Individual Tax Returns in Adelaide: What You Need to Know for EOFY

As the end of another financial year (EOFY) approaches on June 30, it’s time to take a deep breath and get ready for tax season. While the thought of tax returns in Adelaide might seem daunting and tedious, a little preparation can go a long way in making the process smoother and potentially more rewarding. With the right tips you can understand your obligations, maximise your tax deductions, and even boost your savings.

The EOFY is not just about wrapping up the current year; it’s also about setting the stage for the next one. Think of it as a financial reset button. The Australian Taxation Office (ATO) is diligent in ensuring everyone follows the rules, but that doesn’t mean you can’t make the most of your entitlements. By keeping your records up to date and knowing what to include in your tax return, you can avoid unnecessary stress and potentially enjoy a nice tax return.

In this article, we’ll walk you through some essential steps and considerations for your EOFY tax preparation. We've got you covered, whether it’s understanding your different income streams, knowing what deductions you can claim, or planning strategies to reduce your tax bill. And remember, if you ever feel unsure, reaching out to your JSA tax accountant in Adelaide can provide personalised guidance to help you confidently navigate tax time.

How You Can Prepare for Tax Returns in Adelaide

Don’t put your tax return in the "too hard basket." You might enjoy a financial boost if you know what to include and how to maximise work-related tax deductions.

Taxable Income

Your income isn’t just what you earn from your employer. Here are some sources of income to consider:

• Salary/wages
• Lump sum/termination payments
• Employee share schemes
• Bank interest
• Dividends
• Capital gains (profits from disposing of assets)
• Cryptocurrency gains
• Foreign Income
• Managed funds income
• Rental property income

Tax Deductions

Understanding deductions can be one of the most confusing parts of tax returns. However, taking full advantage of tax deductions can significantly impact your financial situation, making good financial sense. By knowing what you can claim and keeping the necessary documentation, you can potentially maximise your deductions and increase your tax return in Adelaide benefits.

You can claim tax deductions for various expenses, especially as a business owner. This can include interest on business loans, business-related insurance policies, and tax agent costs. Make sure to keep records to prove these expenses. Here are some standard tax deductions:

• Work-related expenses
• Home office expenses
• Self-education and professional development
• Registrations, subscriptions, memberships
• Vehicle and travel expenses
• Protective clothing, laundry, and dry-cleaning expenses
• Tools and equipment, including depreciable assets like laptops and computers
• Accountant or tax agent fees (from the year prior)
• Personal super contributions
• Investment income expenses, such as margin loans and financial adviser fees
• Income protection insurance premiums
• Donations

Ways to Reduce Your Tax Bill

Beyond just considering income minus expenses, there are several strategies you can employ throughout the year to manage your taxes effectively.

• Personal Super Contributions
  You might be eligible for a tax deduction for personal contributions up to the $27,500 concessional contributions cap (2023/24). Note that this cap includes all concessional contributions, including employer contributions. Additional personal contributions can be made from your after-tax salary up to the non-concessional contributions cap.
• Co-contributions
  Low or middle-income earners who make personal super contributions may receive a government co-contribution of up to $500.
• Employee Salary Sacrifice
  You can arrange with your employer to redirect part of your salary into super, reducing your taxable income and boosting your retirement savings.
• Spouse Contributions
  A tax rebate (up to $540) might be available for after-tax contributions to super on behalf of a low-income spouse.

However, it is important to be mindful of the following:

• Concessional Contribution Cap
  Exceeding the $27,500 cap (2023/24) may result in extra tax. Note that your cap may be higher if you have unused concessional contribution cap amounts from previous years.
• Age Considerations
  If you’re between 67-74, you don’t need to satisfy the ‘work test’ to make non-concessional and salary sacrifice contributions. However, you must satisfy the work test to claim a tax deduction on personal contributions.
• Timing
  Ensure contributions are in your super account before June 30 to count for the current financial year.

To claim tax deductions for personal contributions, provide a valid 'notice of intent to claim a deduction for personal superannuation contributions' to your super fund and receive a written acknowledgment.

Understand Additional Levies

Taxpayers contribute a Medicare levy (2% of taxable income) to support Australia's public health system. The Medicare levy is a tax that helps fund Medicare, Australia's public health system. You may also have to pay the Medicare levy surcharge if you don’t have an appropriate level of private health insurance and your income exceeds a certain threshold.

Consider the pros and cons of private health insurance. You might be eligible for a rebate that helps cover your premium costs.

Be an Organised Landlord

Ensure you have the annual tax statement from your property’s managing agent and details of any personal expenses you’ve paid, such as land tax, strata fees, insurance, or mortgage interest. Keep receipts for capital improvements and maintain copies of sales contracts and settlement sheets for property transactions.

A depreciation schedule can be valuable, showing deductions for the depreciation of the building structure and items within, offering significant savings at tax time.

Offset a Capital Gain

If you received a capital gain from an investment, which is the profit you make when you sell an asset like shares or property, consider offsetting it by selling a poorly performing investment. This triggers a capital loss, reducing your tax payable and freeing up funds for new investments.

Prepay Investment Loans

Some lenders may allow you to prepay 12 months of interest on your investment loan if you have a geared asset like a rental property and extra capital. This brings your tax deduction to the current year and can offset capital gains or additional income.

Working from Home Expenses

Since COVID-19, many people have new working arrangements. Effective from July 2022, the ATO retired the shortcut method($0.80p/h) and the old fixed-rate method ($0.52p/h). These have been replaced with a simplified claim for deductions of home office expenses, using a revised fixed rate method of $0.67p/h for running costs like phone, internet, heating, cooling, and lighting. Remember that you can’t claim any additional tax deductions for expenses covered by this rate if you decide to use the fixed rate method.

Keep a record of hours worked at home using timesheets or diary notes. If you received an allowance from your employer for home office expenses, include this as income and claim the tax deduction accordingly. Home office expenses can include the cost of your home office equipment, such as a computer or printer, and the cost of your home office furniture, such as a desk or chair. You can also claim separate tax deductions, such as the decline in the value of assets you use while working from home or their maintenance.

There have been no changes to the actual cost method, so if you prefer, you can continue to claim the actual work-related portion of all running expenses.

Plan for the Future with your tax accountant

The end of the financial year preparation is a great opportunity to evaluate your financial situation and get ready for the upcoming financial years. Take into account how changes in your income or expenses could affect your future tax returns in Adelaide. Use any tax refunds wisely to either build wealth or decrease debt. Also, consider setting aside more money for upcoming tax liabilities. This proactive approach can assist you in attaining a more secure and prosperous financial future.

Remember, there’s an EOFY every year, and each one presents an opportunity to improve your financial situation. Applying any lessons learned for future tax planning allows you to set yourself up for greater tax efficiency and financial growth. A JSA Tax Agent or Accountant can help you plan ahead, explore tax efficiency options, maximise your tax deductions, and tax returns, inspiring hope for a brighter financial future.