Tax: five things to do before EOFY
Being a parent, the days often seem to blur together. Between looking after our precious children, working and trying to keep the house in some pretence of order, there just aren’t enough hours in the day for all the necessary things, let alone anything extra.
One extra thing that is definitely worth making time for though is getting ready for the end of financial year. It doesn’t have to be complex at all, but a half-hour or so of paperwork between now and June 30th could make a few hundred dollars of difference to your tax return.
So for all parents, here are five easy things to do before next Friday:
Remember to pay your bills! It sounds obvious, but forgetting to pay bills is so easy in the midst of the day-to-day rush. If those bills are possibly a tax deduction though (income protection premiums, for example, or donations; work-related expenses or investment costs) then pay them before June 30th, otherwise they can’t be claimed in your tax return this year. The difference between paying an expense on June 30th or July 1st is an extra twelve-month wait to get the benefit of the deduction!
Check out the Education Tax Refund. A great cost-saving initiative, the education tax refund enables eligible parents to claim half of most education expenses up to a maximum tax refund of $397 for each primary school child and up to $794 for each secondary school child. Items such as home computers and laptops, related computer equipment or repairs, home internet connection and school textbooks can all be claimed – so make sure you have all your receipts ready. From July 1st, uniforms will also be claimable. You can check what is – and isn’t – available at www.educationtaxrefund.gov.au.
Calculate your medical costs. If your family has had an expensive time healthwise lately, then make sure you pull out your receipts and calculate how much you have spent on medical costs for this financial year. You can claim a tax offset of 20% (that is, 20 cents in the dollar) of your family’s net medical expenses over $2,000. So if you are close to or past that limit and have any medical costs coming up in the near future (dental? New glasses?) then try to make the appointment and pay the bill before the end of next week. You can find out more about the offset on the taxation office website here. http://www.ato.gov.au/individuals/content.aspx?doc=/content/00251172.htm&page=11&H11
Know what work deductions you can claim: For working parents there may be a wealth of work-related tax deductions available. The thing is though that what you can claim varies from profession to profession. Fortunately the taxation office publishes fact sheets on what deductions may be available for which profession. You can check them out online here. http://www.ato.gov.au/individuals/pathway.aspx?sid=42&pc=001/002/010
Bring forward your kids’ income! This one will only affect a small percentage of parents with young children, however those mini-tycoons who receive income from investments or a family trust should note that their tax-free threshold will be significantly reduced next financial year. Currently, children under eighteen can receive $1,666 of “unearned” income before they are taxed at penalty rates. However from July 1st this year the government has removed their access to the low income tax offset for this type of “earnings”, meaning that children will only be able to receive $416 in “unearned” income before they are taxed at 66%. See your accountant for more details.
So in short, pay your bills and check what you may be entitled to. And best wishes for a Happy New (Financial) Year!