June 30 is right around the corner. That means tax season is nearly upon us and the time to start preparing your return is now.
While gathering documents and performing calculations may seem daunting, preparing and submitting your tax return is easy when you know where to minimize your tax liabilities. You may even be entitled to a tax refund, which can be a huge relief if you are in the process of repaying debt.
Here are some tax filing tips to help you prepare and optimise your tax return.
Key takeaways
- The due date to return individual tax returns is October 31 (or six months later through a registered tax agent).
- The main information you need to submit a tax return are your Tax File Number (TFN), income and expenses details, bank statements, and PAYG summaries.
- You can submit your tax return online through the ATO portal, or you can approach a registered tax agent who can also help lower the amount of tax you owe.
Gather Your Documents
The first step to preparing your tax return is to gather all the necessary documents. These include proof of your earnings, such as payslips, PAYG summaries, and invoices (if you are self-employed), and proof of your deductions, such as receipts for work-related expenses and donations to registered charities.
If you have a spouse, you will need to report their earnings and deductions along with your own. If you claim over $300 of work-related deductions, you may need to provide physical or digital copies of receipts as evidence.
Accurately Calculate Your Tax Deductions
Claiming tax deductions is an effective tool for your tax planning strategy. It means you can be reimbursed for any work-related expenses incurred during the financial year (and have not already been paid back for).
Depending on your industry and occupation, you may be able to claim all or a portion of work-related expenses like uniforms, safety equipment, stationary software licenses, transport fees, and work-from-home expenses.
Work-Related Travel Expenses
When claiming work-related travel expenses, remember the current cents per kilometre rate for work-related car expenses is 85 cents for 2023/24. This means you can be reimbursed 85 cents for every kilometre you drive for eligible work-related purposes. Remember, you can only be reimbursed for travelling from worksite to worksite or a client or supplier. You cannot claim expenses for travelling from home to work.
Work-From-Home Expenses
Our tax filing tips don’t end with work-related travel expenses. If you worked from home for all or a portion of the financial year, then you can claim 67 cents per hour you worked from home.
You can also claim a portion of deductions on various work-from-home expenses. These include your gas and electricity bills for heating, cooling, and lighting; home and mobile internet or data; stationary, and computer consumables like printer ink and paper; and mobile and home phone usage. Be ready to calculate the depreciation value of your computers and other office equipment.
You may be eligible to claim occupancy expenses. These include a portion of your rent, mortgage interest, council and water rates, land taxes, and house insurance premiums. This rule applies if an area of your home is used exclusively or almost exclusively for work and cannot be used for any other purpose.
If you need help with calculating your income and expenses, use Debt Fix’s free online budget calculator. The budget calculator allows you to input your salary, investment income, government benefits, and other income, and expenses like household, living, loans and credit cards, and motor vehicle/transport expenses.
Verify Pre-Filled Data
After July 1, the ATO will eventually pre-fill some data in your online tax return based on information from your employers and banking institutions. Although pre-filled data can help simplify the tax return process, don’t assume the data is correct without checking first.
As part of your tax planning strategies, compare your pre-filled data with your documents and calculations. There is a chance the system might not factor in other sources of income. For example, earnings from investment properties, overseas, the shared gig economy (driving for Uber, revenue generated from Airbnb tenants), and compensation for insurance payouts.
For this reason, always calculate your earnings and deductions yourself – especially if you are self-employed, as the ATO typically cannot pre-fill your earnings data on your behalf. This way, you can correct any potential discrepancies and add any missing data.
Use Tax Offsets
There are various tax offsets that certain people can take advantage of to reduce their tax liabilities. Also known as tax rebates, these offsets can help reduce the amount of tax you pay based on your circumstances.
Tax offsets are typically available to eligible recipients, including low-income earners and people who receive government benefits. For example, the seniors and pensioners tax offset can help reduce the amount of income tax you pay. Between 2019 and 2022, the low and middle-income tax offset gave Australians some financial relief during the height of the COVID-19 pandemic.
Other types of tax offsets you may be eligible for include:
- Medical expenses tax offset
- Claiming a foreign income tax offset
- Zone and overseas forces tax offsets
- Private health insurance offset
Keep in mind that you are not eligible for a refund from a tax offset. For example, if you are eligible to receive $2,500 in tax but also eligible for $3,000 in tax offsets, then you will not receive a $500 refund. However, your tax liability will be reduced to zero.
Be Organised and Prepared
With tax time just around the corner, now is the perfect time to get started. As daunting as tax season can be, we hope these tax filing tips can help make the tax preparation process easier.
Also, you may be eligible to receive a tax refund, which can help improve your financial situation. This is especially useful if you are repaying a debt or organising a debt consolidation plan.
If you have over 15k in debt and want help to lower your repayments, get started with Debt Fix today. It takes only 30 seconds to get started. And making an application won’t affect your credit rating.
Frequently Asked Questions (FAQs)
When is the Australian financial year?
The Australian financial year starts on July 1 and ends on June 30 the following year.
What is the deadline for tax returns?
All individual and business tax returns are due by October 31. However, if you are submitting a return through a registered tax agent, then you will have a few extra months to do so.
How long does it take for a tax return to process?
That depends on how you submit your tax return. Online tax returns take about 2 weeks to be processed, while paper tax returns take about 10 weeks to be processed. Once your tax return has been processed, you’ll receive a notice of assessment (NOA) from the ATO confirming the details of your return.