Tax Habits To Start Now For Your Biggest Tax Refund In 2020

We all love to think about the ways we will improve our lives come the 1st of January every year, but not many pay much notice to the second ‘New Year’ opportunity – the 1st of July.

Getting into good tax habits is the best way to boost your refund when the end of financial year comes around. Instead of rushing to get your affairs in order in the last week of June, adopt these healthy tax habits to make next tax time stress free, and get the refund you’re entitled to!

Keep Good Records

When completing your tax return, the word on everyone’s mind is ‘Deductions’. And that’s all well and good, as long as you can provide the relevant proof to back up your claims.

While you are eligible to claim up to a certain amount without receipts, you could still be entitled to more, if only you had the proper records. The records and receipts you need to keep depend on your personal circumstances and are even more important if you work as a sole trader. If in doubt, keeping too many records is better than keeping none at all.

Keeping great records is a great habit to get into, as it will minimize the time and costs involved in managing your tax affairs, with the added bonus of boosting your tax refund – don’t rely on your memory or those few receipts stuffed deep in your wallet to claim your deductions.

July 1st is the absolute best time to make sure you have a great system set up to keep your records. Grab a folder with dividers to hold all your receipts in monthly order, and keep a logbook to track your travel. For a more convenient and fast option, download the ATO MyDeductons app. You can snap photos of receipts as you go and log your travel all in one place. Once the end of the year rolls around, you can upload the data directly into your return, or email it to your accountant.

Declare Your HECS Debt

More than 2.9 million Australians have outstanding Higher Education Loan Program (HELP, formally HECS) debts in 2017-18. This joint debt is compounding, and as a result, the Australian Government is continuing to lower the minimum repayment thresholds. From July 1, 2019, the minimum repayment threshold was lowered from $51,957 to $45,881, meaning Australians are now liable for repayments sooner than ever before.

When starting a new job, you must let your new employer know that you have a HELP debt. Failure to declare your debt results in your employer not withholding the additional tax required to pay your debt at the end of the year – and instead of a nice refund, you’ll be left holding the bill, which can range from $2,000 to over $4,000 depending on your income.

Ticking one box on your tax declaration form is all you need to do to prevent this. Once you hit the minimum threshold, your employer will withhold additional tax at the correct rate depending on your salary, and your debt will be paid automatically come to the end of the financial year.

Add to your Super Fund

“You cannot claim a deduction for superannuation contributions paid by your employer directly to your super fund from your before-tax income such as:

You may be able to claim a tax deduction for personal super contributions that you made to your super fund from your after-tax income, for example, from your bank account directly to your super fund.” (ATO)

The contributions you make to your Super Fund after-tax count towards your concessional contributions cap. If you exceed your cap, you will have to pay extra tax on those amounts.  Before making these types of extra payments, you will also need to supply your super fund with a Notice of Intent form, and receive an acknowledgment of that notice back from your fund.

Making extra contributions to your superfund not only provides a tax benefit, but it can make a world of difference once it comes time for you to retire.

Don’t Forget The Small Stuff!

$10-$20 purchases here and there seem like no big deal, but over the course of a year, those small amounts can add up to a substantial deduction at tax time. Always say ‘yes’ to a receipt and keep it in a safe place, or snap a photo and upload to the MyDeductions app. You’ll be surprised how much you’ve been saying ‘no’ to in the past!

Use a Tax Agent

At the end of the day, tax is what we know best, and we love talking about it! If you’re concerned about the accuracy of your tax return – we can help. Click the link below to download a Free Tax Checklist for individual returns, collect your information and send it into us. You can rest easy knowing we do everything we can to ensure not only a healthy return, but an accurate one. We know everyone wants to pay as little tax as legally possible, and we’re here to make that happen. Many people are unaware that over payments to the ATO can be reclaimed! Contact us today by clicking here to see what we can do for you.

Let’s make it rain in 2020!

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