet expenses. The ATO has allowed a short-cut method that enables you to claim a home-office deduction for your 2020-21 tax return. This allows an 80-cent deduction for every hour you’ve worked at home during the pandemic. You just need to keep a diary or record of the number of hours you’ve worked from home. However, a reminder that using this method means you can’t claim the actual cost of expenses such as office equipment depreciation, telephone, and internet as the 80 cents includes these expenses. Talk to your accountant about which method works best for you.
5. Get the advice!
Talk to one of our expert accountants regarding your circumstances. Everyone’s situation is different and it’s best to get the right advice to maximise your after-tax income. Whether it be a change of jobs or even a change of industry, there may be tax deductions that you’re missing. If you’re not sure, ask the question and get the right advice. Money matters!
Rowe Partners tax diaries open now. Call 1800 04 7693 to book your appointment or visit https://www.rowepartners.com.au/tax