By Stephen Burns. CEO Mr Tax Refund.
There are only a few times every year that we get excited about money. A part from opening birthday cards and grabbing a bargain at the Boxing Day sales, the biggest cash time for most of us is during Tax Season.
We are among the highest taxed individuals in the world; in fact, the top marginal tax rate in Australia is now 47%. If you are earning between $37,001 – $80,000 you could be paying up to 32.5%. That’s just under a THIRD of your annual salary.
This is why it’s important to make sure that you’re not paying any more tax than you have to and that you understand what tax deductions are available to you.
Tax Time is 7 days away. In an effort to reduce the tax season headache we thought we’d give you some daily short hacks as a countdown to tax refund time.
HACK 1: Keep ALL Your Receipts
This is our number 1 tip when it comes to maximising your tax refund and minimising the amount of tax you pay. Keep all of your receipts because you never know what you might be able to claim with the help from a tax consultant!
Receipts = Tax Deductions = More $$ Tax Refund
BASIC RULES ABOUT DEDUCTIONS.
You can only claim deductions for work related expenses. If you’re an Administrative Assistant you can’t claim sunglasses and sunscreen, but if you’re a Roof Tiler you can.
You can only claim deductions incurred while performing your job. If you are a Warehouse Worker completing a paid training course to become a Chef you can’t claim that deduction. You’ll have to wait until you become a Chef to claim.
You can claim an expense if it’s used for both work and personal use. If you use your mobile phone or internet for both personal and work reasons, you can still claim what you use for work (so keep the bill or receipts!)
Deductions aren’t added to your tax refund, dollar for dollar. They’re taken from your taxable income, which means you get a proportion back depending on your income and taxation bracket.
Whether your receipt is for $2 or $2,000 it can quickly add up over the financial year.
HOW TO STORE YOUR RECEIPTS ELECTRONICALLY
You can store your receipts electronically by downloading the MyDeductions App from the ATO. Alternatively, you can store them on your phone or computer by taking a clear photograph or scanning them.
HOW TO STORE YOUR RECEIPTS MANUALLY
Just pop your receipts in your bag, wallet or purse. From here you can toss them into a folder every couple of days. If you want to write notes on the receipts make sure you don’t use a highlighter as it can fade the ink.
After you submit your Tax Return, make sure you keep the receipts for at least 5 years. This is so you can prove your claims if the ATO asks for them.
Stay tuned for Daily Hack 2 tomorrow or if you want all 7 now download our FREE EBOOK.