As a new financial year begins, many Australians will be required to lodge a tax return. The following article will outline some helpful tips that individuals should keep in mind to ensure their return is accurate and they are compliant with the various tax rules in place.
Lodging your tax return
Individuals can use the ATO’s free online tax return, myTax, if they have a myGov account. This process is generally easy and is also free, and any returns lodged this way are usually process within a two-week period. The information required from employers, banks, government agencies and health funds will automatically be added to your myTax profile, however, it is the responsibility of individuals to ensure this information is correct and accurate. There are ‘how to’ videos available online to assist you throughout the process. Below are some ways in which Australians can aim to maximise their tax return for the 2021/22 financial year.
Work from home expenses
With parts of Australia enduring extensive lockdowns over the second half of 2021, there is no doubt this resulted in an increase in the number of employees working from home. If this is you, it is important that you are aware of the work-from-home expenses that you can claim. There is a comprehensive list available of what is and isn’t claimable, however, it is important to remember that you can claim most things that directly affect how you earn your income. This includes electricity expenses for heating, cooling, and lighting, internet expenses, phone expenses as well as a decline in the value of office furniture used for work. To access this list, please click here.
Other work-related expenses
If you pay for your vehicle or travel expenses, you may be able to claim a deduction on them, however it is important to be aware of the limitations around these. You cannot claim the expenses incurred when driving from home to your office, however, you can claim a deduction if you drive or take public transport from one job to another. You may also be able to claim expenses for clothing and laundry, protective clothing, and accessories if they are specifically required, self-education expenses as well as tools and equipment. It is important to keep in mind that individuals can only claim a deduction for these expenses if they relate to earning an income from your job.
Donations to charity
If you donate money, you may be able to get the money back. However, not all donations are eligible for a tax deduction. It is important that those individuals who have donated or sent a gift ensure they meet the following criteria:
- It must be a voluntary transfer – can be either monetary or an item
- You cannot have received another in return – this includes a material gain, advantage or other favours
- The donation should be money, property, or financial assets
- You must have proof of the contribution such as a receipt
- It must be at least more than $2
To read more about claiming a deduction on your donations, click here.
If you have made personal contributions using your after-tax income you are likely able to claim a tax-deduction up to the cap of $27,500. To be eligible to claim a tax deduction you must also satisfy the following conditions:
- Be under the age of 75
- Meet the work test if you’re aged between 67 and 74 (for contributions within the 21/22 FY)
- Not use the contribution to help fund an existing super income stream or pension
- Not be splitting the contribution with your spouse (married or de facto)
- Not make the contribution to an untaxed super fund or a Commonwealth public sector defined benefit fund.
A work test still applies to individuals aged between 67 and 75 years old who wish to claim a deduction for personal superannuation contributions. The work test that applied to accepting non-concessional and salary sacrifice contributions before 30 June 2022 no longer applies from 1 July 2022.
Prior to claiming a tax deduction for these personal concessional contributions, individuals must provide their superfund with a Notice of Intent to Claim. This form is available online from the ATO Website here or from your superfund. When completing the form, individuals are required to:
- Provide it to their superfund by the end of the financial year following the one in which you made the tax-deductible super contribution (i.e. end of 2022/2023 FY) or by the day they lodge their tax return for the financial year in which you made the contribution, whichever comes first;
- Receive a written acknowledgement from your super fund before you claim the tax deduction on your tax return. This provides confirmation that the amount you are claiming is eligible for a tax deduction.
If you would like to take action and ensure you are maximising your super balance whilst reducing your taxable income, please click here to organise a 20-minute complimentary phone call with a EPG Wealth adviser.