With many individuals experiencing the financial impact of COVID-19, you may be looking to lodge your 19/20 FY tax return early to potentially receive a refund. Before the EOFY, it may be worthwhile spending time looking at ways to maximise deductions, offsets and contributions in order to maximise your tax refund. Here are a few strategies to consider:
Review personal/family protection and consider pre-paying income protection premiums
30 June is always a good opportunity to review your current financial health and consider if the insurance strategies you have in place are still appropriate or need adjusting due to your changed circumstances. Pay income protection policy premiums by 30 June 2020 to claim a tax deduction for the premiums in the 2019-2020 financial year.
Working from home for the first time? New ways of claiming tax deductions
In the new COVID-19 world, many people are now working from home. This means you are entitled to claim a deduction on your personal income tax return on some related expenses. The Federal Government has introduced a temporary simplified ‘short cut method’, whereby you can claim 80c per hour that you’ve worked from home. If you intend to make a claim, ensure you’ve kept a record of your hours worked and include a ‘COVID-hourly rate’ in your income tax return.
Make concessional (tax deductible) superannuation contributions
If you have the capacity to do so, make additional contributions to super and claim a tax deduction. Anyone eligible to contribute to super can claim a tax deduction for those contributions but remember, total tax-deductible contributions including Super Guarantee and salary sacrifice amounts paid by your employer, must not exceed your concessional cap.
Consider making any planned donations before 30 June
If you are thinking of making donations to charitable organisations, make them before 30 June to receive a tax reduction this financial year.
Consider making a spouse contribution and obtain a tax saving.
To obtain a tax offset for an eligible spouse contribution, the receiving spouse’s income must be below $40,000pa. The maximum $540 tax offset is available where the spouse’s income is less than $37,000.
To achieve the maximum tax offset this financial year, a spouse contribution of $3,000 would need to be made before 30 June 2020.
Should you have any further queries or questions about this article, please do not hesitate to contact a Certe Adviser to discuss further.