It’s coming to the end of the financial year and you’re going to have to lodge your personal tax return. Regardless of whether you have an accountant or tax agent to prepare, here are some tips that will help you get the most from your 2014-15 tax return.
Prepay tax-deductible expenses before the end of the financial year
Now is a good time to review all the expenses you can claim for your personal tax return. If there are any expenses that are due just before year-end, consider prepaying these so you can get a tax deduction for them this side of 30 June.
Generally, provided the prepayments are under $1000, certain types of expenses can be deductible in the 2014-15 tax return. If the prepayment is $1000 or more or relates to a period beyond 30 June 2015, your deduction may have to be spread over two or more years.
Expenses that you might be able to prepay include:
- Gifts and donation. For example, cash donations to registered charities.
- Self-education expenses for eligible courses, provided the course is sufficiently connected to you earning (more) income. It is important that the study is focused on learning specific skills related to your job or upgrading your qualifications. If a course is too general and not specific, you might not be entitled to a tax deduction.
- Subscriptions relevant to your trade or professional field. For example, trade magazines or online subscriptions to journals and newspapers.
- Income protection insurance.
- Union fees and subscriptions to associations.
- Other work-related expenses, such as tools and equipment.
There may also be certain deductions available for your specific industry. Further information can be found on the ATO website.
Repairs and renovations on your investment property
Expenses relating to rental properties available for rent during the year are deductible. These expenses may include general running expenses, such as advertising for tenants, body corporate fees, council rates and charges, cleaning, gardening and lawn mowing, pest control costs, property agent fees and commissions, costs for travel undertaken to inspect or maintain the property, and repairs and maintenance expenses.
If your investment property is in need of repairs or a renovation, consider locking these in before the end of financial year. For repairs and maintenance costs incurred before year-end, a tax deduction is available for those costs in your 2014-15 tax return. Depending on the nature of the renovations, some of the costs of the renovations might be deductible in your 2014-15 tax return. If in doubt, speak to your tax agent, accountant or check out the ATO website for guidance.
Top up your superannuation fund
Regardless of whether you are self-employed or an employee, consider making additional contributions to your super fund.
While your employer will make compulsory super payments, you can top up your fund by making additional contributions out of your pre-tax income, such as salary sacrificing. These are known as concessional contributions.
You can make additional contributions at any time during the financial year, however you will need to enquire with your employer regarding the salary-sacrificing arrangements that you can make. Typically, employers will require you to commit to salary-sacrifice options at the beginning of a financial year for ease of administration.
Once in your fund, these contributions are taxed at 15 per cent.
For the 2014-15 financial year, the general concessional contributions cap for those younger than 50 in that financial year is $30,000. However, if you turn 50 or older in 2014-15 you can contribute up to $35,000. If you exceed these caps, you might have to pay extra tax, so it’s worthwhile keeping an eye on the contributions received by your superannuation fund just before year-end to make sure the amount received by it for the 2014-15 year doesn't exceed the cap on 30 June 2015.
Top up your spouse’s superannuation fund
You may be entitled to a tax offset of up to $540 per year if you make contributions to your spouse’s complying superannuation fund or retirement savings account (RSA). An RSA is a special account offered by certain banks, credit unions or life insurance companies and is used in a similar way to a superannuation fund for cash savings for retirement
A spouse can be of the same or opposite sex and can include de-facto relationships. Your spouse must be earning a low income or not working. In addition, the following criteria must be met for you to be entitled to the $540 tax offset:
- The total of your spouse's assessable income, reportable fringe benefits amounts and reportable employer superannuation contributions was less than $13,800.
- You were not entitled to a deduction for the superannuation contributions.
- The contributions were made to a superannuation fund that was a complying superannuation fund for the income year in which you made the contribution.
- You were both Australian residents when the contributions were made.
- When making the contributions, you and your spouse were not living separately and apart on a permanent basis.
You can use the ATO website’s income tax calculator to estimate your tax payable.
The end of the financial year is almost here, so it’s time to review your expenses, think about your investments and top up your superannuation fund to get the most out of your 2014-15 tax return.
Disclaimer: This blog provides general information only and does not take into account your financial situation, objectives or individual circumstances. These tips are of a general nature and based on present taxation laws and may be subject to change. Before making any decision based on this information, you should seek independent professional tax advice.