Why it’s wise to turn your thoughts to tax time today

IF you are one of those people who doesn’t even think about tax until July, here’s why you may be missing out on the big bucks.

IT’S the final quarter of Australia’s annual tax match, which means now is the time to start planning for a big refund.

These three months leading up to June 30 give people a chance to work the rules to their advantage, tax specialists say.

Whether for work, investments or superannuation, strategies started now can maximise how much money you get back at tax time.

WORK-RELATED EXPENSES

Receipts can be gathered in the final weeks of the financial year but many key work-related deductions need action much earlier.

If you have work-related car expenses and plan to claim more than 5000km at 66c per kilometre, you will need to keep a logbook that runs for 12 weeks — which is how many weeks are left until June 30.

“It’s a 12-week period and you need to do it every five years,” said H & R Block director of tax communications Mark Chapman.

He said written records for other key expenses, such as home office running costs or work-related phone use, only needed to be for four weeks. “You can choose which four-week period you do, so timing is everything. Give it some thought now rather than leave it to the last minute.”

Mr Chapman said a $20,000 instant asset write-off for small business purchases of tools, second-hand vehicles and other items was scheduled to end on July 1, when it would reduce to $1000.

NDA Law managing director Andrea Michaels says you should be careful with capital gains tax dates.

INVESTMENTS

Buying and selling investments triggers capital gains tax, where at least 50 per cent of the gain gets added to your taxable income for the financial year. It may be wise to delay the sale of profitable investments until after June 30.

You also could bring forward the sale of loss-making investments to offset gains elsewhere, Mr Chapman said.

Property is Australians’ most popular investment, and NDA Law managing director Andrea Michaels said investors should be aware that capital gains tax was based on the date they signed the contract, not the settlement date.

Property investors can have another tax win by getting a tax depreciation report from a quantity surveyor. “A lot of people still don’t do that, and you can get some reasonable deductions out of them,” Ms Michaels said.

SUPER FUND MEMBERS

Rule changes from July 1 reduce the amounts that people can pump into superannuation both before and after-tax. Annual pre-tax contribution limits are dropping by up to $10,000 to $25,000 on July 1, so if you have spare cash you could speed up salary sacrifice in the next few months.

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“Speak to your financial adviser and plan what you can do ahead of time this year, and what you can do next year,” Ms Michaels said.

She said more super flexibility was coming on July 1, when all workers would be able to make tax-deductible contributions whenever they wanted rather than have to set up salary sacrifice in advance.

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