15 Ways to Maximise Your Tax Refunds in 2020
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Home Office Expenses ATO Covid-19
- Cleaning costs for the dedicated work area
- Bills related to cooling, heating, and power
- Ink, printing paper, and stationery
- Depreciation of home office furniture i.e. desk, chair, computer, and printer,
- Home line and wifi expenses.
Tax Deduction on Donations
Retain receipts of donations of $2 or more made to registered charity organisation and you can claim a deduction, to receive a bigger tax refund.
Tax Deductions on Super Contributions
Concessional contribution means super contribution from pre-tax income. This contribution is taxed at a 15% flat if your income is below $250k, otherwise you may be taxed of an additional 15% on top of part or all of the concessional contribution under Division 293. Speak to a friendly Melbourne Tax Accountants at Tax & Accounting House for more details.
Union and Membership Fees
Union and professional membership fees are generally itemised on your income summary. A receipt is not required as long as you have that documentation to maximise tax refund.
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Salary Sacrifice / Salary Packaging
Depending on your industry and package your employer provides, the most common salary sacrifice benefits are super, new car, insurance, computer, mortgage, rent, grocery etc. Salary packaging is a great way for employees to reduce tax & employer to retain the best staff, however, it triggers Fringe Benefits Tax (FBT), speak to your tax agent to know how these rules affect you.
If you use a personal car for trips between two jobs or sites on the same day and you have not kept a logbook, you can claim deduction using cents per kilometre method. This method allows a claim of 68 cents per kilometre at 5,000km max per financial year. You’ll need to provide how you work out your work kilometres by producing diary records of work-related trips.
If you travel more than the 5,000km cap, you’ll need to keep a logbook which is easy using the ATO MyDeductions App.
The ATO does not allow a deduction for travel trips from home-to-work and work to home, so do not be creative to maximise tax refund.
Uniforms and Protective Clothing
You can claim a deduction of $150 for work-related uniforms and protective gearings such as the costs of buying branded uniforms, protective gear i.e. steel-cap boots and high-visibility clothing without receipts, for a higher chance of higher tax refund.
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Uniform Washing or Laundry
- $1 per load – if each load contains only work-related clothing.
- 50 cents per load – if private laundry items are included.
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Phone and Internet Bills
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- If the 4-week records reveal that you made 30 work-related calls over a total of 100 calls, then your work use is 30% =(30/100).
- Work out your monthly phone bill, say $30pm.
- Work out the total number of months you worked during that financial year, say 10months
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The calculation is:
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- Monthly work use = $9 = (30% x $30pm)
- Yearly work use = $108 = ($9 x 10months)
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Claiming Phone on Tax
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- Immediate depreciation if cost under $300, otherwise, use the one of the 2 methods below:
- Diminishing = phone cost x no.days held / 365days x (200/3) x portion % of work use.
- Prime Cost = phone cost x no.days held / 365days x (100/3) x portion % of work use.
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Note: You cannot claim a depreciation if your phone is on a phone and sim plan. Alternatively, you may claim under item 9 above.
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Get Private Health Insurance to Avoid Medicare Levy Surcharge (MLS)
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- You’re single and earn $90k or more pa; or
- Your total combined family income exceeds $180k.
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If your Income for MLS Purposes (“IMLSP) falls under the above-mentioned threshold, the ATO will collect 1% on top of the compulsory 2% Medicare Levy. Below is an example of IMLSP components and how it’s calculated for a single taxpayer: –
| Taxable Income | $70,000 |
| Total Reportable Fringe Benefits | $30,000 |
| Family Trust Distribution Tax Paid | - |
| TOTAL INCOME FOR MLS PURPOSES | $100,000 |
| Multiply MLS Rate | 1% |
| MEDICARE LEVY SURCHARGE PAYABLE | $1,000 |
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Prepay Expenses – Do not wait till the due date.
Pay your income or business-related expenses in advance will reduce your Taxable Income. The ATO allows a deduction for prepaid expenses that are $1k or less and or meet the prepaid expenses 12 months rule.
Use a Tax Agent.
Everyone wants to get A BIG TAX REFUND or MINIMAL TAX BILL comes tax time. Free your time and this boring chore, engage a Registered tax agent as they’re the expert in the TAX FIELD. THEY’LL GET YOU A BIG REFUND & THEIR FEES ARE TAX-DEDUCTIBLE.
Defer Income / Invoicing.
If your cash flow is in good position, consider deferring invoicing until 1 July to avoid paying taxes in the current financial year. For this trick to work you need to bear in mind your tax brackets for both financial years, to ensure you don’t attract a higher rate in the next financial year on the deferred invoices.
Utilise Income Tax Offsets aka Rebates
Refundable and Non-Refundable tax offsets may reduce your tax debt if you’re eligible however they won’t issue you a refund. Here’s the list – dependents offsets, low income tax offsets, low & middle-income offsets, senior Australians & pensioners offsets, zone tax offsets, overseas forces tax offsets, maintained an invalid or invalid carer etc…
Record Keeping for Work-related Expenses
To be approved for tax refunds, Receipts are Proof so get into the habit of keeping a record of your work-related expenses throughout the year. Download ATO MyDEDUCTIONS APP to capture all work-related expenses and mileage between two or more jobs throughout the year.