How to get the best possible tax refund in 2023!
Disclaimer: This information and the example discussed is of a general nature only and cannot be relied upon to fit in with your circumstances. I recommend you get into contact with your own advisors before undertaking any transactions.
Times are tough in the economy at the moment, with the price of goods and services increasing and mortgage rates rising. Understandably, we all want to get the maximum amount back in our tax returns and some of us are really relying on our tax refunds to pay some of the bills. There is good and bad news for Taxpayers this year. We will start with the bad. In 2023 the ATO has removed the Low to Middle Income Tax Offset that was available from the 2019 - 2022 financial years. This means that if you previously earned up to $126,000, you could have received up to $1,500 extra back on your tax. This means that most of us will be starting this year with $1,500 less of a refund than in previous years. The good news is there is still a lot of allowable deductions we can claim. In the end, whether you have a tax bill to pay or will be entitled to a tax refund depends on your taxable income and how much tax you have had withheld on your behalf over the financial year. Here is a list of my top tips to help ensure you can pay the minimum legal amount of tax possible:
The amount of tax payable is calculated on your taxable income. One way to reduce the amount of tax you pay is to reduce your taxable income as much as legally possible by claiming all the deductions you are entitled to claim.
Keep your receipts and records as required by the ATO - the ATO have changed the way many deductions for work related expenses are claimed. If you calculate your deduction incorrectly or don’t have the required evidence to back up your claim this can lead to an ATO audit or review and penalties. The easiest way to get your claims right is to use a registered tax practitioner to help you complete your tax return and make sure your taxable income is as low as legally possible. You can search the public register www.tpb.gov.au/public-register
Find an accountant that is easy to understand and that wants to get to know you and develop a long-term relationship with you as their valued client. It really makes a difference when you can consistently see the same accountant and they know a lot about your situation. This will help them to help you to maximise your tax position now and into the future.
Do some research and find out all the deductions you are legally entitled to claim - as a service to my clients I can use special deduction finder software to let you know what you may be able to claim. There are also lists and information for specific occupations on the ATO website.
Claim your donations – donations made to a public benevolent institution are 100% tax deductible. You can search the name of the charitable organisation you have donated to on the Australian Business Register website. Abr.business.gov.au
Claim your Superannuation contributions – if you made after tax superannuation contributions it may be worthwhile claiming these as a deduction.
Claim your income protection insurance premiums – after the end of the financial year your insurer will send you a letter letting you know how much of the premiums you paid are deductible.
Start planning for your 2024 tax return now – speak to a registered tax agent about how you can improve your tax situation going forward and start putting those things in place now.
Empower yourself regarding your tax and finances – it is invaluable to have a general understanding of how your tax and finances work. Whenever I am working with a client, I make sure I explain everything in plain English and help my clients to understand the contents of their tax return and how tax works. This knowledge will help you to get an even better result going forward and help you to achieve your goals.
If you or someone you know is looking for an accountant to help them with their personal taxes or their business please give them my details. I specialise in giving individuals and small business owners the personalised attention and service they deserve!
Best regards,
Rebecca