Finding it hard to balance the family budget? Well, maximizing tax deductions will certainly be a great help to keep the family finances running smoothly. Here are some tips that Australian families can use get more rebates from taxes.
Keep Accurate Records to Help Maximize Tax Deductions
The Australian Taxation Office assumes that all taxpayers are honest in their estimates when they lodge their tax returns. However, the taxman has every right to audit taxpayers within five years after a tax return is lodged. Those who fail to substantiate the claims will be heavily penalized. So keep all receipts of claimable items, bank and financial statements, insurance payment receipts in clearly labeled folders in a safe place for five years.
Claim Work-related Expenses as Tax Rebates
To get more tax deductions, claim work-related expenses. These tax rebates include many expenses incurred when doing specific jobs as an employee. Premium for income protection insurance, expenses for self-education directly related to a person’s income earning capacity and car expenses for work (not traveling to and from work, though), money spent on job-related safety gear and computer equipment can all be counted as tax deductions. However, these expenses must have proof of purchase and have not been paid for by employers. Parents who work from home may also be able to claim home office expenses.
Offset Capital Gains With Capital Losses
Profits made from selling shares and investment properties are charged capital gains tax (CGT). The good news is that any losses made on these investments can also be offset against profits. Families with investments that have made some profits should consider selling some of their poorly performing investments. The losses will then be offset against the capital gains or profits, resulting in tax reductions.
Use the Education Tax Refund
Escalating costs of education is a prime concern among parents. But with the recently introduced Education Tax Refund, many families will be able to claim back up to 50% of some education expenses such as computers, Internet costs, educational software, textbooks and stationery. The entitlements are 50%of $750 annually for each primary school child and 50% of $1500 for each secondary school child. Again, be sure to keep the receipts as proof of purchase as well as to help families calculate their entitlements. However, for some reason, the Education Tax Refund does not include expenses for school fees and school uniforms.
Other Tax Rebates
Tax rebates can also be obtained through the following:
- Making tax-deductible donations to charities.
- Claiming the costs of managing tax affairs. These will include tax agents’, accountants’ and/or financial planners’ fees; travel expenses to meet these advisers and buying tax reference materials.
- Salary sacrifice into superannuation. Do keep in mind that the money cannot be accessed until retirement.
Australian families can make the best of every dollar earned by maximizing tax deductions. To receive more tax rebates, keep accurate records of receipts and bank statements, claim work-related expenses, offset capital gains with losses, use the Education Tax Refund or even claim the costs of managing tax affairs.