10 ways to maximise your tax return in Australia

Tax time has arrived! And you know what that means — it’s time to make the most of your tax refund. Getting a nice chunk of change back into your pocket can feel like a victory dance, so let’s dive into some tips to help you maximise your tax return.

When is the tax season in Australia?

Tax season in Australia usually kicks off on 1st July and lasts until 31st October. That’s the time when Aussies, both individuals and businesses, gear up to sort out their tax returns for the previous financial year, which goes from 1st July to 30th June. 

Keep in mind that these dates can vary a bit, so it’s best to double-check the Aussie Tax Office’s website for the latest info on tax deadlines.

Before jump in, take a read of this quick disclaimer:

The information in this article is current as at 27 July, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero) for its Swag brand. The information in this article is general information provided in good faith without taking into account your personal circumstances, and financial situation or needs, and should not be relied on as professional advice. Some Information is based on data supplied by third parties and whilst such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional legal, financial and taxation advice before making any important decisions or solely relying on the information in this article.

Understanding tax brackets in Australia

Expert Tip: From Patrick Sargent, CEO at Pop Business Australia has different tax rates for different income ranges. These rates increase as your income increases. The tax rates are applied  incrementally, meaning that each portion of your income is taxed at the corresponding rate for its respective tax bracket.

As of the 2022-2023 financial year, the tax brackets and rates for individuals are:

Taxable income up to $18,200	No tax payable
Taxable income from $18,201 to $45,000	Tax rate of 19%
Taxable income from $45,001 to $120,000	Tax rate of 32.5%
Taxable income from $120,001 to $180,000	Tax rate of 37%
Taxable income above $180,000	Tax rate of 45%

It’s important to note that these tax brackets are subject to change, so it’s always a good idea to check the Australian Taxation Office (ATO) website or consult with a tax professional for the most up-to-date information. Also, different rules and rates may apply for people with unique situations, so you may need to do different things to maximise your tax return.

What is a tax deduction?

A tax deduction is an expense or cost that you can subtract from your taxable income, which helps to reduce the amount of tax you owe. When you calculate your taxable income, you can claim deductions for certain expenses or contributions you’ve made throughout the financial year. 

Common examples of tax deductions for individuals include work-related expenses like uniforms, equipment, or travel expenses, as well as charitable donations, self-education expenses, and certain medical expenses. 

For businesses, tax deductions can include operating expenses like rent, utilities, salaries, and marketing costs, as well as depreciation of assets and contributions to employee retirement plans. 

It’s important to note that not all expenses are eligible for tax deductions, and there are specific rules and limits for each deduction category. It’s always best to consult with a tax professional or refer to the guidelines provided by the Australian Taxation Office (ATO) to determine which deductions you may be eligible for and how to claim them correctly.

How can tax deductions help maximise your tax return?

Tax deductions can help maximise your tax return by reducing your taxable income. When you claim eligible deductions, the amount of income on which you are taxed is lowered, which, in turn, can lower the amount of tax you owe or increase your tax refund.

Expert Tip: From Patrick Sargent, CEO at Pop Business Understand your eligible deductions: such as motor vehicle expenses (if you are required to use a car for work), self-education expenses (if it is directly related to your current work), and tools you purchased for work purposes, donations etc. Car expenses: make sure to keep records of all expenses and record the private use and work-related kms in a logbook for a continuous 12 weeks. We can then use two methods (actual and logbook) to calculate and use the one with the highest MV deductions. Cost of managing tax affairs: The fees you pay to your tax agent are tax deductible in the next year’s return.  If you are not entitled to Medicare, then apply the Medicare Levy exemption to exempt the 2% Medicare Levy fee.

Essential documents needed for tax returns

When preparing your tax return in Australia, you may need the following essential documents: 

• Tax file number (TFN): Your TFN is a unique identification number issued by the Australian Taxation Office (ATO). It’s essential for lodging your tax return. 
• Payment summaries: You may not receive a payment summary if your employer reports through Single Touch Payroll (STP). Instead, your payment summary information will be available in ATO online services through myGov. It’s now called an ‘income statement’. Your tax agent will also have access to this information.
• Bank statements: Gather your bank statements for the financial year, as they can help track your income, interest earned, and any relevant expenses. 
• Investment statements: If you have investments like shares, managed funds, or rental properties, gather the relevant investment statements that detail income earned, expenses incurred, and capital gains or losses. 
• Deduction records: Keep records of any work-related expenses, donations, or other deductions you intend to claim. These records should include receipts, invoices, or other supporting documents. 
• Health insurance details: If you have private health insurance, you’ll need your annual statement or tax statement from your health fund. 
• Medicare records: Make sure you have your Medicare card details handy as well as records of any medical expenses that may be eligible for deductions. 
• Business records (for business owners): If you run a business, you’ll need financial statements, profit and loss statements, balance sheets, and records of business-related expenses and income. 
• Previous tax return: It can be helpful to have a copy of your previous year’s tax return as a reference, especially if your financial situation hasn’t significantly changed. 

These documents are the basics that most people need, but depending on your situation, you might need extra stuff. To be on the safe side, it’s a good idea to check out the ATO website or chat with a tax pro to make sure you’ve got everything you need for your tax return. Better safe than sorry, right?

10 ways to maximise your tax return

Talk to an expert

We know we sound like a broken record, but this may just be the most helpful tip in this list. When in doubt, consult with a tax pro or accountant who can give you personalised advice and help uncover all the deductions and strategies to maximise your tax return.

Grab those deductions

When it comes to deductions, it’s important not to miss out on any opportunities to save money. You want to make sure you claim all the deductions you’re entitled to. There’s no reason to leave any money on the table!

That includes work-related expenses like uniforms, tools, and training costs. Don’t forget about study expenses, donations you made to charities, and even medical expenses that qualify as well.

Expert Tip: From Patrick Sargent, CEO at Pop Business Here are some new changes you should be aware of before you submit your FY23 tax return: Car expenses: rate/km increases from 72 cents to 78 cents. Self-education expenses: the $250 non-deductible threshold is removed. Home office expense: The ‘shortcut method’ for calculating your home office deductions is no longer available. The fixed rate has been increased from 52 cents to 67 cents. The exact expenses the fixed rate covers have also changed. Previously it covered energy costs, furniture depreciation and cleaning costs. Now, the fixed rate covers energy expenses, phone and internet fees, stationery and computer consumable costs, with all other work-from-home-related expenses able to be claimed separately.  The requirement to have a dedicated home office to claim the fixed rate is also removed.  Low and middle income tax offset (LMITO): The maximum LMITO in FY22 is $1,500 but in FY23 it has been removed. The low income tax offset (LITO) is still available.

Keep good records

To back up your deduction claims, it’s crucial to keep solid records. Throughout the year, make it a habit to keep track of your income, expenses, and hold onto receipts. Having proper documentation will make it easier to substantiate your claims and ensure you don’t miss out on any deductions you’re entitled to.

Score some tax offsets

Tax offsets can be a real game-changer in reducing your tax bill. If your income falls within the right range, make sure to claim the low and middle-income tax offset. It’s a nice little boost that can put more money back in your pocket.

Don’t rely on the ATO’s pre-filled data

It might seem like a time-saver to just plug in the data straight from the ATO into your tax return. Just a couple of clicks and you’re done, right? Well, not exactly. Banks and institutions can be slow in passing info to the ATO, which may take until August. Your data could be outdated by then.

And if the ATO spots any discrepancies, guess who’s responsible for fixing them? You. So it’s best to just sort it yourself to save you the hassle later.

Work from home expenses

If you’re one of the many folks who work from home, you may be eligible to claim some expenses. That’s right, you can potentially get a slice of your rent or mortgage, as well as bills like electricity and internet. You might even be able to claim a portion of your office supplies. So, keep track of those home office expenses and see if you can claim them.

Prepay your bills

If you want to get ahead of the tax game, consider prepaying some deductible expenses before the end of the financial year. By doing this, you can claim those expenses in the current year instead of waiting until the next year. So, if you have deductible items like loan interest or insurance premiums, you can pay them before June 30 to maximise your deductions.

Read more: How to create a bulletproof budget

Snatch up government incentives
Governments love to dish out incentives and rebates to encourage certain activities. Keep your eyes peeled for any enticing government programs available to you. Whether it’s grants for first home buyers or incentives for energy-saving upgrades, taking advantage of these can give your tax return a nice boost.

Keep it real

It can be tempting to exaggerate a little here and there in hopes of getting a higher tax return, but trust us: it isn’t worth it. 

The ATO has strict rules and guidelines in place, and they’re pretty savvy at catching out dodgy claims. If you’re caught making false claims, you could be slapped with fines, penalties, or even face legal consequences. Best to play it safe.

Boost your super

Consider topping up your superannuation with extra contributions to potentially lower your taxable income and enjoy tax benefits.

Swag Tip: You can import and save your superannuation details via the Money tab to keep your super details in one place. Soon you’ll be able to conveniently access your Superannuation information whenever you want. 

Common tax filing mistakes to avoid

When it comes to filing your taxes, it’s essential to steer clear of common mistakes that can lead to unnecessary stress and potential penalties. 

Here are 5 tax filing mistakes to avoid:

• Incorrect or missing personal information: Make sure to provide accurate personal details such as your name, tax file number, and address. Triple-check the information you enter to avoid any errors that could cause delays or processing issues.
• Math errors: One of the most common mistakes is making simple math errors, such as miscalculating numbers or transferring figures incorrectly. Use a calculator or tax software to ensure accurate calculations.
• Failing to report all income: Remember to report all your income, including wages, freelance or gig work, investment income, and any other sources of income. The tax authorities receive copies of income statements, so failing to report income can lead to penalties or audits.

Expert Tip: From Patrick Sargent, CEO at Pop Business A common tax filing mistake we see is missing capital gain/loss from crypto/share investment. If this is applicable to you, make sure you include it in your FY23 tax return.

• Ignoring filing deadlines: Be aware of the tax filing deadlines and ensure you submit your return on time. Late filings may result in penalties and interest charges. If you need more time, consider filing for an extension, but be aware of the specific requirements and deadlines for extensions.

Expert Tip: From Patrick Sargent, CEO at Pop Business The best time to submit your tax return: If it’s tax refundable, then submit the tax return ASAP. If it’s tax payable, then submit it before 31 October 2023 (this is the due date if you’re submitting without a tax agent) or 15 May 2024 (this is the due date if you’re submitting your return through a tax agent. Note that you must engage with a tax agent by 31 October 2023).The best time to prepare is as early as possible so if you have a refund, you get the cash earlier. If you have tax payable, you can plan your cash flow to ensure you can make the payment on or before the due date.

• Not keeping proper records: Maintain organised and accurate records of your income, expenses, and supporting documentation for deductions. Good record-keeping helps substantiate your claims and provides evidence in case of an audit.

By avoiding these common tax filing mistakes, you can minimise stress, reduce the risk of errors, and ensure you’re making the most of your tax return while staying compliant with tax regulations.

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Disclaimer

The information in this article is current as at July 2023, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero) for its Swag brand. The information in this article is general information provided in good faith without taking into account your personal circumstances, and financial situation or needs, and should not be relied on as professional advice. Some Information is based on data supplied by third parties and whilst such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional legal, financial and taxation advice before making any important decisions or solely relying on the information in this article.