This tax time will be unlike any other and it promises to be one of the most challenging yet. The 2019/20 financial year has seen our country, our people, our wildlife and our land affected by unprecedented events.
From drought and water shortages, to severe bushfires and more recently the COVID-19 pandemic – every Australian has been affected in some way. As many of us review the past six months and set new goals, consider what you have learnt from the lockdown and how your plans for the future may have changed.
For some your financial situation may have changed. For others your income and expenditure may have altered during the period of lockdown, and while we were all impacted in different ways, the past few months presented a degree of uncertainty for everyone, highlighting the need for financial security.
Tax time can feel stressful, but there are simple things you can do to make filing your return feel less daunting when the time comes around. Here are some of the steps you can take year-round to help you prepare for tax time.
Tax concessions
If you had a reduced income for any parts of 2020 it will mean you may well benefit from a tax refund as you may not have worked the full year or not at the rate you began last year.
When you are calculating your expenses for the past financial year, also remember that there are expenses associated with working from home such as mobile and internet costs, electronic device purchases and stationery costs.
The Australian Taxation Office has a quick formula which will allow you to claim 80c for every hour worked at home or else you can choose to calculate the actual amount yourself. This may end up giving a better result but could be more time consuming. The volatile share market may also mean that you have some capital gains or losses that you can offset against your taxable income.
What’s new for individuals?
2019/20 has been difficult, but your tax return doesn’t need to be. The ATO have created a range of different guides to help you through this tax time with specific measures and support available for individuals.
- JobKeeper
- JobSeeker
- Working from home
- Early release of superannuation
- Reducing superannuation minimum drawdown rates
- Changes to payment summaries
- Low and middle income tax offset
- Genuine redundancy and early retirement scheme payment changes
- Capital gains tax changes for foreign investors
- Net medical expenses for disability aids, attendant care or aged care
- Limiting deductions for vacant land
- Amounts you do and do not need to include in your tax return
- New to tax and super
ATO toolkits
These toolkits created by the ATO have been designed for various occupations and tips on how to avoid common mistakes. Here are a few toolkits you might want to check out:
- Tax Time Toolkit – rental property owners
- Small Business Guides
- Income to declare
All the ATO toolkits can be found on their website.
Tax refunds
Many people are already planning what they’ll do with their tax refund money. Bills? Mortgage? Holiday? Shopping?
We’d like to share with you a few ways to help you either save those funds wisely or get the most out of your tax refund.
There are some really smart ways to use tax refund money, depending on your circumstances. The obvious ways are through reducing any personal debt or saving it.
- Pay off your credit card
- Pay a lump sum off your home loan
- Contribute to superannuation and/or investments
- Keep it in your home loan offset account
- Save into an online savings account or term deposit
Using your tax refund for a little splurge is a great way to reward yourself for all your hard work throughout the year. It’s always a good idea to shop around to get the best price on whatever you are planning to buy.
Whether it’s a new a pair of shoes, watching your account balance grow or slashing your personal or home loan debt, we hope you make great use of your tax refund. If you’d like more information about using your tax refund to help reduce your personal debt or saving it – talk to us today.
This year has highlighted the importance of reaching out and asking for support. The team at Evalesco are always here to help. We can keep you on track to reaching your goals. Feel free to get in touch with your adviser today.
