Help! I Don’t Want a Tax Bill!
Hi Barefoot,
I am 27 and work as a carpenter with a small construction company. The accountant I have always used (who always got me a good refund) retired at the end of last year, and I am worried I will have to pay tax this year. What can I do to get around it? What deductions can I claim? I just want to break even and not have to pay anything!
Ben
Hi Ben,
Your old accountant was probably a very nice chap, but he didn’t have wizard-like ‘tax deduction’ powers.
He either fibbed on your behalf (highly unlikely) or you simply got what you were entitled to.
So here’s a hack for you:
Download the ATO’s myTax app, via your myGov account.
The myTax app will pre-fill all your information (though you’ll have to wait till August for this). Then you’ll be able to click ‘Calculate’ and see whether you’re due a refund or up for a tax bill.
On past experience, you might well get a refund.
However, if you are up for a bill you can at least extend the time you have to pay it until May next year, simply by lodging your tax return with an accountant. This’ll give you plenty of time to save your backside off.
Yet what can you do to actually lower your tax this year?
Well, there’s not much wizardry on offer now that we’re in the new financial year, I’m afraid.
And it’s not advisable to fudge your tax return. It’s possible to do, since the ATO operates under a self-reporting system, which means it’s totally up to you what you put on your tax return.
It’s a bit like lying to your mother … you’ll be caught out. That’s because the ATO data-matches 640 million separate transactions ‒ cross-referencing bank accounts, share certificates, Centrelink payments and more (which is how they get all your data to prefill the myTax app).
They have the computing power to check the legitimacy of every single tax return.
And they will.
Go to the ATO website and check out their work deduction guide (building and construction employees), and then go through your bank statements to see if there are any purchases you can claim.
Having said that, you can claim up to $299 in work-related deductions without having any evidence or receipts, however you do need to be able to show how you worked out your claims.
Anything over that, however, needs to follow three rules: it must be related to your job, you must have receipts, and it can’t have been reimbursed by your boss.
OK, now it’s time to think ahead — what can you do during the coming year to really save some cash?
The best tip is to get a 100% tax deduction by having your boss pay for some work-related expenses.
You should be able to negotiate extras, like having your employer pay for your phone calls (or cover part of your monthly plan), getting an allowance for work-related travel, or having them pay for a course that will make you a more profitable employee.
This 100% deduction can’t be claimed on your tax. But it’s a much sweeter deal overall than those ‘fully tax-deductible’ purchases you can claim, which really just mean you’re spending one dollar to get 45 cents back (and that’s only if you’re paying the highest rate of tax).
A final tip for the coming year:
The ATO now has an app (called Australian Taxation Office), and it’s pretty good. It allows you to take photos of receipts and enter work-related deductions on the fly. If you’re claiming a car expense, it has a built-in GPS tracker to record car trips. And it feeds directly into myTax.
Download it and get on the front foot for tax time next year.
Scott
