As tax time nears, here are some things to think about to get the most out of this EOFY.

The end of another financial year is looming, and with that may come thoughts about your tax return and how your wealth has tracked throughout the year.

Whether you’re nearing retirement, a high-income earner looking to reduce your taxable income, or you’re on a lower income and looking for ways to maximise your super contributions; there are a few things you can consider at tax time. Read this article to finish this financial year on the right foot.

Nearing retirement? Maximise your super contributions

If you’re nearing retirement, putting as much money into your superannuation account now is a good way to make sure you build up a healthy nest egg to live off in your golden years. To maximise your super contributions, consider salary sacrificing to put more money into your super account.

Salary sacrificed super payments take money out of your pre-tax income. These are called concessional contributions and are taxed at 15%. This rate is lower than most taxpayers’ marginal tax rates, so it can be an excellent way to reduce your taxable income while increasing your superannuation savings.

The maximum employer and salary sacrificed contributions that can be made each financial year is $25,000. And remember, if you’re self-employed, your concessional contributions are a tax deduction.

Non-concessional contributions of up to $100,000 can also be made each financial year. These contributions come from your after-tax income.

Consider a one-off contribution to lower your income tax

Let’s say you’re on an income of $170,000. If you haven’t opted to salary sacrifice, your employer contributions to super will be $14,748.86 in the financial year. Therefore, your taxable income will be $155,251.14.

To lower your taxable income, you could make a one-off concessional contribution of $10,000. This will reduce your taxable income and still come in under the concessional contribution cap of $25,000.

Are you eligible for the Government co-contributions to super?

If you earn less than $54,837 per year (20/21 financial year) before tax, you could be eligible for the Government’s co-contribution on after-tax super contributions.

Those who earn under the threshold can make an after-tax contribution, and the Government will calculate your co-contribution amount when you submit your tax return. The co-contribution will be deposited directly to your superannuation account.

Taking advantage of Government co-contributions can be a great way to boost your superannuation savings, either for retirement or to save towards buying your first home.

Review your records now

It just wouldn’t be tax time without the fun of sorting through your receipts and documents. If you stay organised throughout the year, however, it doesn’t need to be a headache.

Now is the time to check you’ve been keeping good records. Have you got a record of relevant receipts and policy statements for items such as income protection policies you have outside superannuation?

Understanding the paperwork you require now to maximise your deductions will save you time when it comes to completing your tax return. If you haven’t got all of your records organised, review your spending throughout the year, identify transactions that may be a tax deduction, and put aside those receipts for tax time.

Looking for more help?

If you’re looking to maximise your tax return and get ready for a successful financial year ahead, talk to a financial adviser about your options.

It doesn’t matter your circumstances; there are options available to help you boost your super savings and get the best tax return possible.

At Hejaz Financial Services, we have an expert team that comprises of Tax Financial Advisers, Tax Agents and Accountants. We can therefore advise and assist on matters relating to Tax Minimisation, Tax Strategy, and Investment Structuring. Learn more about our tax services here.

Working from home? Here is how to boost your next tax return.

With the range of technology and software available today, it’s become easier than ever to work from home. If you’ve been working from home, you’ve likely set up a dedicated work area, and you’re using your own electricity and resources to power your workday. In this article, we take a look at the deductions available to you and how to boost your next tax return.

With the range of technology and software available today, it’s become easier than ever to work from home. Employees can efficiently complete calls using teleconferencing software, many collaboration tools are now cloud-based, and work devices, including laptops and tablets, are light and portable.

If you’ve been working from home, you’ve likely also set up a dedicated work area, and you’re using your own electricity and resources to power your workday. But which of these items can you claim in your next tax return to ensure you maximise your return?

How many Australians work from home?

Working remotely has become more common as companies began providing the technology to enable employees to work from anywhere. Research from Roy Morgan found that in early-2020, at the height of the COVID-19 pandemic shut down, 32 per cent of Australian workers were working from home. This equates to over 4.3 million people.

It’s easier for employees in certain industries to work from home, such as finance and insurance, public administration and defence, and communications. In contrast, more “hands-on” industries such as retail, manufacturing, transport and storage and agriculture still require staff to be present in-store.

Tax deductions available if you work from home

Home office expenses you may be able to claim include:
• electricity;
• cleaning costs for your dedicated work area;
• phone and internet expenses;
• computer consumables – such as printer paper and ink cartridges;
• stationery; and
• home office equipment – including computers, printers, phones, furniture, and furnishings.

The Australian Taxation Office (ATO) provides a complete list of the available deductions and how to calculate each on its website.

How to calculate your home office expenses

There are three methods employees can use to calculate their home office expenses:
• Shortcut method: 80 cents per work hour – only available from 1 March 2020 to 30 June 2021
• Fixed-rate method: 52 cents per work hour
• Actual cost method

Be careful with home office expenses

If you include home office expenses in your next tax return, ensure you calculate and apply your deductions correctly. For example, you can claim the full cost of home office equipment up to $300, but you need to claim the decline in value (depreciation) for any items that cost over $300.

Regardless of the method you use to calculate your expenses, you will need to have records. You’ll need to keep receipts for any purchases you’ve made and a record of relevant utilities and bills. You’ll also need to keep a timesheet, roster or diary that shows the hours you’ve worked from home.

If you can, keep your relevant records and receipts aside and updated throughout the year to save yourself a significant administrative workload at tax time.

Have a professional prepare your tax return to maximise your refund

With the range of deductions that may be available to you, plus the different calculation methods for home office expenses, having a registered tax professional prepare your tax return can be worth the investment. Quite often, your maximised refund will cover more than the cost of having a professional prepare your return.

If you’re unsure about the home office deductions you’re entitled to, contact an accountant or qualified financial professional for advice.

These are just a few ways to manage how your money is taxed. Depending on your circumstances, other options may be available. Your licensed adviser can work with you to help you achieve what is best for you this financial year. But please don’t leave it too late, get in before the crowd and get your refunds early.

At Hejaz Financial Services, we have an expert team that comprises of Tax Financial Advisers, Tax Agents and Accountants. We can therefore advise and assist on matters relating to Tax Minimisation, Tax Strategy, and Investment Structuring. Learn more about our tax services here.

When it comes to getting the most (money) from your annual tax return, there is usually a lot to think about, so we’ve identified a few options that could open the door to some opportunities to save on tax. This article provides a short checklist of some of the key deductions and superannuation contributions to make the most of this financial year.

The key here is to plan ahead.

Deductions — lower your tax liability

• Pay now for some of next year’s expenses

If you have some spare cash available, paying for certain expenses before June 30 could mean you get your tax break back from the ATO earlier. Expenses paid in July could leave you waiting more than 12 months for the return. A popular expense in this category is prepaying interest on an investment loan, but be careful because not all expenses qualify for a tax deduction in advance.

This year the ATO is focusing on work-related expenses. If you are planning to claim expenses for things like a home office, mobile phone, tools and equipment, etc, make sure you claim only eligible expenses and have the paperwork to substantiate them.

• Cash back for insuring your income

You can claim the premiums you have paid for your income protection insurance as a tax deduction. Note that you can only claim the portion of the premium that covers you for loss of income, not for any benefits of a capital nature. Premiums for other personal insurance cover such as life, critical care or trauma cannot be claimed. You also can’t claim deductions for premiums that are paid from your superannuation contributions if your policy is held in your fund.

Super contributions — don’t waste the limits

June 30 is not just about deductions for expenses. It’s also a good time to review your superannuation contributions to date and take advantage of the annual caps.

• Salary sacrifice or concessional contributions

The annual limit for these types of tax-deductible contributions is $25,000 per annum, regardless of age. If you’re an employee, this limit covers both employer super guarantee and salary sacrifice contributions.

How much has your fund received in contributions so far this year? Do you need to review and adjust your current arrangements?

• After-tax contributions

Anyone under 65 (whether working or retired) can contribute $100,000 each year to super as after-tax or non-concessional contributions. You can also contribute $300,000 in a single year by bringing forward the limit for the following two years. But – when it comes to super there’s usually a ‘but’ – check your total super balance to ensure any extra contributions do not exceed the general balance transfer cap of $1.6 million for 2017/18.

And one final point on super contributions – the total contributed is based on how much is received by your fund, not when you sent it to the fund. Another reason why planning ahead is crucial.

These are just a few ways to manage how your money is taxed. Depending on your circumstances, other options may be available. Your licensed adviser can work with you to help you achieve what is best for you this financial year. But please don’t leave it too late, get in before the crowd and get your refunds early.

At Hejaz Financial Services, we have an expert team that comprises of Tax Financial Advisers, Tax Agents and Accountants. We can therefore advise and assist on matters relating to Tax Minimisation, Tax Strategy, and Investment Structuring. Learn more about our tax services here.

Starting 1 July 2019, businesses with 19 or less employees will be required to adopt the single touch payroll (STP) system. This will change the way businesses report salary/wages, PAYG and superannuation information to the tax office. So, what is single touch payroll and how big is the change? We explain the main points.

What is it

Single Touch Payroll (STP) is a new way of reporting payroll to the ATO. The ATO will use single touch payroll reports as the sole record of salary/wages paid, taxes collected, and superannuation contributed.

Difference

Instead of finalising your payroll records at the end of the financial year by providing a payment summary for annual report and employee respectively, small businesses now will need to submit the information online after each pay day, using a specific format known as SBR (Standard Business Reporting).

What it means

• You’ll be updating the ATO on a pay-by-pay basis
• No need for annual report and employee payment summaries
• Depending on how you do payroll now, you may need to change software or find a service provider who can produce compliant reports for you.

How

There are several payroll software packages that you may use to submit your reports to the ATO on your own. However, you’ll need to make sure the reports are ATO-compliant.

If you’re not ready to report your payroll requirement on your own, get in touch with our accounting team at Hejaz Financial Services, and we will guide you through the options. We offer great packages to maintain your STP requirement and save you the hustle and complications you may face. Our packages include:

• Lodgement of weekly/fortnightly payroll using STP
• Lodgement of monthly/quarterly instalment activity statement
• Lodgement of monthly/quarterly business activity statement
• Software subscription