By H&R Block’s Director of Tax Communications, Mark Chapman
It’s less than a month to tax time, and from 1 July, millions of Australian parents will be going through the arduous ordeal of preparing their tax return in the hope of a speedy and substantial tax refund.
With 84 percent of taxpayers expecting a refund and the average size of refunds last year reaching over $3,500, it pays to spend a little time and effort ensuring you’ve got every detail of your return right.
So what are H&R Block’s top tips for maximising your refund this year?
1. Claim what you’re entitled to
You’re entitled to claim a deduction for any expense which you incurred in earning your income. So, if you have incurred a work-related expense, and you have the paperwork to prove it, don’t hesitate to claim it. Amongst the common deductions many taxpayers claim are:
- Costs of using your own car for work
- Costs of travelling for work
- Costs of tools and other equipment
- Home office expenses where you work from home. If you’ve set up a home office in your study or converted a spare bedroom into a workspace, you need to be aware of the potential tax deductions you can claim including the work-related portions of costs such as:
- Heating, cooling, lighting and water bills,
- Depreciation of home office furniture and fittings, depreciation of office equipment and computers
- Computer consumables (like printer ink)
- Telephone and internet costs
- Cleaning costs
A good tax accountant will be able to tell you precisely what you can and can’t claim, minimising the chances of an audit at a later date.
2. Don’t embellish deductions
You can only claim what you’ve spent. So, don’t inflate deductions to get a bigger refund and only claim costs you can prove you spent, by producing an invoice, receipt or bank statement for instance.
3. Do your kids need to lodge a return?
If your children have taxable income, they may need to lodge a tax return.
As children get older, many teenagers will get a part-time evening or weekend job. While it’s unlikely that they will earn more than the tax-free amount of $18,200, if their employer deducts even $1 in tax from their pay, they will need to lodge a return to get a refund.
If your children receive income in the form of interest on a savings account or dividends on shares, they may also need to lodge a tax return to disclose that income but only if the income really does belong to the child.
If you or another adult (such as a grandparent) provides the original funds for the investment, but then receive the investment income to use as you wish (even if you decide to use it for the benefit of your child), the income is treated as belonging to you or the other adult and must be disclosed on your tax return. Similarly, any capital gains or losses (on share disposals for instance) must be reported by you.
4. Any other tax benefits to being a parent?
Sadly not. These days, there are no tax breaks directly linked to being either a parent or part of a couple.
5. Get help
Most people find it far less stressful to pass on all their information to a tax agent and leave it to the agent to complete their return, safe in the knowledge that the return will be accurate and complete. An experienced agent will usually be good at sniffing out those obscure tax deductions you didn’t know you could claim so they can often pay for themselves several times over. Best of all, the tax agent’s fee is also tax deductible!
6. Don’t miss the deadline
If you’re a self-lodger, you must lodge your return by 31 October 2019.
If you use a tax agent, you can lodge later, possibly as late as 15 May 2020. To take advantage of those extended deadlines, you need to be registered as a client of the agent by 31 October 2019.