5 ways to maximise your tax refund in 2023

tax refund, tips, return

Most people don’t think about tax time until the Easter bunny has hopped away others until the calendar has clicked over 1st of July and some only when the dreaded deadline looms. But that doesn’t have to be you. Why not make this year the year you lodge on time and receive your possible refund sooner.

Tax refunds are a great way for Australians to get back the extra money they paid in taxes during the year. With the correct knowledge of income tax laws, and a few helpful tips, filing your taxes can be an easy process that puts some extra money back in your pocket.

For those who are unfamiliar with Australian tax law, understanding how income tax works can seem daunting. To maximise your refund this year there are 5 things you could do today that could make the process of filing your tax return easier, faster and how to maximize your potential refund amount. To help you stay organised and make sure your taxes are filed correctly, here are some tips for being ready for tax time this year.

  • Know what is relevant.

When it comes to income, allowances and expenses; its important you know what you can claim. Common allowable items include charitable donations, job-related travel, home office supplies as well as study expenses. Another thing taxpayers need to consider when claiming their taxes are any losses incurred due to investments or other business activities; these losses may also be deducted from your taxable income.

The ATO have a range of tailored guides that outline common work-related expenses for your occupation. Better still, our staff at Impact Taxation can create a strategy specifically for you to avoid missing deductions.

Organising your paperwork ahead of time is essential for ensuring you make the most of any potential deductions or credits available, maximising your refund. Start by gathering all relevant documents such as pay slips, bank statements and receipts for any expenses that may be deductible. It’s also important to check if you have received any benefits or other payments that need to be declared on the return.

Make sure you keep an eye out for tax forms from employers, banks, funds or government agencies including Centrelink, Medicare and the ATO which provide necessary information that must be included in the return.

  • Keep detailed records.

Electronic or paper – you need to be able to prove any purchases you plan on claiming. Don’t leave your hunt for receipts till the last minute.

When it comes to filing taxes, keeping detailed records of receipts and purchases can be a huge help. It is important for individuals to track all their income sources and expenses throughout the year. Knowing exact details about what was bought, when it was bought, and how much it cost allows taxpayers to take full advantage of deductions that are available to them.

Having detailed records of your tax activity makes it easier for you to verify information when needed by the ATO. This includes reports on contributions made, donations made, business expenses incurred, etc. Keeping accurate records also gives you peace-of-mind knowing that you have kept track of all your finances properly in case you are ever audited.

If you don’t already have a filing system or plan – get started now.

  • Logbooks

Many people miss out on claiming work-related expenses every year simply by not having recorded the information. For instance, to claim car deductions you need to either keep a record of kilometres travelled or a logbook which covers a minimum of 12 continuous weeks. A coincidence this year that Easter is 12 weeks from June 30, we think not. Logbooks are valid for five years but if yours is out-of-date or non-existent the time to start is now.

For those people still working from home, it is important to know the method and rates have changed for the 2022-23 tax year. Some records are required for the entire year, others for a 4 week period so be sure to check which method is right for you.

  • Contribution to super

Australians are increasingly turning to superannuation contributions to secure their financial future. Contributing to your own super is a great way of saving for retirement and taking advantage of the tax benefits that come with it. With Australia’s ageing population and longer life expectancy, having a strong plan in place for retirement is essential.

Making contributions to your own super can be done in a number of ways, such as salary sacrifice or making voluntary payments from your after-tax income. Salary sacrificing into your super usually means you divert some of your pre-tax salary into your fund before it’s taxed, allowing you to access the taxation benefits associated with super contributions while still contributing towards your retirement savings.

There may be deductions or government co-contributions available to you if you add to your own super before the end of the tax year. It can be different for everyone and confusing for most, so make sure you give Impact Taxation a call to chat about the best option for you.

  • Ask for help

Which leads us perfectly to the 5th way to maximise your tax refund– us! Impact Taxation can save you time, stress and even buy you an extension on the usual October 31 deadline. Our team are experts at maximising your refund while giving you on-going support and advice.

Tax season can be stressful for everyone, but it does not have to be. Asking for help with your tax questions and filings can make the process much easier and ensure you get the most out of your return. No matter where you choose to look for help, it is important to ask questions if you do not understand something about your tax situation.

In conclusion, the process of tax refund in Australia is straightforward and relatively easy for those who are familiar with the system. If you are not quite sure it pays to seek out professional help from a qualified accountant or tax agent.

With good preparation and knowledge, you can ensure you get the most out of your refunds.

Contact us today to book an appointment 02 87641596.


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10 things you should consider before buying a property

Are you considering buying a property? Do you know you could miss opportunities to save thousands, or tens of thousands of dollars if you don’t plan well before the purchase?

Below are a few key considerations:

1. How should you set up your loan structure? If you don’t have a loan offset account for a rental property, after you make extra payments directly to the loan account, you can only claim interest deduction on the remaining balance of the loan. For tax purposes, this deductible balance can’t be changed even if you redraw the overpaid amount later. A good loan structure could also help you to stabilize interest rate and speed up loan repayment by combining a standard variable loan (with an offset account) and a fix rates account.

2. Timing of renovation. You might want to do a renovation right after you have bought the rental property. But do you know for any genuine repair & maintenance included in the renovation, you can claim an outright deduction against the rental income when the property is available for rental? If the work is done before the date when the property is available for rental, you can only claim the deduction against future capital gain when the property is sold. Depend on when you are going to sell, it could take years or up to decades before you can claim the deduction.

3. How should you split ownership? You might want to share the property ownership with a family member. For tax purposes, the percentage of ownership is based on the legal title, regardless of who is paying more on the mortgage. If the property will give you a tax profit, you might want to allocate more
ownership to the low-income earner to utilize the lower marginal tax rate. If it is giving you a tax loss, you might want to allocate more ownership to the high-income earner to utilize the loss. The goal is for the family to pay minimum tax together.

4. Should you use a family trust to purchase the property? There are many pros and cons related to a family trust. The advantages include tax savings on rental profit or capital gain, asset protection and succession planning on family wealth. However, family trust can’t distribute losses. All losses are trapped in the trust to be used to offset future trust profit. Therefore, you can’t utilize any rental loss in a trust to offset other income such as salary & wages. Family trusts also attract high accounting fees on initial setup and annual fees on financial statements and tax returns. State governments also charge much higher land tax on family trusts.

5. Will the income level change in future years for different owners? You might want to forecast the possible income for different owners to understand total tax payment / savings related to the property. This could also impact on your decision making on point 3 and 4 above.

6. Understand when you can treat your property as main residence to receive an exemption on capital gains tax. When eligible, even if you have received rental income, you could still treat your rental property as main residence and receive the exemption. To be eligible, you will need to treat it as your main residence at the beginning. Please check out this ATO link: Treating former home as main residence.

7. Decide whether you need to purchase a depreciation report. Most taxpayers don’t know that the depreciation on the building will need to be added back to calculate capital gains tax when the property is sold. When the property is held for more than 12 months, after applying the capital gains tax discount of 50%, it will effectively cut the tax rate by half at the time of sales. This makes depreciation deductions desirable for high income earners. However, for low-income earners it might not be ideal to claim depreciation as a rental deduction since they could be paying more on capital gains tax in the future. It could get more complicated if the property is under joint ownership between high and low income earners.

8. You might want to consider Centrelink payments for future or existing owners. Most Centrelink payments are income and asset tested. Before attaching a rental property to a family member who is receiving, or plan to receive government benefits, you might want to check the testing thresholds first to see if the Centrelink payment will be impacted. This is also applicable when you are making distributions from a family trust to different family members.

9. Have you considered using your SMSF (selfmanaged super fund) to make the purchase of a rental property? There are a lot of tax saving opportunities with a SMSF since the income tax rate is only 15%. And the capital gains tax rate is effectively only 10% after factoring in the 1/3 discount. The major downside with a SMSF is normally you can’t get the money out until you retire or on compassionate grounds (SMSF does have more flexibilities compared to normal retail super fund. But the choices are still very limited). It could be expensive to set up and operate a SMSF too. There are also strict legal requirements on the trustees. Penalties on incompliance could be severe. Tax law around SMSF is very complicated too. You will need to find a good tax accountant specialized in SMSF to help you to understand the structure, also do a cost-benefit analysis before setting it up.

10. Consider internal ownership changes. For your existing rental properties, you can also consider whether you should transfer the ownership between family members, or between different business structures (this is not applicable for SMSF). You might want to do this when the income level changes with family members, or rental property changes between tax profit and loss. Before the change, you need to consider the cost of transfer including capital gains tax, stamp duty, conveyancer fees, etc. Again, a cost-benefit analysis is a must before the change.

Last but not the least, did you combine all the above strategies and compare your choices? If you haven’t yet, how would you know that you have picked the best strategy to minimize your taxes? We can help you to factor in all considerations, compare different scenarios, also present you with a Property Prepurchase Report with all our findings to help you to make a decision. Contact us today to book in a consultation with an experienced tax accountant!

This is general advice only and does not consider your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from your financial adviser and seek tax advice from your accountant.

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