Tax Tips- 2012 Individual Tax Returns
Use a tax agent
Every PAYG taxpayer is required to lodge their tax return before 31st October, but tax agents are given more time to lodge their clients' returns. If you have to pay tax, this can be a handy extension to delay having to pay. The fee paid to a tax agent is also an allowable deduction in the tax year it is paid.
If you can, pre-pay investment loan interest
You may be able to negotiate with the lender of your investment property or margin loan to pre-pay interest on borrowings before 30th June and benefit from a tax deduction.
Use the CGT rules to your advantage
Capital gains made on investments cannot be 'carried forward' to future tax years, but unused capital losses must be carried forward to offset future realised capital gains. So if you have made and crystallised a capital gain from your investments this financial year (which will be added to your assessable income and taxed at your highest marginal rate), think about selling any investments on which you have lost money before 30th June to offset the gain.
Put as much as you can into super - but beware of the caps
Salary sacrificing into super is a good way to reduce your taxable income and pay less tax while at the same time saving for your retirement. However, please be aware of exceeding the legislated super contribution limits as tax can be levied at the highest rates on the excess contributions. If you do exceed your caps there is some relief available – up to $10,000 in excess super contributions can be 'allocated' to assessable income instead which will be taxed at your marginal rate. You are only allowed to do this once.
The government will match your super contribution 100% up to $1000. So if you contribute $800 of your after tax money the government will contribute $800 on your behalf. This is income tested and cuts out when your income reaches $61920.
Children at school?
The Education Tax Rebate (ETR) is being replaced by the new SchoolKids Bonus which is a cash hand-out of $820 for every high-school student and $410 for every primary school child.
The new SchoolKids Bonus will not commence until January 2013. The means-tested payments, with a cut-off ranging from family income of $101,000 for one primary school child to $123,000 for two high-school students, will be paid to those who qualify for Family Tax Benefit part A.
As part of the transition to the new Schoolkids Bonus, the ETR for 2011-12 will be paid as a lump sum in June 2012. All eligible families will receive the maximum ETR entitlement for 2011-12, without having to claim through their tax return. Payments will be deposited into their bank account as follows:
• $409 for each child in primary school
• $818 for each child in secondary study
If you do not receive a one-off payment in June, you will need to contact Centrelink to check whether you are entitled.
Are there any tax deductions you may not have thought of?
You can claim up to $300 of work-related expenses without receipts, provided the claims are for outgoings related to earning assessable income. Follow this link for a checklist of work-related deductions to keep as a handy reference. Also, here is a list of deductions that are grouped according to certain professions.
Private health insurance rebate
From July 1, 2012 an individual's entitlement to a private health insurance rebate will be income tested. These changes are for the 2012-13 financial year. Taxpayers will not be entitled to their current rate of rebate if their income for Medicare levy surcharge purposes is either a single income of $84,001 or more, or a combined family income of $168,001 or more. See more details here.
Medical expenses tax offset
Any out of pocket medical expenses over $2,060 will be eligible for a 20% rebate. From the 01/07/2012 this will be income tested. Eligible out of pocket medical expenses include payments;
• to dentists, orthodontists or registered dental mechanics
• to opticians or optometrists, including for the cost of prescription spectacles or contact lenses
• to a carer who looks after a person who is blind or permanently confined to a bed or wheelchair
• for therapeutic treatment under the direction of a doctor
• for medical aids prescribed by a doctor
• for artificial limbs or eyes and hearing aids
• for maintaining a properly trained dog for guiding or assisting people with a disability (but not for social therapy)
• for laser eye surgery, and
• for treatment under an in-vitro fertilisation program.
Higher Education Loan Program (HELP or HECS) and Student Financial Supplement Scheme (SFSS)
Voluntary repayments of $500 or more will receive a 5% discount. If your debt is close to being repaid it is better to make the voluntary payment to clear the debt and get the 5% discount before lodging your tax return.
ATO is targeting…
The ATO is targeting residents that are not disclosing foreign income. If you are a resident of Australia for tax purposes then you must declare your worldwide income.
They are also targeting the following professions;
Real estate employees, Carpenters and joiners, Earthmoving plant operators, and Flight attendants.
What they say: “We selected these occupations because of the number of employees and the relatively high amount of work-related expenses being claimed in previous years, compared with other similar occupations.”