Unlock a $280 tax refund with this simple trick
- Replies 9
Disclaimer: This article should not be considered financial advice. For professional guidance, please consult a financial advisor.
As the saying goes, 'In this world, nothing can be said to be certain except death and taxes.'
But what if there's a way to make your tax situation a little less burdensome?
With the Stage 3 tax cuts set to kick in on July 1, there's a golden opportunity to claim back $280 in tax—and it's easier than you might think.
Everyone pays the same tax rates, regardless of income or generation. However, clever individuals know how to use these rates to their advantage.
With the upcoming tax cuts, most of the media attention has been on who will benefit and who will lose out.
But there's a crucial aspect that's been overlooked: the short window of opportunity to get more back in your tax return this year.
Ben Nash, Financial Advisor and Founder of Pivot Wealth, stated: ‘Lower tax rates next year mean you’ll pay less tax—but what most people haven’t fully figured out yet is that it means your tax deductions are also going to be worth less as soon as these tax cuts kick in.’
‘Which means deductions you get between now and June 30 are going to be worth more than they ever will be again,’ he added.
Nash broke it down: if your income is $190,000 in this current financial year, every dollar of deductions you claim this year will be refunded at 47 cents in the dollar.
But next year, those same deductions will be refunded at 37 per cent, meaning 10 per cent less return on your deductions. This applies across all income brackets, not just high earners.
‘The average tax refund in Australia is $2,800, so if you were able to get an extra 10 per cent back, you’re looking at $280 of free money—which could be even higher depending on your level of deductions,’ he explained.
‘If you want to use the rules to your maximum advantage, you’ve got a small, fast-closing window to make it happen.’
So, what can you deduct? Nash mentioned several expenses.
The two largest work-related deductions are motor vehicle expenses—which can be claimed if you're using your vehicle for work purposes—and home office expenses.
Another area many people claim is around self-education expenses. Any education, reading or learning you do that can help you increase your income is generally considered deductible by the Australian Taxation Office (ATO).
Outside of work-related deductions, Nash said that you can also claim expenses relating to your investing and tax strategy.
‘Interest costs on investment debt, capital losses on investments, the cost of tax advice, or advice around generating ongoing investment income, depreciation, and negative gearing expenses can all be claimed and help maximise your tax refund,’ he shared.
To get the maximum tax return, it's crucial that you understand the rules. Many people miss out on claiming deductions and getting a refund simply because they don't know what they can and cannot claim.
The ATO website offers useful guides about tax deductions to help you maximise your benefits.
Nash highlighted the benefits of shifting your tax-deductible expenses in this current financial year.
‘Firstly, as mentioned above, with the changing tax rates, your deductions will be worth more to you this year than next—but it also means that you get any tax back a full year sooner.’
For instance, you could consider paying interest costs, insurance premiums, the cost of advice, or advance your home office or vehicle spending. This will increase your deductions in the current financial year and will ensure that you receive your money back sooner.
However, Nash pointed out: ‘Note that this only works if the expenses are going to happen anyway, i.e. it doesn’t make financial sense just to spend money to get a tax deduction. But, if you’re going to spend this money anyway, you’ll benefit from bringing tax deductible spending forward.’
Additionally, Nash emphasised that keeping good records is crucial when it comes to tax.
You must be able to back up your claims with the ATO, and if you’re not on top of tracking your tax-deductible expenses, it’s easy to miss things when you submit your tax return.
It's important to have a system in place to track your tax-deductible expenses. You can use the shoebox method, a tax tracking app, your own spreadsheet, or any other method that works for you. The key is to keep track of your expenses and have them easily accessible when needed.
‘Most people miss out on claiming tax deductions simply because they didn’t keep good records, so don’t fall into this trap,’ he said.
‘Tracking your tax deductions well will also make it easier for you to do your tax planning before [end of financial year] and help you get your tax return submitted promptly to get the money back in your bank account faster,’ Nash continued.
Being proactive with your tax planning is something that’s valuable and important every year, but this year in particular, with the changing tax rates, it’s even more valuable. The window of opportunity here is closing fast, and once closed, it will be gone for good—so don’t miss out.
What are your thoughts on the upcoming tax cuts, members? Share them in the comments below!
As the saying goes, 'In this world, nothing can be said to be certain except death and taxes.'
But what if there's a way to make your tax situation a little less burdensome?
With the Stage 3 tax cuts set to kick in on July 1, there's a golden opportunity to claim back $280 in tax—and it's easier than you might think.
Everyone pays the same tax rates, regardless of income or generation. However, clever individuals know how to use these rates to their advantage.
With the upcoming tax cuts, most of the media attention has been on who will benefit and who will lose out.
But there's a crucial aspect that's been overlooked: the short window of opportunity to get more back in your tax return this year.
Stage 3 tax cuts are scheduled to come into effect on July 1. Image source: Shutterstock
Ben Nash, Financial Advisor and Founder of Pivot Wealth, stated: ‘Lower tax rates next year mean you’ll pay less tax—but what most people haven’t fully figured out yet is that it means your tax deductions are also going to be worth less as soon as these tax cuts kick in.’
‘Which means deductions you get between now and June 30 are going to be worth more than they ever will be again,’ he added.
Nash broke it down: if your income is $190,000 in this current financial year, every dollar of deductions you claim this year will be refunded at 47 cents in the dollar.
But next year, those same deductions will be refunded at 37 per cent, meaning 10 per cent less return on your deductions. This applies across all income brackets, not just high earners.
‘The average tax refund in Australia is $2,800, so if you were able to get an extra 10 per cent back, you’re looking at $280 of free money—which could be even higher depending on your level of deductions,’ he explained.
‘If you want to use the rules to your maximum advantage, you’ve got a small, fast-closing window to make it happen.’
So, what can you deduct? Nash mentioned several expenses.
The two largest work-related deductions are motor vehicle expenses—which can be claimed if you're using your vehicle for work purposes—and home office expenses.
Another area many people claim is around self-education expenses. Any education, reading or learning you do that can help you increase your income is generally considered deductible by the Australian Taxation Office (ATO).
Outside of work-related deductions, Nash said that you can also claim expenses relating to your investing and tax strategy.
‘Interest costs on investment debt, capital losses on investments, the cost of tax advice, or advice around generating ongoing investment income, depreciation, and negative gearing expenses can all be claimed and help maximise your tax refund,’ he shared.
To get the maximum tax return, it's crucial that you understand the rules. Many people miss out on claiming deductions and getting a refund simply because they don't know what they can and cannot claim.
The ATO website offers useful guides about tax deductions to help you maximise your benefits.
Nash highlighted the benefits of shifting your tax-deductible expenses in this current financial year.
‘Firstly, as mentioned above, with the changing tax rates, your deductions will be worth more to you this year than next—but it also means that you get any tax back a full year sooner.’
For instance, you could consider paying interest costs, insurance premiums, the cost of advice, or advance your home office or vehicle spending. This will increase your deductions in the current financial year and will ensure that you receive your money back sooner.
However, Nash pointed out: ‘Note that this only works if the expenses are going to happen anyway, i.e. it doesn’t make financial sense just to spend money to get a tax deduction. But, if you’re going to spend this money anyway, you’ll benefit from bringing tax deductible spending forward.’
Additionally, Nash emphasised that keeping good records is crucial when it comes to tax.
You must be able to back up your claims with the ATO, and if you’re not on top of tracking your tax-deductible expenses, it’s easy to miss things when you submit your tax return.
It's important to have a system in place to track your tax-deductible expenses. You can use the shoebox method, a tax tracking app, your own spreadsheet, or any other method that works for you. The key is to keep track of your expenses and have them easily accessible when needed.
‘Most people miss out on claiming tax deductions simply because they didn’t keep good records, so don’t fall into this trap,’ he said.
‘Tracking your tax deductions well will also make it easier for you to do your tax planning before [end of financial year] and help you get your tax return submitted promptly to get the money back in your bank account faster,’ Nash continued.
Being proactive with your tax planning is something that’s valuable and important every year, but this year in particular, with the changing tax rates, it’s even more valuable. The window of opportunity here is closing fast, and once closed, it will be gone for good—so don’t miss out.
.png){kind=icon}
