Maximising Your Tax Refund: Tips for Individuals and Small Business Owners

As the end of the financial year approaches, individuals and small business owners in Australia look for ways to maximise their tax refunds. By understanding the tax requirements, staying organised, and taking advantage of available deductions and offsets, you can ensure you get the most out of your tax return. Here are some tips to help you maximise your tax refund while avoiding ATO scrutiny.

For Individuals

1. Claim All Eligible Deductions and Offsets
   Work-Related Expenses: Keep receipts for things you buy for your job, like uniforms, tools, and work-related travel. Maintain timesheets for hours worked from home, evidence of running expenses (phone and electricity bills), and receipts for depreciating assets (technology and office furniture).
   Education Expenses: If you’re studying and the course is related to your job, you can claim costs like textbooks and course fees.

2. Maximise Superannuation Contributions
   Putting extra money into your superannuation can reduce your taxable income. Plus, it helps save for your future.

3. Check Your PAYG Withholding
   PAYG stands for Pay As You Go: Make sure the amount your employer withholds from your wage is correct. Too much withholding means you get a big refund, but it’s better to get that money throughout the year.

4. Health Insurance and Medicare Levy
   If you have private health insurance, you might avoid paying extra Medicare Levy Surcharge if your income is high. Also, claim any eligible private health insurance rebates.

For Small Business Owners

1. Track All Business Expenses
   Maintain detailed records of all business-related expenses to ensure you claim all eligible deductions. This includes costs like office supplies, business travel, and utilities.
2. Employee Payments and Superannuation
   Pay your employees’ wages and superannuation contributions before the end of the financial year to claim these expenses.
3. Instant Asset Write-Off
   You can immediately deduct the cost of certain assets up to a limit, the announced amount for the 2024 financial year is less than $20,000 however this measure is not yet law.
4. Business Structure
   The type of business you run (sole trader, partnership, company, trust) affects how much tax you pay. Talk to a us to see if changing your business structure could save you money.

Key Areas Under ATO Scrutiny

1. Work-Related Expenses
   Documentation**: Maintain timesheets for hours worked from home, evidence of running expenses (phone and electricity bills), and receipts for depreciating assets (technology and office furniture).

2. Motor Vehicle Expenses
   Accurately record and justify the business-use percentage. Use a logbook or diary to differentiate between business and private travel. Note that commuting from home to work is private use unless it’s for a home-based business.

3. Income from Rental Properties
   Repairs vs. Renovations: Only repairs due to wear and tear or tenant damage are tax-deductible. Improvements or replacements are capital expenses eligible for depreciation.
   Mortgage Interest: Full interest claims are permissible only if there were no drawdowns for private purposes.
   Gross Income Reporting: Ensure net income after expenses is not mistakenly declared as gross income.

4. Undeclared Income (Cryptocurrency Profits)
   Capital Gains Tax (CGT): Crypto assets held as investments are subject to CGT. Transactions like disposal, exchange, or swaps are CGT events, potentially resulting in capital gains or losses.
   Record Keeping: Maintain thorough records of all crypto transactions. Holding a crypto asset for more than 12 months may qualify for the CGT discount.

General Tips

1. Keep Accurate Records
   Accurate and organised records make it easier to identify deductions and offsets. Utilise accounting software or hire a professional bookkeeper to maintain your records.

2. Consult with a Tax Professional
   We can provide personalised advice and ensure that you are taking advantage of all available tax benefits. We can also help you navigate complex tax laws and avoid potential pitfalls.

3. Stay Updated on Tax Law Changes
   Tax laws change often. Keep informed about any changes that might affect your taxes so you can adjust your strategy.
   Avoid making disproportionate expense claims that attract ATO scrutiny. The ATO uses advanced data analytics to detect anomalies based on employment type and financial investments. Excessive claims in areas like working from home, motor vehicle expenses, and rental property income are particularly scrutinised.
   Use tools like myDeductions to streamline record-keeping and ensure accuracy.

By reviewing these guidelines, individuals and small business owners in Australia can ensure their tax returns are accurate, compliant, and less likely to attract ATO scrutiny while maximising their tax refunds. Remember, thorough preparation and a proactive approach are key to optimising your tax return.