Are you ready for tax time?
The end of the financial year is fast approaching so now is the time to get all your finances in order to not only maximise your tax return but also set yourself up for the next 12 months.
Try these tips to make the most of tax time.
If you own a business that turns over less than $2 million a year you can take advantage of the Government's new small business tax benefits that were announced in the 2015 Federal budget.
All small businesses are eligible for a 100 per cent tax deduction for any individual assets purchased that costs less than $20,000. The tax deduction applies to each individual item purchased and there is no limit to how many items under $20,000 can be bought.
From 1 July this year, small businesses will also have their tax lowered from 30% to 28.5%. If you business in unincorporated you'll get an annual 5% tax discount up to $1,000.
Gather all statements for your property such as receipts for repairs, building work, insurance, body corporate levies, council and water rates from throughout the year. If your property is managed through a real estate agency, your property manager will be able to provide copies of everything.
Make sure that maintenance is up to date. Book in any minor works or repairs that are needed and an annual fire alarm inspection before 1 July and claim the expenses this financial year.
If you haven't already done so, organising a depreciation schedule from a quantity surveyor. The Australian Taxation Office allows property investors to claim depreciation as a tax deduction. Whilst a quantity surveyor will incur a fee, for years to come you'll be able to claim depreciation on your investment property at no cost to you. Depreciation applies to both residential and commercial investment properties.
Planning for the next 12 months
It's a good idea to start new practices that can help save you money, reach your financial and lifestyle goals as well as maximise your next round of tax returns. Here are some tips to get into healthy habits.
- If you want to buy property in the next 12 months work out how much you can borrow and the amount of deposit you'll need so you can start preparing. Remember in order to avoid lenders mortgage insurance, you'll need at least a 20 per cent deposit.
- Get in the habit of filing receipts, invoices and recording your deductible expenses.
- If you're currently paying a mortgage, organise a review to work out if there are opportunities to save money - there might be a better interest rate out there for you, or perhaps you're paying for features you don't use.
Think about where do you want to be financially in 12 months time. Do you want to pay your credit card debt off? Complete your home renovations? Are you interested in buying an investment property? Forward planning is critical when it comes to saving or spending money and the best place to start is understanding your options. I'll talk you through your options and put together a plan to achieve your goals.