ATO tax time 2022: what to do now for a bigger refund

Some clever tax tactics in the next month can potentially boost Australians’ refunds this year by thousands of dollars. Here’s how.

The most important month of the financial year is just two days away, allowing Australians to potentially boost their upcoming tax refund by thousands of dollars.

During June people should consider making extra work-related purchases, tweaking investments and expenses, and injecting extra money into superannuation, accounting specialists say.

They can then reap the benefits from July through bigger tax refund, which for many is already enlarged by more deductions related to working from home.

The trend towards hybrid work models has resulted in people investing more in computers and accessories, monitors, ergonomic desk chairs, printers and mobile phones, says Officeworks general manager merchandise Jim Berndelis.

“Many of these items can be tax deductible,” he says.

“It’s best to keep a record of your purchases and speak with your tax accountant to avoid confusion.”

New Officeworks research has found that many Australians believe toilet paper and coffee should also be tax-deductible when working from home, but National Tax and Accountants’ Association taxation manager Rebecca Morgan says these expenses are private in nature and not deductible.

Kylie Woods meets her accountant in June to maximise tax deductions. Picture, John Gass

Morgan says “lines have become blurred” around tax-deductible expenses for many people working from home, and tax rules can be complicated, so working with a registered tax agent can offer great comfort.

HOW TO CLAIM

The ATO allows three ways for people to claim working from home deductions.

• The actual cost method, where all receipts and records must be provided.

• A temporary 80c per hour “shortcut” method, where a diary is kept of all hours worked from home.

• The 52c per hour fixed rate method, which covers running costs such as electricity and cleaning, but allows separate deductions for thing such as phones and internet expenses, stationery and depreciation of electronic equipment.

“Educate yourself on available deductions,” Morgan says.

H&R Block director of tax communications Mark Chapman says the 80c shortcut method ends this year, but people often get bigger deductions from the fixed rate method.

“The 80c method is very simple to use, with very little record keeping, but potentially you are leaving hundreds or thousands of dollars on the table by using that method,” he says.

SUPER BOOST

Chapman says paying extra money into superannuation as a one-off tax-deductible (concessional) contribution is a June strategy that can deliver huge deductions.

Australians have an annual $27,500 cap on these contributions, which include salary sacrifice and employers’ compulsory contributions.

Injecting cash available in your annual concessional contribution cap “flows through to a tax deduction at your marginal tax rate, which can be thousands of dollars,” Chapman says.

VISIS Private Wealth founding partner Chris Smith says people wanting to pay extra into super must submit a Notice of Intent to Claim a Deduction form to their super fund.

“A lesser-known trick about concessional contributions is that if your total super balance is less than $500,000 at the end of the previous financial year, you can carry forward unused concessional contributions,” he says.

VISIS Private Wealth founding partner Chris Smith

“The amount you can carry forward will depend on the amount you have contributed in the previous five years, starting from the 2018-19 financial year. This can be particularly beneficial in years where a large capital gain event arises, such as the sale of an investment property.”

Investors can use June to prepay expenses such as loan interest, landlord insurance, repairs and maintenance, or sell loss-making shares to offset capital gains elsewhere.

Kylie Woods, 36, keeps on top of tax planning and meets with her accountant in June to make sure she hasn’t missed anything.

“Every year I consider what items need upgrading or replacing for the coming months and I will make these purchases pre-June 30,” she says.

“That way I can claim them in my return, rather than wait another 12 months.”

JUNE TAX TACTICS

• Consider spending on work-related items before June 30.

• Collect receipts – both paper and electronic – so you hit the ground running in July.

• Check investment gains and losses, to review if you should sell assets or delay sales until July.

• If applicable, read the ATO’s free tax guides for occupations and rental property investors.

• Consider making tax-deductible super contributions.

• Bring forward investment-related expenses that are tax-deductible.

Source: National Tax & Accountants’ Association, VISIS Private Wealth