How to make the most of your tax return
Tuesday, 11 August 2020
Filing your annual tax return may not be your favourite task, even if you do have an accountant on board to help. However, spending just a little bit of time getting your financial ducks in a row at the beginning of the financial year can pay dividends now and down the track.
With many of us working from home during the coronavirus pandemic, there’s plenty of deductions to be claimed this year. If your income has dropped, you will probably be looking forward to a better tax return than usual.
HomeStart Finance’s Chief Executive Officer John Oliver has these five tips on making the most of your tax return.
1. Use your tax return to pay off debt
It’s been a tough year financially for many of us, so if you’ve got outstanding debts, your tax return can be a great way to start getting on top of things. Tackle anything particularly urgent first, such as overdue mortgage repayments, rent, overdue accounts or council rates. Then look at any debts where you’re paying a particularly high interest rate, such as credit cards or car loans. If you’re struggling, the National Debt Helpline can help on 1800 007 007.
2. Put an extra lump sum on your mortgage
If all your urgent debts are paid off, it makes a lot of financial sense to put your tax return into your mortgage; especially while interest rates are so low. Not only will it help shave weeks or months off your mortgage (fingers crossed for a good tax return), but it will also give you a bit of breathing room if your circumstances change down the track – or if interest rates go up………and they will one day in future.
3. Speak to your tax advisor to ensure all relevant items have been claimed
A good tax agent or accountant is worth their weight in gold, so if you don’t have a trusted one already, ask friends, family or colleagues for their recommendations. While you will pay for their expertise, it’s likely to be well worth it in the long run, as they can inform you of any changes to the tax system, while helping you claim maximum deductions on everything from self-education expenses to donations or voluntary super contributions. Plus, your appointment is tax deductible, too.
If you are working from home at the moment:
4. Claim work from home deductions
If you have found yourself working from your spare bedroom or kitchen table during COVID-19, you’ve likely spent more on electricity bills and home office equipment. Under the Australian Tax Office’s new ‘shortcut’ method you can claim 80 cents per hour for running expenses such as bills, phone, and internet for the hours you worked at home between March 1 and June 1. However, if you have the time and patience, it’s also worth investigating whether the ATO’s ‘fixed rate’ or ‘actual cost’ methods might allow you to claim more. Plus, don’t forget to claim a deduction on any home office equipment expenses, such as new desks, computers, or chairs.
5. Use your tax return on home (or home office) improvements
Depending on the size of your tax return, you might be able to use it to make a few much-needed improvements around your home, get solar panels installed or just tick off those odd jobs that need to be done – such as getting your fence fixed, sorting out any plumbing problems, giving your place a fresh lick of paint or sprucing up the garden.
If you think that you are ready to start the home buying journey, contact HomeStart today and take the first step in getting into your own home, sooner.
With many of us working from home during the coronavirus pandemic, there’s plenty of deductions to be claimed this year. If your income has dropped, you will probably be looking forward to a better tax return than usual.
HomeStart Finance’s Chief Executive Officer John Oliver has these five tips on making the most of your tax return.
1. Use your tax return to pay off debt
It’s been a tough year financially for many of us, so if you’ve got outstanding debts, your tax return can be a great way to start getting on top of things. Tackle anything particularly urgent first, such as overdue mortgage repayments, rent, overdue accounts or council rates. Then look at any debts where you’re paying a particularly high interest rate, such as credit cards or car loans. If you’re struggling, the National Debt Helpline can help on 1800 007 007.
2. Put an extra lump sum on your mortgage
If all your urgent debts are paid off, it makes a lot of financial sense to put your tax return into your mortgage; especially while interest rates are so low. Not only will it help shave weeks or months off your mortgage (fingers crossed for a good tax return), but it will also give you a bit of breathing room if your circumstances change down the track – or if interest rates go up………and they will one day in future.
3. Speak to your tax advisor to ensure all relevant items have been claimed
A good tax agent or accountant is worth their weight in gold, so if you don’t have a trusted one already, ask friends, family or colleagues for their recommendations. While you will pay for their expertise, it’s likely to be well worth it in the long run, as they can inform you of any changes to the tax system, while helping you claim maximum deductions on everything from self-education expenses to donations or voluntary super contributions. Plus, your appointment is tax deductible, too.
If you are working from home at the moment:
4. Claim work from home deductions
If you have found yourself working from your spare bedroom or kitchen table during COVID-19, you’ve likely spent more on electricity bills and home office equipment. Under the Australian Tax Office’s new ‘shortcut’ method you can claim 80 cents per hour for running expenses such as bills, phone, and internet for the hours you worked at home between March 1 and June 1. However, if you have the time and patience, it’s also worth investigating whether the ATO’s ‘fixed rate’ or ‘actual cost’ methods might allow you to claim more. Plus, don’t forget to claim a deduction on any home office equipment expenses, such as new desks, computers, or chairs.
5. Use your tax return on home (or home office) improvements
Depending on the size of your tax return, you might be able to use it to make a few much-needed improvements around your home, get solar panels installed or just tick off those odd jobs that need to be done – such as getting your fence fixed, sorting out any plumbing problems, giving your place a fresh lick of paint or sprucing up the garden.
If you think that you are ready to start the home buying journey, contact HomeStart today and take the first step in getting into your own home, sooner.
