Tax – we all hate paying it, but many of us fail to take advantage of many legal strategies to reduce the amount of tax we pay. Do it right and it could mean a nice fat tax refund this year instead of getting next to nothing back – or worse still, owing something to the tax man when you lodge your annual return.
With that in mind, here are some easy things you can do to reduce your tax obligation and maximise your 2022 tax return*.
1. Use the services of a tax agent or accountant*
Yes, you’ll have to pay for their services, but a professional knows all the ins and outs of what you can and can’t claim, so you can be sure you won’t miss out. Depending on your occupation, you may be able to claim the cost of a wide range of things such as subscriptions, dry cleaning, training and even sunscreen (just make sure you keep your receipts).
And don’t forget that whatever you pay the tax agent or accountant to prepare your return for you, is tax deductible in the next tax year.
2. Working from home
During the COVID pandemic many of us had to work from home, and the good news is that you can claim a portion of your home expenses on your tax return. You’ll need to substantiate it, but you can claim:
Alternatively, you may be able to claim 80c per hour for each hour worked with minimal substantiation needed.
3. Tools, equipment and materials
If you need to buy tools or equipment for your job, these are all tax deductible. So hairdressers can claim the cost of scissors, consultants can claim the cost of a new briefcase to carry documentation to meetings, and tradies can claim for any tools, equipment or materials they need to supply themselves (so long as it isn’t reimbursed by your employer). If you work outside, and your employer doesn’t provide protective clothing or sunscreen, you can claim the cost of that too (including hats and sunglasses).
4. Travel costs
Sadly, you can’t claim any of your costs getting to and from work, but if you need to visit a client or supplier, you can claim any travel that is related to that visit. And if that visit happens on your way to (or from) work, you can claim the whole trip (from home to the meeting and then from the meeting to work). If you use your own vehicle, you can also claim mileage costs.
5. Study or training costs
If you’ve been trying to improve your career prospects by undertaking some study or training, you can claim those costs against your tax. Of course, whatever you’re studying must be relevant to your current employment (so if you’re a hairdresser, a course in interior design isn’t going to pass muster), and you should be able to demonstrate how the study is likely to result in an increase in your income from your current employment.
You can claim things like:
6. Work clothing
If you need to personally purchase occupation-specific clothing (such as a chef’s attire, a nurse’s non-slip shoes or occupational heavy duty wet weather gear), you can claim the cost of purchasing AND the cost of laundering or dry cleaning.
Unfortunately – even though we all need to clean the clothes we wear to work – if your clothing isn’t occupation specific, you can’t claim the costs associated with keeping them clean (sorry, general office or shop worker clothing doesn’t meet the requirement).
7. Pay some extra money into Super
If by some miracle you find yourself with some spare cash before the end of the tax year, one tax minimisation option is to put it into your super fund. As long as the personal super contribution is made from your after-tax income, you’ll be able to claim it against your tax obligation. You'll need to notify your super fund of your intention to claim, so don't forget to check in with them first to make sure you are eligible.
Start thinking about tax minimisation now!
It’s never too soon to start thinking about what you can do to reduce the amount of tax you pay, and with very little effort you could very well find yourself due for a nice refund. We do know however, that many families are doing it tough right now with the escalating cost of living - so if you’re feeling the financial squeeze, we’re here to help. Just take a look at our cash loans up to $5,000 to find out how quick and easy it is to get your hands on some extra funds. Once a loan is approved, the cash is usually in your bank account within a few hours - and you can use the funds for whatever you need!