EOFY

Tips for a smooth EOFY

And just like that, we’re wrapping up the end of another financial year. For most of us, it usually means a mad scramble to pull a list together on what we need to do to lodge our tax return. You can sit back and relax for now. This blog will cover things you need to consider before the EOFY.

1. Beware of the flashy EOFY marketing campaigns and do the math before buying reduced price items.

It goes without saying that there’s nothing wrong with buying something you need at a reduced price and claiming a deduction. It’s only when tax law and common sense get lost in marketing that it starts to be concerning. Some EOFY campaigns suggest that if you spend $100, you’ll get $100 back. This isn’t how tax refunds really work. If you paid $100 for a legally deductible item before June 30, The Australian Taxation Office (ATO) wouldn’t give you that money back. That $100 would come off your total taxable income and potentially reduce the amount of tax you pay. If your small business is set to report a profit, spending a portion of that before the EOFY will help you pay less tax, but it won’t get you a dollar-for-dollar refund. You should always do the maths to make sure you truly understand the real benefit from the transaction.

2. Take advantage of tax advantages before the EOFY.

Often, we don’t know the full extent of what we can claim. Standard expenses such as work uniforms, computer and stationery expenses etc. are a no brainer. But, there are plenty of things that often get overlooked. Below we’ve listed some of the most commonly overlooked deductions you can claim when completing your tax return.

Donations: You can claim tax deductions for charitable contributions, but not all donations are the same. For your donation to be tax-deductible, it needs to meet four conditions:

• Your donation is made to a registered deductible recipient 
• You voluntarily transferred money or property and received no material benefit
• The donation consists of money or property 
• You have a record of the donation (eg a receipt)

Prepaid expenses: Prepaying your expenses can attract a tax deduction that is commonly overlooked. You can prepay expenses to cover a time-frame not exceeding more than one year to bring forward your operating expenses before the end of each financial year. Subscriptions, certain business travel expenses, training events, leases, rent, phone, internet, insurance, and business asset repairs are just a few examples of expenses you can prepay.

Medical expenses: You can claim a deduction for net eligible expenses for disability aids, attendant care or aged care, providing it’s necessarily incurred in earning an income.

Sun protection: You’re entitled to a tax deduction for sunglasses if, as part of your employment, you’re required to work outside for prolonged periods.

Self-education expenses: You can claim self-education and study expenses when the course you take leads to a formal qualification and have a sufficient connection to your current employment activities as an employee and either:

• maintains or improves the specific skills or knowledge you require in your current employment activities
• results in or is likely to result in, an increase in your income from your current employment activities.

Laundry: Yes, you got that right. You can claim a deduction for the cost of buying and cleaning occupation-specific clothing, protective clothing and unique, distinctive uniforms.

4. Acknowledge additional Tax Relief.

The Government announced on 29 March 2022 a proposal to increase the low and middle income tax offset (LMITO) by $420 for the 2021–22 income year. This will increase the base amount to $675 and the maximum amount to $1,500.

The Government also confirmed that 2021–22 income year will be the last year that LMITO is available.

If you have any questions about your specific tax obligations, check out the information on the ATO website or reach out to your accountant. 

Whether you’re expecting a tax return or not, if you’re in need of a temporary cash boost, Credit24 is here with loans up to $10,000. It’s quick, easy and affordable. Click here to find out more.  

General advice warning

This article contains general advice and does not take into consideration your personal circumstances. All strategies and information provided on this website is of general advice only. We recommend you seek personal financial and taxation advice prior to acting on this information.