Make sure you are claiming all possible deductions this tax time
In the lead up to tax time we often spend time sifting through old receipts to see what expenses we can claim when we should be looking deeper into our accounts and using financial strategies to ensure we are making the most of all possible deductions.
Here are some points to remember in the lead up to June 30:
∑ Income Protection insurance policy premiums can be claimed as a personal tax deduction because people are insuring an income-producing asset - their ability to work!
∑ Any donations over $2 made to legitimate charitable organisations are 100 per cent deductable so donít forget to claim these.
∑ A 20% tax offset is available for each dollar of a personís net medical expenses that exceed $1,500. Broadly, net medical expenses are amounts that are above what the person can claim back through Medicare and/or their health insurance company.
∑ Remember to declare all income and capital gains such as interest received on bank accounts, however small, and the selling of assets such as real estate, shares or managed fund investments.
∑ People generally do not need to pay tax on an inheritance, but if they have reinvested that money, or are gaining an income from it, tax may apply on this income. Further, Capital Gains Tax (CGT) may apply where assets such as shares or property are sold Ė however specific CGT exemptions may be available in certain circumstances.
∑ People who are eligible for Family Tax Benefit (Part A) may be eligible for an Education Tax Refund to assist with costs of education. Up to 50% of eligible expenses such as home internet connection, personal computer purchases, pens, texts, exercise books etc can be claimed. The maximum refund is 50% of:
o $794, for each primary school age child, and
o $1,588 for each secondary school age child.
∑ Donít forget to make sure all information with Centrelink is up to date. This will ensure you receive any benefit entitlements such as the Child Care Rebate. The Child Care Rebate covers 50% of out of pocket expenses for approved childcare, up to a maximum of $7,941 per child for the 2010-11 financial year.
∑ Many of the services which have been paid for in relation to the general maintenance and upkeep of investment properties can be claimed as a tax deduction. This includes expenses such as lawn mowing, pool maintenance and other similar costs which you have outlaid in relation to your investment property.
∑ Certain types of financial advice and other professional services received in relation to an investment property may also be tax deductable.
∑ If people have insurance cover on investment properties they may be able to claim this premium as a tax deduction as well.
Self Employed / Sole Traders
∑ Self employed people or sole traders can claim 100% of personal superannuation contributions. However, care needs to be taken to ensure that these contributions do not result in that personís contribution cap being breached as this would attract tax penalties.
∑ In order to be eligible for a tax deduction during the current financial year, make sure that all superannuation payments have been paid for your employees on or before 30 June.
∑ Just as for sole traders and individuals, if businesses have had a good year and have some spare funds available, rather than keep it in a bank account, businesses are able to pre-pay certain future expenditure and claim a deduction in this yearís tax return.
As tax matters can be quite complicated, itís a good idea to speak to your financial planner to ensure youíre paying for the tax you need to but making the most of any deductions or claims you are eligible for.
Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.
I hope this helps