How can you ensure you receive the full tax refund to which you’re entitled in 2021? It’s a great year to maximise your tax refund, with lots of opportunity to claim expenses. These are our top tips for getting the most back at tax time, without the stress.
Claim Everything That You’re Entitled To
Do you know everything that can be claimed as a tax deduction? Every year people miss out on tax refunds because they don’t know to claim for certain things. If you’re unsure if an item or other expenses is eligible, check with your tax agent.
Some common things that you are entitled to claim include:
- Phone and internet expenses (business use percentage of the monthly fee)
- Vehicle expenses (if you travel for work activities)
- Work-related equipment (like tools, printers or office supplies)
- Protective clothing or uniforms (if you require it to do your job)
- Laundry and dry cleaning (for work clothes only)
- Union fees, subscriptions and professional body fees
- Donations made to eligible charities
- Fees you paid to your tax agent to complete your 2020 tax return
For devices and other things that you use for work as well as for your own personal use, you can only claim a percentage of the cost as a work expense. This is based on how much you use the device, such as a phone or laptop. Eg 15%-20% business use. You must keep a record to confirm how you calculated your business use percentage, such as hours of use or percentage of calls.
Keep Accurate Records
To maximise your tax return, it’s important to keep accurate records throughout the year. You may have plenty to claim, but that becomes tricky if you haven’t kept hold of things like expense receipts.
It’s a good idea to use a smart record keeping system, like an app or other digital solutions. This makes record keeping easy, storing all your necessary documentation in one place without the need for messy piles of receipts.
Keeping detailed and accurate records of all spending related to your work helps to make tax time easy and stress free. Simply track all relevant receipts and invoices, and let your registered tax agent, such as the agents at Online Tax Australia, help you to claim everything that you’re entitled to.
Working From Home Expenses
In the last financial year, many people have been working from home due to the COVID-19 pandemic and the associated lockdowns and restrictions. This means that more people than ever will be making claims relating to working from home. But if you don’t typically do this, you may not know what deductions you are eligible for.
People that work from home are eligible for a wide range of deductions relating to the costs associated with having a home office. Even if you have only worked from home for a fraction of the financial year, you can claim the costs associated with this. Some of these costs may include your office furniture, like a desk and ergonomic chair. It can also include bills for power, internet, and phone use. If you have needed printing or stationery, this is also counted as a deduction.
With internet and mobile phones the ATO are aware these services are used for personal use, especially internet when working from home is only a small portion of the working period. It is recommended internet claims be between 10%-20% of the cost which then allows for family use for activities such as streaming of information and entertainment . The phone may be a higher percentage however it is also used for personal use with most plan costs associated with data access vs calls.
It’s important that you keep a log of the hours you work from home as this will be necessary to calculate the percentages of the deductions you’re entitled to. Additionally, if you purchased something for work – such as a new computer – but have also used it for personal use, you need to log the hours that you use it for work purposes.
Invest in Self-Education
Improving your skills and knowledge is a great way to succeed in your career and also help you to maximise your tax refund. Self-education that relates to your current field of employment and is designed to improve your skills and increase your income in your current role is tax deductible.
Make sure you keep accurate records of the costs associated with your studies so that you can make a claim. These include the costs of the course, as well as resources like textbooks.
If you have donated money in the past financial year to a registered charity, then your donation is tax deductible. Donations need to be more than $2 to be eligible. When donating to a charity, make sure you get a receipt so you have a record of your donation at tax time.
Private Health Insurance
If you have private health insurance, it can help at tax time. High-income earners pay the additional Medicare Surcharge if they do not have private health insurance, meaning you aren’t likely to get as much tax back. Talk to your tax agent about the benefits of taking out private health insurance and check if it will decrease the amount of tax you’re required to pay.
Employ a Professional Tax Agent
A good tax agent can ensure that you get the most out of your tax return. When you employ a tax agent to help you at tax time, you’re getting peace of mind that you don’t miss out on any eligible deductions and your taxes are legally compliant. Plus, their fee is tax deductible too.
You will often get more money back by hiring a good tax agent, so it’s worth the investment of having your tax return done by a professional. Online Tax Australia’s online services can connect you with a professional tax agent and can ensure that you maximise your 2021 tax refund.