Tax Time Tips

It’s that time of the year again when we are bombarded with ads telling us to take out health insurance before June 30. Here is something they probably won’t mention in the ads – many health insurance companies allow you to prepay next financial year’s premiums (in fact Medibank Private is allowing members to pay up to 18 months in advance). “So what”, you say. As there are changes in the new financial year for individuals earning more than $84,000 and couples/families earning above $168,000, if you are earning these amounts you will be better off locking in this year’s premium and the 30% rebate attached to it before that rebate drops to 20%. For high income earners the rebate drops to 0%. So if you can lock in a once off saving, now is the time to do it. Most people take the 30% health insurance rebate, as reduced premiums during the year. If you are not “most people” don’t forget to claim when you do your tax.

 

Families need to have a look at a few things around tax time, including checking to see if your children’s immunisations are fully up to date so that you can continue to qualify for Family Tax Benefit Part A.

 

Be careful with claiming expenses like interest on a mortgage if you have worked from home. It means that your house will be hit with capital gains tax when you sell. Let’s say you claim 20% of your mortgage interest for 2 years when you work from home. It means that 20% of the increase in value of your house when you sell (apportioned over those 2 years) will be subject to capital gains tax. It doesn’t matter that the value of your house may not have risen in those 2 particular years (it may even have gone backwards in value over that time) as it’s worked out as an average over the time you own the home. Claiming the home office expense (a massive 34 cents for every hour you work at home) will not affect any capital gain on it.

 

Don’t forget to claim any work related deductions, especially if you have had a break from the workforce during the financial year. And of course there are the usual deductions of things like bank fees for any accounts you hold that earn interest during the year.

 

In the event you have some spare cash and wish to top up your super, a $1,000 contribution from your bank account will be matched dollar for dollar by the government for people earning under $31,920. It tapers off until it cuts out completely for those earning $61,920 for the current financial year. Next financial year the scheme drops in its generosity to be 50 cents contribution from the government for every dollar you put in, and the cut off mark drops to $46,920. So you will only get a maximum of $500 for your grand.

 

As always, if your tax is too hard for you to do yourself, speak to an expert.

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