Key PointsTax returns for the 2023-24 financial year can be made from 1 July.Tax agents suggest people consider making contributions to their superannuation or towards charities before then.A number of payments and purchases can be claimed as deductions which can reduce the amount of tax a person pays.
On 30 June, the 2023-24 financial year will end, which means it’s time to start thinking about preparing your tax return.
The Australian Taxation Office’s (ATO) requirements and restrictions regularly change, so it’s important to ensure you lodge your tax return on time and claim everything correctly to avoid a hefty tax bill or fine.
Here’s everything you need to know, and some of the things you can do before the end of the financial year to make the most of your tax return.
Consider an additional super contribution
Marianna Agostino, founder and tax agent at Conscious Wealth Creation, suggests making additional contributions ahead of the end of the financial year.
Additional payments not only boost your super balance but also reduce your taxable income.
Conscious Wealth Creation founder and tax agent Marianna Agostino suggests those wanting to bring down their taxable income could do so by spending some money ahead of 30 June. Source: Supplied
“Superannuation contributions need to have reached their superannuation fund by 30 June in order for the tax deduction to be effective,” she said.
“So whether you are in business or not, you can make a personal superannuation contribution over and above the superannuation that’s paid for you by your employer.”
Agostino said the superannuation concessional cap — the maximum amount of before-tax contributions you can make to your superannuation without being subject to extra tax — is $27,500 this year.
“The extension of that is that if you haven’t used up the concessional caps from the last five tax years, you’re actually able to bring them forward and use up any unused superannuation caps that you haven’t used.”
Make a charitable donation
can reduce your taxable income.
But Agostino said only donations over $2 to eligible deductible gift recipients made a difference at tax time. This typically doesn’t include things like crowdfunding campaigns.
“So, not GoFundMe pages, unless a deductible gift recipient is receiving the amounts paid through GoFundMe,” she said.
“That’s a common trap, that people think they made a donation to a crowdfunding or GoFundMe page and it’s deductible. It’s not unless there’s a [deductible gift recipient] in the back.”
Consider the cost of working from home
With , CPA Australia spokesperson Gavan Ord said there were several related deductions those doing so could claim.
“There are two ways to calculate working from home deductions – the fixed rate method (when you can claim a set rate of 67 cents for every hour worked from home) and the actual cost method,” he said.
“Having records means you can choose which works best based on your individual circumstances.”
Those records could include a time sheet of hours worked from home, evidence of running expenses such as phone and electricity bills, and receipts and supporting documents for technology and office furniture purchases.
In many cases, the cost of such items may be taken into account over a period of years. These are known as depreciating assets.
Find receipts for work-related expenses
According to Ord, work-related deductions are the biggest deduction in most Australians’ tax returns.
He said while people may be tempted to overstate their expense claims in this area, some may put in claims without sufficient evidence to support them.
“It’s important to be thorough but realistic with your work-related expenses. Don’t try to claim 100 per cent of your home internet use as a work expense, for example,” Ord said.
Typical work-related expenses for people who work at a physical location include uniforms and protective items, even sunglasses if needed.
“Just remember that if your work pays for them, you can’t claim them as a deduction,” Ord added.
CPA Australia spokesperson Gavan Ord said it was important to have evidence to support deductions made in tax returns. Source: Getty / Martin Poole
Other common expenses include a work phone, subscriptions and union fees, and travel expenses between worksites or client locations — but not the commute to and from home.
He said those who drive a motor vehicle for both business and private use must be able to correctly identify and justify the percentage they claim as business use.
“The percentage that is for private use isn’t claimable. To claim accurately, you will need to use a logbook or diary to record private versus business travel.
“Travelling from home to work is considered private use, unless you are a home-based business, and your trip was for business purposes.”
Take stock
Agostino encouraged small businesses to bring forward deductions by paying bills before the due date ahead of the end of the financial year.
“Often small businesses income tax is calculated on a cash basis, which means the actual fees that you’ve received and the actual expenses that you’ve paid, not just received an invoice for,” she said.
Agostino said business owners often overlooked the physical stock they held at tax time.
“If you’re in any kind of business where you sell goods, you should be doing stocktake on 30 June or around 30 June to be able to record any losses in stock and also to make sure that numbers are correct, because your actual stock that you’ve purchased is a tax adjustment,” she said.
Have evidence
Ord said every claim made should be able to be backed up.
“The ATO may ask you for evidence to support your claim so you should make sure you have the receipt or other records necessary to prove your claim.”
He pointed out expenses must directly relate to the , you must have paid the expense yourself, not had it reimbursed, and you must have evidence of the expense like a receipt.
Australians can either choose to do their own tax return or pay to have a tax agent complete their return for them. Source: Getty / LPETTET
“The ATO has powerful computer systems that can, in almost real-time, detect returns where expense claims are out of the ordinary for that occupation and location.
“This may trigger the ATO to write to you to ask further questions. Where the deduction claim doesn’t meet one of the golden rules, the ATO can disallow it and apply penalties.”
Claim the refund
While some people prefer to , others may pay to have it done for them.
Ord said those who did hire someone for the service should remember to claim it in their return the following financial year.
“Another common deduction people overlook is the cost of seeking professional tax advice. Some people might not think they can afford to hire a tax agent, but when it’s a legitimate deduction you can claim every year, why wouldn’t you?”
Have your paperwork in order
Ord urged people not to complete their tax return before they had had time to get all the necessary documents and information together.
“While June 30 is the cut-off point for the tax year, it doesn’t mean you need to rush to complete your returns,” he said.
“Don’t be the first person at your accountant’s door on 1 July, because chances are you won’t have all of the information you need to properly do your tax return, increasing the risk of making costly mistakes.”
If you are lodging your return yourself, it is due by 31 October.
Different lodgement schedules are in place for tax agents so those using an agent to prepare and lodge their return may be able to do so after that date.
