We all like the feeling when we receive our tax refund, but getting the return aced to generate it can seem like an assignment from hell. It’s not that hard to get your return in timeously and without stress, but it does need a little bit of extra planning to get right.
You should ideally look at organising your tax affairs even before the end of the year comes. If you streamline your tax receipts through the year, you will pay minimize tax in the first place, and that remains the best way to handle your tax affairs. Try to prepay your expenses, but hold back any income you can delay if at all possible. Depending on your affairs, this may help you reduce your overall tax bill for the year. Make sure that you have record of all your charitable donations for the year, as well as getting repairs, maintaining and other tasks out the way in a way that will streamline your tax affairs. If you’re a high income earner, remember that the Medicare Levy Surcharge will apply if you don’t hold private health care coverage- you’ll need to hold it for the whole year to avoid the amount being prorated, so it’s worth looking into a policy with attractive premiums that will benefit you more.
Using your superannuation limit to the max is also a great way to cut down on tax. Just be careful not to go over the yearly limit. If you’re a trust or company, the timing of the distribution of your funds can also have an impact on your tax bill, as well as the actual physical structure of your company- whether as sole proprietor or something else. Assets that came in under the limit for the year can also be directly written off to your advantage that year, as can bad debts that may have occurred that are unlikely to be settled by year end. A timeous stock take will also help you get rid of obsolete stock, office stationery and more to your advantage.
Other areas that need attention when streamlining your affairs are your spousal contributions to superannuation funds, the maximisation of contributions to such funds without going over the yearly limit, and other forms of salary sacrifice. Remember that these contributions must be timed correctly, however, and don’t make a hash of it. Sometimes, the spousal split on the contributions can make good sense too.
Correct structuring of your retirement provisions, especially as you transition to retirement in the last decade before you retire, can also have a huge impact on your tax affairs. And, of course, the most important thing you can do when it comes to the tax return itself is make sure you fully understand each and every one of the deductions you are entitled to. Remember that there are industry specific deductions as well as more general ones, and be sure not to miss out on this easy and simple as well as legitimate way to cut down on the tax you pay and maximise your tax return annually.
Keyword: tax refund