As tax time approaches, many Australians are wondering how to maximize returns amid the cost of living crisis.
From declaring home work expenses to knowing when is the best time to file your refund, there are a few tips tax advisors use to get the biggest returns.
DO NOT USE THE PRE-FILLED OPTIONS
Tax agents say you’re unlikely to get the highest returns by relying on pre-populated data from the Australian Taxation Office (ATO).
While it may be the quickest way, taxpayers should know that the pre-populated information isn’t always the most reliable, said Mark Chapman, H&R Block’s director of tax communications.
“Particularly in July, many taxpayers are shocked to find that much of their income data is not appearing when they download data from the ATO,” he said.
“That is because many third parties do not pass on the data they are legally required to provide until well into July and in some cases August.”
Mr Chapman urged Australians to use their own income statements rather than relying solely on the ATO’s records as the legal burden is on the individual to ensure the information is correct.
WORKING FROM HOME
If you work from home a lot, there are also a number of items you can claim, such as telephone and internet costs, stationery, printer paper, ink and even office furniture.
However, the ATO has changed the way people can declare work from home, which may affect how much you can get back.
For expenses you incur from March 1 of this year, you can declare 67 cents per hour when working from home, an increase compared to the standard rate of 52 cents per hour.
However, there are also new rules that come with those changes that may catch some people off guard, according to general manager of Impact Taxation and Financial Services Brenda Ferguson.
“The main change is that people actually need a very detailed daily diary. If they don’t, they can’t use the flat rate method,” she said.
The journal also needs to be kept while the person is working, so you can’t create it later.
However, those who fill out timesheets or have rosters can use those as proof that they worked from home instead of a calendar.
Not only do the new rules change the documentation requirements, they also change what can be claimed on the side.
“In addition, the new flat rate method already includes a mobile phone and internet, so in addition, they cannot claim mobile phone and internet consumables,” Ms Ferguson said.
“Another thing is the old method included office furniture wear and tear, but the new 67 cents an hour method does not include office furniture, so that’s actually a little bit of good news for taxpayers because that means they can claim their home office furniture separately on the sheet.”
For expenses incurred from the end of last year’s tax season through March 1, it reverts to the standard rate of 52 cents per hour.
HOW TO DECLARATE YOUR EXPENSES
The tax expert also warned people not to inflate their spending, reminding people that they are only entitled to what they made – if you overdo it, you could get into trouble with the IRS.
“However, if you have actually incurred work-related costs and you have the substantiation to prove it, do not hesitate to claim it,” Mr Chapman said.
If you’ve bought something for work or business in the last 12 months, those items can help you get the highest return possible.
Things like power or hand tools, computers, phones and tablets can be claimed, at least in part, if you use them for work.
The full cost of items under $300 can be claimed for the fiscal year in which the item was purchased, while the depreciation expense of more expensive items can be deducted over several years.