Written by Hudson Adviser Kris Wrenn
The 31st October deadline fast approaches and if you don't lodge your tax return by then you can eventually face fines of up to $1,050. So far roughly 10 million have now lodged their return, which is actually up on this time last year, however about 4 million are still yet to lodge. Many of those four million may well be entitled to an unexpected rebate thanks to Scott Morrison’s Low and Middle Income tax offset which may net you up to $1,080.
Are you yet to lodge? Lodging a late return comes with a penalty that increases as each month passes. In theory, on November 1st you can be fined $210 and then another $210 each month, up to a maximum of $1,050. Should you get to that point the ATO have been known to then estimate your income (and therefore what you owe them) and can eventually prosecute.
If you are pushing the deadline, and perhaps feel you have no chance of making it, there is one little trick you may want to do. Appoint a tax agent! If you are registered with an agent by 31st October they actually extend the deadline for you until May 15 2020, an extra six and a half months!
More (general) last minute tips before you lodge:
- Did you make any personal Super contributions that you need to convert to be deductible prior to lodging your tax return? Once you lodge it's too late and you could lose thousands in tax.
- Did you know you can claim up to $300 in work related expenses without receipt, whatever your profession?
- Have you accounted for all your donations?
- Have an investment? Don’t forget to claim any bank fees you may have incurred.
- Do you travel to see you tax agent? The cost of the travel is deductible!
- Do you have a compulsory uniform, or need to wear protective clothing? These could be deductible expenses.
- Work in construction? What about the cost of renewing a license?
- Work in education? Think stationary, registration fees, prizes purchased to reward students.
- Work in health or social care? Consider meals purchased while on overtime.
- Work in retail? Was there a cost to travel between stores?
- Professional? Do you use a handbag or briefcase to transport a device or documents? These may be deductible so check with your account!
Please note that all of the above is general in nature and should be discussed with a licensed tax agent
What to do with that rebate?
- Pay down debt, and effectively “guarantee a return” of whatever the interest rate is. Generally speaking, you start with the higher interest debt like credit cards and personal loans. Next comes your home loan (because it’s not tax deductible), and finally any investment debt (although you may not be guaranteeing much of a return depending on your tax rate).
- Contribute it to Super as a deductible contribution, to start eating into that $25,000 concessional cap. If you earn say, $60,000 p/a, you’re making an overnight return of 19.5% on your money. Imagine being offered a share for $1 that was guaranteed to be worth $1.20 the following day.
- Set up a managed fund for one of the kids or grandkids and start chipping in $100 a month.
- Avoid the stress later and make a start on this year’s Xmas presents!