If you haven’t yet lodged, beware that missing the October 31 deadline could see you fined up to $1110 from the Australian Taxation Office, but people can potentially miss out on much more money if they’re not focusing on their 2021-22 tax return now.

Platinum Accounting Australia managing director Coco Hou says the key to a bigger tax refund is making the right moves now rather than waiting for the June 2022 rush.

“There are a number of ways you can better manage your tax affairs throughout the year to assist in reducing your tax liability at the end of the year,” she says.

Accounting specialists have shared the following tips to max your tax refund.

DON’T BE LATE

H&R Block director of tax communications Mark Chapman says individuals who don’t lodge before November 1 “could be looking at a stiff fine” because the ATO can charge $222 penalty units for every 28-day period they’re late – up to a maximum of $1110.

“The good news is that, while the penalty is normally applied automatically, it is not normally applied to returns that either have a nil result or generate a refund,” he says.

“But you can actually lodge much later than that without being penalised. You simply need to be registered as a tax agent client by October 31, 2021 and you can lodge your tax return through that agent as late as May 15, 2022.”

WORK FROM HOME WISELY

Millions of Aussies are still working from home, and the ATO offers three ways to claim deductions for this, but the simplest claim is not always the smartest. The WFH deduction methods are:

• The 80c per hour “shortcut” flat rate that only requires you to show the hours you work at home.

• A 52c per hour flat rate that allows separate claims for work-related proportion of items such as home internet, phone costs, stationery, ink and computer equipment depreciation.

• The actual cost method where all working from home costs are recorded using receipts, diaries and logbooks.

“While it may sound like the most generous, the 80c rate does not allow you to claim anything else for working from home,” Chapman says. Many people get bigger bang for their buck using the 52c method.

SUPER BOOST

Superannuation contributions are tax deductible up to a $27,500 annual limit, and are best managed through regular payments during the financial year rather than trying to scrape together big bucks at the end.

Lower income earners on less than $41,112 can get a $500 government gift – an effective 50 per cent return on their money – through the co-contribution scheme if they make a $1000 after-tax payment into their fund.

Chartered accountant Adrian Raftery says many people on lower incomes have more pressing money priorities and he suggests making small contributions regularly.

“It is a lot more manageable if you start taking $20 from your weekly pay and putting into super, rather than trying to find $1000 at the end of the year,” Raftery says.

USE THE ATO’S APP

Raftery says poor record keeping produces low refunds.

“Tax agents cannot wave a magic wand if you don’t do the basics and keep your receipts throughout the year,” he says.

“The ATO have a great app called myDeductions which is an easy way to diligently record your receipts simply taking a picture with your mobile device at the time that you incur the expense.”

DONATE FOR DEDUCTIONS

You could set up regular donations to charities and get tax deductions for it, with many charities offering monthly direct debits.

Hou says: “for a donation to be tax-deductible, it must be made to an organisation endorsed as a Deductible Gift Recipient, and must be a genuine gift”.

INVESTMENT PLANNING

Consider tax impacts whenever you make investment moves during the year, because timing is important.

“Use a quantity surveyor to prepare a tax depreciation schedule for your rental property,” Hou says.

“A tax depreciation schedule is 100 per cent tax-deductible.”

When selling investments, remember there’s a 50 per cent capital gains tax discount for assets held more than a year, Hou says, and that investment losses can be carried forward to offset future gains.

Original article published here by The Advertiser on 25 October 2021.