With the end of the financial year rapidly approaching, there's no time like the present to get your tax affairs in order. Several actions can be taken to maximise your tax refund from the ATO.
A little bit of extra work in June could set you up for a nice tax refund. This could be put towards your next holiday, kids' school fees, or invested in the S&P/ASX 200 Index (ASX: XJO) to grow your wealth even further.
Here are three tax tips to ensure you're maximising your tax refund.
Pre-paid expenses
If you want to claim expenses as deductions this financial year, you'll have to make them before 30 June.
In the case of investment property maintenance, this may mean planning ahead to ensure the services required are available. Chances are, many other investment property owners may have the same ideas as you. This can make June a particularly busy month for painters, electricians, and other tradies.
Workers can also prepay certain expenses in June to receive the deduction this financial year. These include items such as income protection insurance, conferences, subscriptions, union fees, tools, and training.
Work from home expenses
Many Australians who work from home are eligible to claim expenses for costs incurred. This covers things such as electricity and internet costs. Workers can choose between two methods: actual cost and fixed rate.
The actual cost method allows workers to deduct the actual costs incurred. However, records must be kept to justify these expenses.
Alternatively, workers use a fixed rate to estimate expenses. This financial year, the fixed rate increased to 0.70 cents per work hour (up from 0.67 cents last year). For an individual who works full time from home (40 hours per week for 48 weeks of the year), that's an extra $1,344 that can be claimed as a tax deduction.
Workers can also separately claim office furniture and stationery, as long as the expense doesn't exceed $300. Expenses over $300 (such as a laptop or desk) must be depreciated (apportioned) over several years.
Voluntary superannuation contribution
Another way to boost your tax refund is to make a voluntary contribution to your superannuation fund. This can come from your salary, savings, or the proceeds from the sale of an asset, and is claimed in the financial year it is made. This is especially enticing for higher-income earners, who pay the top marginal tax rate.
There is a limit on the amount that can be contributed each financial year. For FY25, a maximum of $30,000 can be added to super, including both employer contributions and voluntary superannuation contributions.
Employers are now required to pay 11.5% of your pay into your super (this goes up to 12% next year). You can contribute the gap between this amount and $30,000 (as well as any unused contributions for the past 5 years) and claim it as a tax deduction. Given the potential size of this deduction, this could substantially boost your tax refund.
