It’s the biggest week of the tax year – here are 10 tax tips and traps

The biggest week of the tax season is here. The 14 July deadline for employers to send out group certificates has come and gone and thousands of Australians are expected to flock to their tax agents this week to find out what they can do to reduce their tax bills and maximise their returns.

Every cent counts for cash-strapped individuals in the downturn. While SmartCompany has already revealed the top 15 tax tips for small business, (part one and part two), here are 10 more tips for individuals looking to maximise their returns.

1. Deductions

Remember to claim eligible work-related and home office expenses. No receipts are required for deductions totalled under $300, but if you go over that amount you will need receipts for the total amount, not just the deductions over $300.

Additionally, laundry costs can be claimed without receipts if the total is under $150.

2. Targets

The ATO usually picks a number of areas to scrutinise each year. This year it will look at the returns of high-income earners, inappropriate loss schemes, re-characterising capital losses as revenue losses, rental property owners and capital gains tax claims.

And be careful if the ATO has sent you a helpful letter specifying what you can and cannot claim, as this may indicate you are employed in an area which the tax office is investigating heavily. Occupations under scrutiny this year include sales and marketing managers, electricians and truckies and are firmly in the tax man’s sights.

3. Rental properties, holiday homes

The Australian Taxation Office will be looking hard at rental property owners this year, after reports that rental income is being over-reported and deductions over-claimed.

Nevertheless, rental property owners may claim deductions for advertising, bank charges, body corporate fees, gardening, cleaning, council rates, postage and stationery, property agent fees and commissions, repairs, secretarial and bookkeeping fees, telephone calls, water rates, electricity and gas, pest control, legal costs, land tax, cleaning and even security control fees.

Additionally, changes to non-commercial losses now mean owners of holiday homes will not be able to claim a high deduction for a home that is rented out for only three or four weeks of the year. This only applies to individuals earning over $250,000.

4. Superannuation contributions

For low income earners the Government will match superannuation contributions dollar-for-dollar. Individuals should also be aware that changes in the budget reduce voluntary contributions to just $25,000 for those under 50 and $50,000 for those over 50.

5. Capital gains and losses

If you have managed to record a capital gain during the year, investigate whether it is possible to actually realise a capital loss to offset the gain.

6. Medical expenses

A rebate of 20 cents to the dollar for every dollar spent over $1,500 is available for all medical procedures performed during the one financial year.

7. Depreciating assets

Individuals may claim an immediate deduction for the cost of certain depreciating assets less than $300, but they must have been used for producing assessable income that is not from running a business.

8. Medicare levy surcharge

Be aware that the Medicare levy surcharge thresholds have increased, following the May budget. For singles the threshold has increased from $50,000 to $70,000 and from $100,000 to $140,000 for families. If you don’t have private health insurance, you may be able to dodge the surcharge this year.

9. Donations and gifts

Ensure you have all your receipts available for donations and gifts made during the year, as no amount can be claimed if the receipts are not on-hand.

10. Children

Don’t forget about the 30% child care tax rebate, which covers out of pocket child care expenses for approved centres. The maximum rebates are about $4,200 although this will increase next year, as the Government has increased the child care rebate to 50% from 1 July.

Additionally, make sure you keep receipts for education expenses, as you could be eligible to claim them under the Government’s 50% refund for primary and secondary school equipment purchases. The refund covers items such as laptop computers, computer related equipment such as printers, school textbooks and even trade tools for trade courses.