So it’s July again… tax time! The time of year when accountants are overcome with joy, and everyone else is cursing and stressing and digging through drawers for receipts.
Ok – so I probably lost you when I said ‘tax’. But don’t stop reading.
I get it. For most people, tax is boring. But I’m all about more and more people leading their best life, and being smart with money is a powerful tool to help you do that. Sadly, tax plays a part in that equation. So bear with me….
The thing is, to be ‘tax’ smart doesn’t mean you have to read a 1,000 page tax guide for dummies or sit through 8 hours of tax updates (like I did last week! And, ok, I did actually enjoy most if it… *geek*). If you can get the following five simple things right, you will absolutely be ahead of the game. The trick is to think about tax NOW, and not next June. Leave it until next June, and you’ve probably left it too late.
Spend 15 minutes today to do the following:
- Get a record keeping system.
The biggest failing of most people by far is the absence of any kind of system to keep records. July comes around, and they start rummaging through drawers, their glove box, their credit card statements, piecing anything they can together. Get yourself a system people!!! It could be an envelope in your diary or download an app like the ATO’s (free) MyDeductions, which allows you to photograph receipts and file them. This app makes it so easy, there is no excuse.
- Know what you can deduct.
Now is the time of year to spend 5 minutes learning about what you can deduct for your specific job, and keeping appropriate records for the tax year that has just started.
You can see if the ATO has released a guide for your specific occupation or industry here, and take a read.
Or consider going to see a decent accountant even as a once off to pick their brains and see if there is anything you have been missing.
- Get prepared for claiming any car expenses
Guaranteed, most clients who use their car on occasion, forget a few trips here and there come tax time. So think about setting up a system now for recording work kilometres. Chuck a log book in your glovebox or use an app like MyDeductions, which has a log book feature.
And if you are doing a LOT of work kilometres in your own vehicle, NOW is the time to do a proper log book (not June next year!!). You will need to log all work trips for a consecutive 12 week period for it to be valid. Again, an app like MyDeductions makes this super easy.
- Think about the account holder for interest earning accounts
For couples, if you want to minimise tax, make sure interest earning bank accounts and term deposits are in the name of the lower income earner. Again, now is the time to do this in preparation for NEXT tax year. It’s a small inconvenience for a potential tax saving.
- Evaluate your private health insurance coverage
If you/your family are over the Medicare Levy Surcharge threshold (check out the thresholds here), you will be slugged with the Medicare Levy Surcharge if you don’t have private health insurance for the whole family.
Estimate what you think your/your family income for the coming year will be and consider private health coverage if you are over the threshold.
Make sure you see what is included as income (it’s not just taxable income), and the appropriate level health insurance coverage you need to avoid the surcharge.
So, with a little bit of preparation, you can feel completely on top of your tax matters (tick – one less thing to think or worry about) and you see the rewards come July next year.
And of course, the more money you can save from being a little savvier with your tax matters, the more you will have to dedicate towards what matters to you. Have I convinced you?! Time to get off your butt and get organised!
I’d love to know what brings you unstuck when it comes to tax. Share so we can help and learn ?
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