Money

Sneaky tricks to do right now that will save you money on tax this EOFY

More cash for frivolous spending (or, you know, the mortgage).

By Amber Manto and Holly Royce
How to save money on tax

It's less than two weeks until June 30 - aka End of the Financial Year aka Accountants' Christmas - so it's time to start doing a few sneaky (but totally legal) things now to reduce your taxable income. After all, the more deductions you have the less money you'll have to hand over to the ATO.

Prepay expenses: It sounds almost too good to be true but if you have some spare cash consider paying for certain things now - such as magazine subscriptions, or even the interest on your investment property - that you'll actually use next financial year. "You can claim a tax deduction this year for expenses which wholly or partly relate to next year," explains Mark Chapman, Director of Tax Communications at H&R Block. Nice.

Pay extra into your super: If you have some spare cash, look at making a personal contribution into your super fund. Provided the total amount of your contributions (including the contributions made on your behalf by your employer) does not exceed $25,000, this can be a great way to boost your retirement savings and claim a tax deduction for the personal contribution.

The payment must be made by June 30th and you need to advise your super fund that you've made the payment by the time you lodge your return (your super fund or accountant can give you guidance on how to complete the form and there's a standard form on the ATO website.

Be charitable and make a last-minute donation: If you're going to hand over your hard-earned cash to anyone, would you rather it be a worthwhile charity or the ATO? Your call, but there's no limit to how much you can donate and claim back - just as long as you have the receipts to prove it. "Any donation over $2 can be claimed provided you have substantiation - such as a receipt - and the donation is to a Deductible Gift Recipient (DGR). Most major charities are DGRs but if you're not sure you can check via the ATO's ABN lookup," says Mark. However be warned: "You can't claim for donations that give you some form of benefit, such as raffle tickets or tickets to charitable dinners or other events." Damn, always a catch.

Offset capital gains against capital losses: Sold shares or investment property and made a tidy sum? Consider looking at what investments you have that are sitting at a loss and selling off those too because as Mark explains: "The resulting capital losses can be offset against the capital gain."

Buy something for your business costing $20,000 or less: If you're a small business owner with an aggregate turnover of less than $20 million, you can buy something for your business (sorry, this isn't an opportunity to desk out your bedroom) and immediately write it off against your business tax bill.

"It's a great way for a business to invest in new assets like computers and other technology items, plant and equipment, office furniture and even motor vehicles," says Mark. "Even better, this relief (which was scheduled to be abolished on 30 June this year), has been extended for another year through to 30 June 2019, so even if you don't make purchases this tax year, you can still take advantage of the tax break break next year".

5 most common tax mistakes

Missed income: Have you changed jobs this year? Earnt interest from a bank account you totally forgot about? Missed or forgotten income is an easy mistake to make, especially if you earnt it way back at the start of the financial year. Make sure you consider all of your income sources and declare them, otherwise the ATO may catch up with you when you least expect it.

"The ATO are very good at receiving data about what you earned from third parties, like employers, banks and sharing economy platforms, so the chances are the ATO already has a very good idea of what you earned and will pick up discrepancies as soon as you lodge your return" explains Mark.

Missed deductions: Legitimate items are either missed because you didn't know you could claim for them, or you just plain forgot which is easily done if your receipt keeping leaves a lot to be desired. Always investigate deductions before you lodge your return with either a trip to an accountant or the ATO's website, and try to keep all your receipts going forward - even just popping them into an empty shoebox. You'll be grateful you made the effort when you get your Tax Statement.

"My top tip for staying on top of your receipt keeping is to take a photo of each receipt as soon as you get it. Keeping electronic copies on your phone or laptop reduces the chances of losing receipts, and eliminates the all-too-common problem where receipts fade to illegibility over time!"

Lodging an incomplete form: Simple things such as forgetting to include your date of birth, signature, or even your tax file number. This results in delays because the ATO will need to send your return back and this will hold up your refund. If you use MyTax this is an easy way to make sure every part of the form is completed because the software literally will not let you submit your tax until every box is filled out properly.

Not including Medicare levy information: Remember, if you qualify for a reduction in the Medicare Levy Surcharge you need to put that information on your tax return, otherwise you will be charged the full amount.

Not claiming rebates: such as spouse, medical and education rebates to name a few. While the changing thresholds of some rebates can be confusing, don't be fooled into thinking because it's too hard, you won't be bothered claiming them. They may be worth the extra time to research what you are entitled to claim.