How you could get $20,000 back in your tax

For many Australians, tax time brings a sneaking suspicion you’ve left money on the table. Here are some simple ways to boost your returns.

For most Aussies, tax time means either a nice tax refund that can boost your savings, or the sneaking suspicion you’ve left money on the table.

According to new research from Officeworks, lots of Aussies are getting tax time wrong – and it’s costing us serious money. From lost receipts to missed deductions, and even more in between, the result is the average taxpayer is donating hundreds or even thousands of dollars extra to the ATO just because they don’t know better.

Below I’ve included some of the most common tax mistakes and how much they could be costing you. And spoiler alert, if you’re falling into these traps it could cost you more than $18,000 over the next decade.

So whether you’re a regular employee, working for yourself, or running a side hustle, here are the top tax mistakes to avoid – and how you can keep more of your hard earned money.

Not claiming what you’re entitled to

One of the biggest mistakes made by Aussies at tax time is a simple one – not claiming all the deductions you’re entitled to. According to H&R Block, people who lodge their own tax return miss out on deductions that cost them an average of $525.50 each year.

And it’s not even just the big things people miss. Officeworks research found that just 24 per cent of people claim deductions for office furniture, 20 per cent claim pens, and 46 per cent are deducting electronics and tech accessories.

Given how many people are working from home, and buying things they use for their work, this shows there are a heap of people missing out on deductions. If you’re spending money on deductible items for your work, you’re entitled to claim them – but only if you’re tracking them – and then actually include these expenses in your claim.

A woman working in her home office. Picture: iStock

Losing receipts

Nearly 30 per cent of Aussies lose receipts and end up claiming less, according to Officeworks EOFY research. That could easily mean $500 in missed deductions (or even more), meaning $185 less in your tax refund based on a 37 per cent marginal tax rate.

This mistake is an easy one to avoid, it just requires a little bit of organisation. The ATO accepts digital receipts, so you can make your life easier by filing digital receipts on your computer, using an app, or choosing a supplier like Officeworks that offers digital receipts or their own app for tracking.

That way at the end of the year, you’ll have everything organised and in one place, making your claim easier – and most importantly making sure nothing is missed.

Not planning at EOFY

Bad timing can be just as costly as bad habits when it comes to your tax return prep. The research from Officeworks shows that 44 per cent of Australians make work related purchases before 30 June to boost their tax deductions. When your deductible expenses land before 30 June rather than after 1 July, this means you’ll get the deduction, and the refund a full year sooner.

But if you miss the window, you could miss out on the deduction. If you have another $500 in expenses deferred or forgotten, that’s potentially another $185 missed this year.

Make sure to keep receipts. Picture: iStock

Not getting the right help with your return

Lots of Aussies still lodge their own tax returns, and for some people that’s completely fine. But the data shows a clear benefit to getting some good help with your tax prep.

People that lodge their tax returns through a tax agent receive an average tax refund of $3550, compared to $2576 for self-lodgers. This reflects a difference of $974 every year, or almost a thousand dollars you could potentially be missing out on by doing your own tax return (even after fees).

And to make getting some help here even easier, the cost of a tax agent is fully tax deductible.

Total cost of these mistakes

These tax mistakes may seem small, but they add up. Across the four areas outlined here, you’re looking at a total of $1870 less back in your refund this year. Over the course of a

decade, that’s a total of $18,695 – or almost $20,000 being left on the table.

The wrap

The tax system is full of opportunities to get more out of the money you already have, and keep more of your hard earned income – but only if you understand the rules and how to use them to your advantage.

Most people aren’t trying to dodge tax on purpose. It could be that you’re too busy, unsure, or maybe even a little overwhelmed. But by avoiding a few common mistakes, and being just a little bit more intentional, you could be saving tens of thousands of dollars, maybe even more over the years ahead.

To get the most out of your tax refund this year, and use the money as a platform to start the new financial year in a stronger position, there are a few things you need to look out for.

Keeping your receipts, tracking everything (even the small stuff), being strategic with your timing, and getting good help – it all makes a big difference.

Ben Nash is a finance expert commentator, podcaster, financial adviser and founder of Pivot Wealth. Ben’s new book, Virgin Millionaire; the step-by-step guide to your first million and beyond is out now on Amazon | Audiobook.

If you want some help with your money and investing, you can book a call with Pivot Wealth here.

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.