A tax refund is already an issue on discussion tables across Australia, while many have yet to lodge tax returns. It is because many Australians have faced hardship in the last two years due to the adverse effects of the pandemic.
Australians have faced sudden changes in work conditions, work-from-home expenses have become a significant issue of confusion and contention, and work-life balance has gone off the track. Therefore, Australians seeking tax relief is evident. Many Australians are wondering if their tax refund could be big enough.
Tax Refund in Australia:
Usually, tax is deducted at the source or paid by individuals and businesses without calculating the deductible expenses. Therefore, when ATO calculates the taxes on the annual income, it refunds a certain amount that you have already paid despite expenses.
Hence, ATO considers your original income, deducts the expenses from the income, and then recalculates your taxable income and tax payable. If ATO finds that an individual or a business has already paid more tax than the payable tax, ATO issues a tax refund.
Previous Tax Refund Scenario:
During the assessment year 2020-21, Australians received an average of nearly $2900 in tax refunds. Tim Loh, the assistant commissioner, informed that 9.9 million individual refunds were issued until April 07 last financial year, totalling $28.64 billion.
Deductible Expenses:
There are many expenses at the individual and business level that ATO considers deductible from your income to reduce your tax burden.
Working from home expenses
You are eligible to claim WFH expenses for spending on work-related things. However, overlapping expenses can’t be fully deductible.
Work-related education:
The educational expenses directly related to your work can be deductible from your income.
Work travel cost:
You can deduct your travel expenses related to work from your taxable income. However, travel costs due to the unavailability of public transport can’t be deducted.
Tax Return preparation expenses:
The expenses you have to pay to the tax agent for preparing your tax return can be claimed as deductible.
Interest charged by the ATO:
ATO makes you eligible to claim the interests you have paid on tax-related items as a deductible expense.
Tools & equipment expenses:
If you have spent money on equipment necessary to perform work-related tasks, you can claim those expenses as deductible.
Clothing & cleaning expenses:
If your job requires you to buy certain types of clothes and security gear, spending on those can be deductible.
Besides the expenses mentioned above, you can also claim costs for overtime meals, gifts and donations, association subscription fees, client bad debts, work-related phone expenses, personal super contributions, Income protection insurance, and election expenses.
Big Ticket Tax Refund Item:
In all probability, you may get a bigger tax refund this year. Questions about the Low and Middle Income Tax Offset have been in place due to Covid-related issues. Many assessees have questioned if LMITO is available this year or not.
On the contrary, the government of Australia has increased the LMITO offset amount this year. However, this is the last year of LMITO. Therefore, you may receive a bigger tax refund this year thanks to the government offsetting a large chunk of your payable tax.
However, the LMITO offset depends on your annual income; the government has increased the amount by $420 for the assessment year 2021-22. Hence, your tax offset can be around $1500. You will receive the offset without effort if your annual income is lower than $126,000.
Maximise your Tax Refund
Since you don’t deal with taxation and ATO daily, you can’t know the deductible expenses in detail. Only a registered tax agent can help you claim the maximum expenses as deductible. Legitimate, many expenditures can easily be deducted, but in all likelihood, you aren’t aware of any of them.
Besides, there is a range of work-from-home and work-related expenses that you usually neglect or are unaware of being deductible. A tax accountant helps you list every expense in your tax return to maximise your tax refund.
An Expert Tax Advisor:
PND Accountants and Advisors have been helping individuals and businesses increase their tax refunds and reduce their tax burden. You can be one of them to receive expert tax advice to ensure you get a bigger tax refund. Similarly, you must claim legitimate expenses to avoid penalties from ATO. A taxation expert can help you avoid any mistakes in your tax return.
