Maximising you Tax Refund
May 2014
The following checklist will help you understand your own tax position and provide your taxation adviser with the information they need to complete your tax return.
Income
Gross salary, wages, earnings, allowances, benefits, tips and directors’ fees as per the PAYG payment summary supplied by your employer.
Lump sum and termination payments as per the ETP payment summary supplied by your employer or super fund.
Government and Centrelink payments, including pensions and allowances, as per the PAYG payment summary supplied by Centrelink or other government agency.
Annuities or other pensions, such as account-based pensions, as per PAYG payment summary or statements provided by your financial institution or super fund.
Interest earned as per your bank, building society or credit union statements and ATO refund interest.
Rent received from investment properties as per real estate agent statements or personal records.
Details of any foreign source income (including overseas pensions) earned or received, foreign assets held and any foreign taxes paid.
Dividends received or reinvested, including any franking credits attached as per the dividend statements provided by the company.
Distributions from partnerships and trusts (including managed funds) as per the distribution statement provided by the partnership or trust.
Details of any capital gains or losses incurred from the sale of (or other dealings involving) CGT assets, such as shares and property. This includes dates and values of acquisitions and disposals, as per purchase and sale documents.
Expenses
Work related expenses
Motor vehicle expense details for unreimbursed work related travel in a personal vehicle, including the work related kilometres travelled.
Other unreimbursed work related travel expenses, such as taxis, public transport and bridge tolls.
Purchase of compulsory uniforms and protective clothing and laundry costs for work related purposes.
Self-education expenses, including fees, books, stationery, travel and parking.
Union fees and memberships to industry and professional organisations.
Purchase of sun protection, hats, sunglasses and sunscreen for work related purposes.
Purchase of tools of trade or equipment for work related purposes.
Telephone accounts for work related calls. Overtime meal allowances.
ttendance fees and travel for work related seminars, conferences and conventions.
Books, journals, subscriptions and your professional library expenses.
Home office set-up expenses such as depreciation on purchase of equipment, eg computer, telephone, fax and furniture. Details of home office running expenses such as heating, cooling, lighting and cleaning.
Investment related expenses
Motor vehicle expenses for investment related travel, including investment related kilometres travelled.
Telephone accounts for investment related calls.
Attendance fees and travel for investment seminars, conferences and conventions.
Interest paid and fees charged on money borrowed for investments, such as shares.
Bank fees incurred on investment related activities and accounts.
Property rental expenses, including advertising, council and water rates, insurance, interest on loans, real estate management fees, repairs and maintenance, travel for inspection, lease preparation, minor capital items depreciation and capital
works deductions.
General expenses
Donations of $2 or more to registered charities. Tax preparation fees, including travel to your tax agent.
Tax offsets (rebates) and
deductions
You may be entitled to the following tax offsets or deductions for the year ended 30 June 2014:
Private health insurance offset
Depending on your income and age, you may be eligible for a tax offset between 0 and 38 per cent. Taxpayers who haven’t claimed a reduced premium from their health fund should claim an offset in their tax return.
Spouse super contribution offset
For personal superannuation contributions made on behalf of a spouse, there is a tax offset of up to $540 pa. This is available for spouse contributions of up to $3,000 pa, where your spouse earns less than $10,800 pa, and a partial rebate for spousal income up to $13,800 pa.
Self-employed super contributions
Since 1 July 2007 eligible individuals can effectively claim a dollar for dollar deduction up to the concessional contribution cap. For 2013/14 this cap is $25,000 per person per year.
Net Medical expense tax offset
From 1 July 2013, those taxpayers who received the offset in their 2012/13 income tax assessment will continue to be eligible for the offset for the 2013/14 income year if they have eligible out-of-pocket medical expenses above the relevant claim threshold.
This offset will continue to be available for all people with out-of-pocket medical expenses relating to disability aids, attendant care or aged care expenses until 1 July 2019.
Baby bonus
Eligibility for the Baby Bonus, ends on 1 March 2014, after this date you may be able to claim Parental Leave Pay or, receive the Newborn Upfront Payment and Newborn Supplement with your Family Tax Benefit Part A payments
Child care offset
Eligible parents can claim a 50 per cent tax offset for their out-of-pocket childcare expenses, with a maximum offset of up to $7,500 per child.
To be eligible to claim the child care offset, an individual must be in receipt of the child care benefit (CCB) from Centrelink for approved childcare, and must meet the CCB work, study or training test. Taxpayers must provide receipts from their childcare provider and the reconciliation letter from the Family Assistance Office.
Mature age worker tax offset
A resident individual who is at least 55 years of age (as at 1 July 2012) and has a net income from working of less than $63,000, may be able to claim the mature age worker tax offset. The maximum amount of mature age worker tax offset that can be claimed in any one income year is $500.
Senior Australians Pensioner tax offset (SAPTO)
The senior Australians Pensioner tax offset allows those eligible to earn more income before they have to pay tax and the Medicare levy. From 1 July 2013 taxpayers eligible for this offset will pay no tax on an annual income less than:
- $32,279 (a reduced offset applies to incomes up to $50,119) for singles
- $57,948 (a reduced offset applies to incomes up to $83,580) for couples.
- Tax hints
- Superannuation is a very tax-effective vehicle to help you save for your retirement. Following are some tips to help you maximise your super.
- Contribution limits
- For the 2013/14 financial year, non-concessional (or after tax) super contributions are capped at $150,000 per person per year or $450,000 ($900,000 for a couple) over three years using the bring forward provisions.
- Concessional contributions, or those made with pre-tax money, are currently limited to $25,000 per person per year. If you are 59 or over on 30 June 2013 this cap increases to $35,000. From 1 July 2014 the higher $35,000 cap will apply to people who are 50 years of age or over.
- It is important, however, not to exceed the annual contribution limits — excess contributions could be taxed at up to 93 per cent. If you are worried, ask your financial adviser for help.
- Prepaying interest
- If you have an investment loan you can arrange to prepay the interest on that loan and claim a tax deduction in the same year the interest has been prepaid.
- Negative gearing
- Is another strategy used to manage tax liabilities. Geared investments use borrowed funds therefore enabling a higher level of investment than would otherwise be possible. Negative gearing refers to the cost of borrowing exceeding the income generated by the investment. This difference is an allowable tax deduction. If you invest in shares you may obtain imputation credits which can be used to further reduce the amount of tax you pay.
- Salary sacrifice
- A salary sacrifice strategy allows you to make contributions to super from your pre-tax salary. Your salary is then reduced by the amount you choose to sacrifice and the benefits of this are two fold: your super balance obviously increases, but this strategy could also reduce your taxable income and therefore the amount of tax you pay. Not only that, but super contributions are concessionally taxed at just 15 per cent (up to 30 per cent proposed for individuals with income over $300,000) instead of your marginal tax rate, which could be as high as 45 per cent — so you’ve got more to invest in super.
- Super co-contributions
- If you earn less than $33,516 (including reportable fringe benefits) and make an after tax contribution to super of $1,000, you will be eligible for the maximum super co-contribution of $500 from the Government. The co-contribution amount reduces by 3.33 cents for every dollar of income over $33,516 and phases out completely once you earn $48,516.
- The ATO uses information on your income tax return and contribution information from your super fund to determine your eligibility.
- Super splitting
- If you want to split your super contributions with your spouse, don’t forget this can only be done in the year after the contributions were made. Therefore, from 1 July 2013, you are able to split up to 85 per cent of any concessional (or pre-tax) contributions you made during the 2012/13 financial year with your spouse.
- Apart from making the most of your super, there are other ways you can minimise your tax liability.
- Capital gains and losses
- A capital gain arising from the sale of an investment property or shares may be offset by capital losses. For example, given the recent market downturns, you may have had to sell investments that were no longer appropriate for your circumstances and any capital losses realised as a result can be offset against any capital gains you have realised throughout the year. Specialist advice should be sought before dealing with your investments.
- Unused losses can be carried forward to offset gains in future years.
Income protection insurance
Review your income protection insurance.
If you hold a policy in your name then any premium payments you make are tax deductible.
Pension Bonus Scheme
The Pension Bonus Scheme is a voluntary scheme that rewards people who continue to work past age pension age (men 65 years and women 64 years) and Veteran’s Service Pension age (men 60 years and women 59 years).
You could be eligible for a bonus if:
- you were age pension age before 20 September 2009 and continued to work past this age
- your registration for the Scheme has been accepted (prior to 1 March 2014)
- you meet a work test with a minimum number of 960 hours for at least one year.
Individual tax rates for the year ended 30 June 2014 | |
Up to $18,200 |
Nil |
$18,201 to $37,000 |
Tax is 19% of the portion over $18,200 |
$37,001 to $80,000 |
$3,572 + 32.5% of the portion over $37,000 |
$80,001 to $180,000 |
$17,547 + 37% of the portion over $80,000 |
Over $180,000 |
$54,547+ 45% of the portion over $180,000 |
The information contained in this newsletter is of a general nature only and does not take into account your particular objectives, financial situation or needs. Accordingly the information should not be used, relied upon or treated as a substitute for specific financial advice. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided. Taurus Financial Services Pty Ltd its directors or staff, nor its employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.
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