What you need to consider for your Income Tax Return

The end of the financial year is a great time for individuals and businesses to get their finances in order. Under the tax law, individuals and businesses are required to keep records of their financial transactions as well as supporting documents and other information that is included in stating income and claiming a tax deduction.

Individuals

For individuals recording your income and claiming work-related expenses may seem simple, however many are claiming deductions that they shouldn’t and missing out on other deductions which could reduce your taxable income.

Here are some common expenses that may be relevant for you to claim;
Working from home (learn more)
- Nowadays many of us work from home and there are several deductions that may be available to employees working from home. Remember to keep your receipts for
  - internet usage
  - Mobile phone
  - Laptop
  - Home office – eg electricity & gas and depreciation on your office furniture.
- Work-related deductions
Motor Vehicle deductions (learn more)
- Ensure you keep a log book for your vehicle usage.
Asset purchase for work use
Superannuation Contributions
- The amount of concessional (tax deductible) contributions that can be contributed to super is limited to $25,000 for all individuals. Avoid additional tax and administrative fees by making sure you don’t exceed this limit
- Age restrictions apply in some circumstances
Self education expenses
Repairs & maintenance
Insurance
Depreciation
Interest
Property expenses
- If you can bring forward any expenses that can be claimed
  - Pest control
  - Upfront interest repayment
- Share purchases or sales
  - If you have generated a capital gain, are there any others that you are considering selling that might incur a capital loss? If so, it could be worthwhile selling those before 30 June so the you can offset the capital gain with the capital loss.
- Reduced pension drawdowns
  - As a result of COVID the minimum drawdown requirements for account-based pensions and similar products have been temporarily reduced by 50%. This will benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.

Businesses

You can claim deductions for most business expenses, as long as they directly relate to earning your income. For example, you may be able to claim deductions if your business;

Has set up a website
Has motor vehicle expenses
Uses diesel fuel
Operates at home
Has travel expenses
Uses machinery, tools or computers.

You will require records to prove the expenses that you claim as a business deduction.

Some areas to consider and tasks that will need to be completed for the year end include;

Stock take
Finalise STP
Annual Taxable payment reports
Review debtors & creditors to see if any need paying or following up
Prepay expenses – when you bring forward other expenses, you can obtain the deduction this year, thus reducing your immediate tax obligations
Meeting superannuation requirements – if you need an additional deduction in order to reduce your tax bill, consider using super as a tax strategy. You can obtain a deduction a year earlier by paying your super Planning for an early deduction can give you increased flexibility in your budget and cashflow.
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