With just five days left before the end of the financial year, crafty consumers are hitting the shops to ensure they maximise their tax return.
Mark Chapman, director of H&R Block, has unveiled the biggest mistakes Australians make when lodging their tax refunds
The tax specialist has also given a break down for the surprising items you can buy which will boost your refund.
Mr Chapman told Daily Mail Austraila the best services and products to buy this week-end would be items under $300, as you can get an immediate tax deduction in it.
Scroll down for video
Money expert Effie Zahos says buying items under $300 such as for example headphones are good to buy this weekend as you will get an immediate tax deduction on those items (stock image pictured)
Australians who work outside, such as for example gardeners or teachers, can claim a tax deductions on sunglasses (stock image pictured)
‘There’s a limit for things you can write-off straight away as it has to be less than $300, you could buy you an affordable mobile phone or cheap laptops.
‘If you use head phones for work then you could get head phones.
‘A large amount of people have gone out and bought desks, chairs, and filing cabinets for their home offices since they’ve been working at home.’
Employees who tend to work outside can claim a deduction on sunglasses.
You may also claim a deduction on a handbag, so long as it’s for work purposes.
Mr Chapman said claiming work-related purchases up to $300 do not require receipts but he advised against venturing out and buying services and products that aren’t work-related.
For bigger ticket items, it’s really a bit trickier, he said.
When it comes to items over $300, he said one of the biggest mistakes many people make is not keeping a record of these purchases.
‘One we see usually is people not keeping receipts, proving they spent some money. You’ve got to be able to prove you incurred the fee.’
Money expert Effie Zahos says you can claim a tax dedication on your handbag as long as it’s for work purposes (pictured: Mimco bag)
Finance expert Effie Zahos told the Today Show shoppers shouldn’t go crazy while spending at the EFOS sales this weekend.
‘You’ve got to keep in mind that you are utilizing your cash, it’s appearing out of your wages and just how much you reunite does depend the proportion of business use versus personal use and also your tax bracket.
Items to buy for an immediate tax deduction:
Sunglasses (if you work outside)
‘If you’re earning between $37,000 to $90,000, then you’re considering getting around 34.5 cents back on which you spend. So you have got to remember it is not just instant money back. So take it easy on the shops this weekend.
‘When you are purchasing a car, lots of people don’t realise there is a car limit. $57,581 may be the max that you will have a way to obtain a deduction on.
‘That’s if the vehicle only has nine passengers or less that can handle it. So do be mindful on that. If you buy it by lease, it’s not eligible under the instant tax write-off.’
The financial year comes to an end on June 30 and with so many Australians working from home due to the COVID-19 crisis, many people could be in for a larger tax return this season.
The ATO has simplified the guidelines for those working at home, providing a computerized ‘COVID-hourly rate’ for workers who want a shortcut to calculate the amount of money they will earn back.
The shortcut claims a deduction of 80 cents for each hour worked at home from between March 1 to June 30 this season.
if you’re looking to upgrade your home office, this is the time to take action as you can claim a tax deduction on those items (pictured: Furniture from Ikea)
Mr Chapman warned that as the shortcut might save on paperwork, workers may be forgoing generous tax refunds of more than $1,000.
He calculated that some body claiming the flat rate of 80 cents since March would typically reunite $400 to $450 – or just a quarter of the $1,600 they might possibly claim.
‘Generally speaking, whenever the ATO puts forward these flat rate allowances, you can pretty much guarantee that there’s a trade-off,’ he said.
‘The ATO says: ‘We’ll make life possible for you, we shall take all of this difficult record keeping and all of these difficult calculations off you but we’ll give you this flat rate.’
‘In exchange, you’re not going to get as big a deduction as you would otherwise.’
Mr Chapman said someone claiming a lower 52 cents one hour rate, along with their work-related phone, internet and electric bills, was much more likely to obtain a refund of $850 to $900.
A tax refund could stretch to as much as $1,600 if an individual working at home claimed the price of a new desk, chair or occupation-related item worth up to $300.
‘If you’ve got your paperwork, if you’ve got all your expenses, if you can work out the amount that relates to your office at home, the amount of time that you’re using that home office for work purposes, and you can prove all of that, you’re going to be a lot better off,’ Mr Chapman said.
More expensive items like laptops and cellphones can only be claimed as tax deductions over couple of years to account fully for depreciation.
In the very first week of April, the tax office and Assistant Treasurer Michael Sukkar announced that Australians working from home could claim a set 80 cents an hour rate for work done in the home between March 1 and June 30 as an alternative to ‘needing to calculate specific running expenses’.
‘The short-cut deduction method can make it easier for many Australians who are working at home for the very first time due to COVID-19 in regards to accurately completing their tax get back,’ Mr Sukkar said at the time.
What you can and can not claim on tax while working from home
Expenses you can claim
If you work from home, you will be able to claim a deduction for the additional expenses you incur. These include:
- electricity expenses associated with heating, cooling and lighting
- the area that you will work and running
- items you are using for work
- cleaning costs for a passionate work area
- phone and internet expenses
- computer consumables (for example, printer paper and ink) and stationery
- home office equipment, including computers, printers, phones, furniture and furnishings – you can claim either the total cost of items up to $300 decline in value for items over $300.
Expenses you can not claim
- If you are working at home, you can not claim:
- the cost of coffee, tea, milk and other general household items your employer may otherwise have provided for you at work
- costs related to kids and their education, including setting them up for online learning, teaching them at home or buying equipment such as iPads and desks
- items that you’re reimbursed for, paid directly by your employer or the decline in value of items supplied by your employer – for example, a laptop or a phone
- time spent not working, such as for example time spent home schooling your kids or your lunch break.
Employees generally can not claim occupancy expenses such as for example rent, mortgage interest, water and rates.
Source: Australian Tax Office