It’s that time of the year again, filing for taxes and making the most of tax deductions. It also marks the end of the financial year. It’s the time of sending paperwork to their respective accountants, the time when their tax returns must be compiled. Finding needed receipts can be a hassle if not a waste of time, and the situation is not something new to many Australians. In fact it is a routine every year. The general consensus is that paying taxes is a stressful time for most people, but it doesn’t have to be like finding a needle in a haystack every time. With some planning and preparation throughout the year, you can significantly reduce the amount of taxes that you owe.
The months of May and June provide a perfect opportunity to start getting organised and plan to make the most of those tax deductions. The following tips should help to guide you on creating a stress free plan, to get organised and maximise your tax deductions.
Planning for Maximum Tax Deductions
Claim any potential deduction that you are aware of: Know your potential deductions. A deduction is something that reduces the amount of your income that is taxed. These can include charitable donations, job-related expenses, interest paid on student loans and mortgages, energy-efficient home improvements and more. Make sure you keep track of all your assets and claim any potential tax deductions. You can also claim, if you’re into business, a tax deduction on pre-pay or stock up on supplies that you buy regularly like office equipment. Even bad debts are tax deductible. To know more about tax deductions you are eligible for, it is best that you review your tax form.
Know Potential credits you are eligible for: Being eligible for credits on taxes entitles you for a reduction on the actual amount of money you have to pay for your taxes. Examples are child tax credit, earned income tax and student tax credit. Furthermore any business with a turnover less than $2 million is potentially entitled to a range of tax benefits, like capital gains tax, income tax, GST and fringe benefits tax. Knowing potential credits may help you get the most from your tax deductions
Evaluate your Financial Position: Having a stable financial position is important in maintaining financial life and business. A stable financial position lessens your burden on taxes. More importantly, it will give you peace of mind knowing your finances are stable.