June 24, 2014
The beginning of a new financial year is a great time for Australians to get their finances in order and make their money work harder for them.
Mortgage Choice spokesperson Jessica Darnbrough said Australians can take significant steps now to help them maximise their tax refund, thus helping them to achieve their financial goals sooner rather than later.
“If you wish to maximize your tax refund, it is really important to know what you can claim and what you can't. Many people have no idea that they can claim a tax deduction on petrol or home office expenses,” Ms Darnbrough said.
“You don't have to run a business from home to claim things like stationary. Rather, you just need to have a dedicated place to work at home.
“Similarly, many property investors don't realise that they may be able to claim for a range of expenses, including agents' fees, advertising, body corporate fees, capital expenses, building maintenance and repairs, cleaning, insurances, home loan fees and interest payments. Don't forget council and water rates, plus the cost of travel to and from the property for inspections can also be claimed.
“One aspect that property investors often overlook when lodging their tax return is depreciation deductions. Depreciation applies to new and existing residential properties and in most cases owners of an investment property or properties are likely to be able to claim something.
“Everyone's situation is different, so it is important to consult a financial adviser to help determine any tax deductions.”
Of course, while it is important to do all you can to maximise your tax return, Ms Darnbrough said now is also the perfect time to review your current financial situation and introduce changes that can not only help you to improve next year's tax return, but your overall financial position.
“Part of good tax management involves making plans for the year ahead rather than facing a last minute rush,” she said.
Mortgage Choice provides the following tips for Australians moving into the new financial year:
Formalising salary sacrifice super arrangements: Making salary sacrificed super contributions offers a simple way to save on tax and build wealth. It involves having part of your before-tax salary paid into your super rather than taking the money as cash in hand. These contributions are taxed at 15%, which is likely to be below your marginal tax rate (which could be as high as 46.5%), so more of your money goes towards growing your super rather than paying the tax man. Up to $25,000 annually can be added to super through pre-tax contributions ($35,000 if aged 60-plus). This limit includes your employer's compulsory contributions.
Examine your asset structure: It is important to review how your assets are structured on a regular basis (at least once a year) to make sure you are achieving a balance of flexibility of use and protection from creditors and excess taxes. If done effectively, asset structuring can provide tax advantages, family tax protection and the longevity of assets.
Use your tax return to your advantage: Every little bit of savings can put potential buyers closer to property ownership. Those looking to purchase property could consider contributing their tax refund into a high interest paying savings account or they could utilise the tax refund to reduce any existing debt. Having too much debt can make a difference when it comes time to apply for a home loan.
“It is important to remember that everyone's situation is different, so consult with the experts to ensure your finances are on track to help you achieve your goals,” Ms Darnbrough said.