Money Australia — May 2017

4

EXPENSES FOR AN

INVESTMENT PROPERTY

Ifyou’rebuyingamicrowaveorrangehoodforyour

investment property, choose one that costs less than

$300–thatwayit’sanoutrightdeduction.Don’tfor-

gettoincludeanysharedassets.Quantitysurveyor

WashingtonBrownsaysmostinvestorsoverlookthis.

Forinstance,sayanelectricmotorforthegaragedoor

costsanapartmentblock$2000.Ifthereare50units

intheblock,yourportionis$40.Youcanclaimthat

$40outrightasyourportionisunder$300.Ifitcosts

more than $300 you’ll have to write off the cost over

thelifeoftheasset.

5

TOPUPSUPERAND

GETA$500‘GIFT’

Ifyouearn$36,021orlessthefederalgovernment

pays50¢foreverydollaryoucontributetoyour

superfunduptoamaximumof$500ayear.Sopop

$1000 into your account and you’ll receive a $500

tax-freecontribution.Putin$600andthegovern-

ment will pay $300 into your super fund.

Ifyouearnmorethanthisthenyourco-contribution

entitlement reduces by 3.33¢ for every dollar you earn

over the threshold. It cuts out at $51,021.

It’sworthvisitingthetaxoffice’sonline calculator

toworkoutwhatyou’reentitledto.

6

PREPAY YOUR

SUBSCRIPTIONS

When it comes to generating a quick tax deduction,

prepayingexpensesmaybeanoldiebutit’sagoodie.

Youcanclaimadeductionforprepayinganydeductible

expensethatyouwillincurinthenext12months.

This could include subscriptions, membership of

professional associations and contracts for property

repair and maintenance.

Taxagentfeesforpreparingyourreturncanalso

beanimmediatededuction.Andifyouhavean

investmentloan,prepayingnextyear’sinterest is

another way to generate a quick deduction.

7

TAKE COVER: IT’S YOUR

31 STBIRTHDAY

If you don’t take out hospital cover before July 1

followingyour31stbirthdayyoumaybestuckwith

a2%loadingontopofyourpremiumeachyearfor

everyyearyou’reagedover30anddonothaveprivate

hospital cover, up to a maximum loading of 70%. The

goodnewsisthatifyouwerealittlelategettingbasic

hospitalcoverinitially,onceyouhavehaditfor10

continuous years your health insurer can’t continue

to charge you the loading.M

BY THE NUMBERS ...

82% –taxpayerslikelyto

get a tax refund this year

$2112–averagetax

refund

26%–peoplewho do

their own tax

WHAT AUSSIES DID

WITH LAST YEAR’S

TAX REFUND

29% paidbills

21%saved it

16%didn’t get a refund

13%made loan or credit

card payments

9%made home loan

payments

5%put it towards a

holiday

5%used it for other

things (including engage-

ment ring, education, car

rego/tyres, party)

2%spent it on household

appliances

Source: moneysmart.gov.au

FIVE DEADLY SINS

by Adrian Raftery

F

or many of us, preparing a tax return is as painful as

havingteethpulledbuttherewardscanbegreat.To

easetheordeal,therearefivecommonmistakestoavoid

when doing your tax this year.

• Mathematical errors (stupidity).Smallerrorscould
  resultinbigmistakes.Awrongnumberhereorabadcal-
  culationtheremaycostyouthousands.Soifyoudoyour
  return yourself then make sure you “measure twice” and
  avoid any unnecessary headaches.


• Car logbooks (carelessness).It is the biggest claim
  made in tax returns but often done incorrectly. If you make
  aclaimformotorvehicleexpensesunderthelogbook
  method,thenmakesureyouactuallyhavealogbookpre-
  pared in the correct format. It must be for a continuous
  12-weekperiodandhavebeenpreparedinthepastfive
  years.Ifyouhavechangedyourcaroryourjobduties
  sinceyoudidyourlogbook,youmustprepareanewone.


• Rental properties (greed).TheATOalwaysseesa
  numberofcasesofindividualsover-claimingexpenses
  including initial repairs, interest on loans that include
  a private component when the property is used as a
  holiday home, borrowing costs and depreciation without
  a quantity surveyor’s report. Conversely, I have also seen a
  number of returns where the taxpayer simply didn’t realise
  everythingthattheycouldclaim,particularlylandtaxand
  stratalevies.Ifyouhavearealestateagentmanagingyour
  property,thenaskthemforasummaryofincomeand
  expenses to make the process easier.


• Doing it yourself (arrogance).Just as most people
  canchangeatyre,mostofushavetheabilitytodoour
  tax ourselves but it usually pays to get an expert to look
  at it for you. The last thing you need is a knock on the
  door from the taxman because you claimed too much.
  A registered tax agent knows where the boundaries are
  in terms of what you can and, more importantly, can’t
  claim. And their fee is tax deductible too!


• Omitted income (dishonesty).This year the tax
  office will data-match over 650 million transactions
  and it expects to contact 500,000 taxpayers with
  discrepancies on their interest, dividend, trust and
  managed fund income. This process is quite lucrative as
  $1.1 billion in tax revenue was generated last year due to
  auditinvestigationbytheATO.Overseasincomeaswell
  as income from the cash and sharing economies (for
  example, Airbnb, Uber, Airtasker, Camplify and Car Next
  Door)areparticularareasoffocusthisyear. You can run
  from the taxman but you can’t hide.

AdrianRaftery(MrTaxman)isanassociateprofessor

at Deakin University and author of101WaystoSave

MoneyonYourTax–Legally!, 2017-2018 edition (Wiley,

June 2017, $25.95).