Are you trying to increase your tax refund? Are you trying to improve your tax refund in the upcoming financial year?
As with all things finance-related, knowledge is key in achieving the best possible result in collecting all tax deductions available to you.
This article will outline the basics of tax refunds and how to tailor your plan to collect the maximum tax deductions you can!
Increase your Tax Refund by Claiming all Work-Related Expenses
You may be curious as to what you can claim in your tax return on work-related expenses.
Well, there is a range of expenses that you may be viable to receive back at the end of the financial year!
Some of them are known to many, such as travel expenses or tools directly related to your line of work.
However, there are many expenses claimable that you may not have even heard of! In order to claim such expenses, you must follow these two rules:
- You personally spent the money being claimed
- The money was spent in direct relation to your employment
Furthermore, you must have documented evidence, generally, a receipt, to prove that the purchase was made.
Expenses you may be able to claim as deductions when the next end of the financial year rolls around include:
- Clothing expenses
- Dry-cleaning or laundry expenses
- Education to improve your performance in your current line of work
Increase your Tax Refund by Using a Tax Agent
The investment in a tax agent service can truly support your pursuit of the maximum tax return possible.
As opposed to the Australian Tax Office (ATO) whose main purpose is to collect taxes, a tax agent can support you in the process of claiming any tax returns you are owed and making sure you are aware of all viable claims.
A tax agent is a professional in the field of tax so will likely be knowledgeable in the best and most efficient manner to ensure you’re collecting all deductions you can.
They may also save your valuable time and resources by preventing you from pursuing deductions that you do not qualify for.
Their knowledge can also prevent you from receiving fines from the ATO by, again, preventing the claim of returns you are not viable for.
Claim Charity Donations to Reduce Tax
Did you know that some charity donations are viable for a tax deduction in Australia? Not only is your money going to a good cause, but you may actually be able to claim it back!
A donation of over $2 to a charity registered by the Australian Tax Office under the Charity register can be claimed as a deduction at the end of the financial year.
In order to receive tax returns of charitable donations, however, you must not receive anything from the ordeal.
This includes raffle tickets, clothing, furniture, and more. You must also have a receipt or document of sorts to show as evidence for the claim.
If there is a cause that means a lot to you and you wish to donate to, consider a quick check of the register to see if it’s tax-deductible; it may give your tax return a nice boost!
Increase your Tax Refund by Claiming Travel Expenses
An often-disregarded tax deduction is work-related travel expenses and placing some thought and effort into this area may be beneficial to your tax returns!
A travel expense is considered, as the name suggests, regards any expenses, or purchases you made concerning travel to, from, or for your employment.
You may be able to claim returns for travel for areas such as:
- Registration costs for your vehicle
- Depreciation costs
- Expenses for the functioning of your vehicles, such as petrol or servicing
You however will not be liable for deductions for travel expenses for the initial purchase of your vehicle and any costs for fines, such as parking fines or speeding tickets, you incur while travelling.
As of the financial year 2021-22, you can claim 72 cents per kilometre for travel costs, however, amounts are reviewed and sometimes edited each year. You may also claim for only 5 000 kilometres per vehicle.
Remember Self-Education Expenses
Self-education costs are another commonly disregarded deduction that you may be viable to claim during tax returns. In order to claim said return, you must be studying a course from a school, college, or another trainer that is to further your knowledge in your current field of work.
As stated by the ATO, to qualify for self-education deductions you must either be:
- Maintaining qualifications for your field of work; or
- Be developing your skills or knowledge in your field of work; or
- Be a trainee and the course taken is a part of the completion of said traineeship; or
- Be studying in the pursuit of a pay raise in your current employment.
Naturally, you must have evidence to prove any of the above factors, especially the fourth one!
Claim Work-From-Home Funds
With recent disruptions in Australia, such as COVID-19, you may have found yourself working from home.
Did you know you can claim deductions for expenses regarding this process?
It is vital, however, that you claim appropriately for these expenses as overclaiming can result in fines from the ATO.
To ensure this, keep records of your expenses as evidence for claims and avoid exaggerating costs.
It is important to note that if you work in a shared area of your house, such as a lounge room or living room, you can only claim tax returns for the periods you had sole use of this area.
Home office expenses that you may be able to claim include:
- Inhabitancy expenses, such as rent.
- Office equipment, such as technology or stationery items.
- Work-related phone conversations
- Lighting expenses
- Heating or cooling expenses
As aforementioned, be sure to do your research if you are considering claiming home-based work expenses as the ATO does check!
Increase your Tax Refund – Key Takeaways
Boosting your tax refund may seem like a difficult task but it can definitely be worth it in the long run.
It may be worth your time to revise your past tax strategies in the past and use this to make an informed decision about what can work for you in the future.
Remember to keep a comprehensive record of your documents and receipts for purchases, as they are vital in proving your claims for deductions in the future!
If you’re struggling with anything tax related, don’t be afraid to enlist the help of a professional to assist you in getting the best results in your tax deductions.