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3 DAYS TO GO: 12 things to prepare for tax time on Thursday

·6-min read
(Left) Calendar marking July 1, (Right) person pulls out file labelled 'Tax'
There are some things you should prepare before 1 July, and some tax changes you should be ready for. (Source: Getty)

With tax time just days away, there are a few things you can still do to ring in the new financial year as prepared as possible, tax experts have said.

“Many people are no doubt wondering if it’s too late for some last minute tax planning to help reduce your 2021 tax bill,” said H&R Block director of tax communications Mark Chapman.

But it isn’t too late – here are six things you can still do to make sure you’re in the best shape come Thursday.

BEFORE 1 JULY...

  • Find all your receipts

The ATO won’t accept any deduction claims without hard evidence – meaning receipts or statements, Chapman said.

“Before the end of the financial year, make sure you have written evidence, such as receipts, invoices and bank or credit card statements, for everything you intend to claim,” he said.

“Taking the time to ensure your records are fully up to date now will pay dividends when it comes to tax time.”

READ MORE: 5 tips to maximise your tax return, according to the ATO

  • Donate to charity

If you’re thinking of making a charitable donation, do it this side of the financial year.

“You can claim a deduction for donations of more than $2 to a registered charity provided you have a receipt for the donation,” said Chapman.

  • Top up your superannuation

If you saved a bit more than you expected to, think about making a contribution to your super fund.

If the total amount doesn’t exceed $25,000, you can boost your retirement savings and claim a deduction for the contribution at the same time, said Chapman.

“The payment must be made by 30 June and you need to advise your super fund that you’ve made the payment by the time you lodge your tax return,” he added.

If you’d like to make a contribution to your super, the ATO has a form you can fill out here.

  • Go shopping

The taxman will reimburse you for a number of things, including transport expenses if you’re traveling for work, work uniforms like protective clothing, and tools or handbags that you need for work.

“If you use a bag for work, to carry papers or a laptop perhaps, you can claim a tax deduction for the cost. That could include a briefcase, a backpack or a handbag, whichever suits your needs,” said Chapman.

READ MORE: Everything you should buy before EOFY

  • Own a business? Use this tax trick

Australians who run their own business can consider using the “temporary full expensing” measure, said Chapman.

“This allows you to claim an immediate tax deduction for all capital purchases (irrespective of the cost), rather than depreciating the cost over several years, as used to happen,” he said.

This encompasses crucial tech, like laptops, tablets and phones, office furniture, tools and equipment for tradies, and vehicles.

But if you make this purchase, the item you buy must be in your hands before the new financial year, Chapman warned.

“Realistically you need to get the item delivered and installed by 11:59PM on 30 June. If you buy something now for delivery and/or installation in July, you won’t be able to claim the deduction this tax year.”

  • Prepay some of next year’s expenses

If you have some spare cash left over, you can actually claim a deduction this year for expenses that entirely or partially relate to next year, said Chapman.

“Consider paying things like union fees, professional subscriptions and annual insurance premiums in advance in order to accelerate the deduction.”

AFTER 1 JULY…

There are a suite of tax changes that will come into effect from 1 July 2021 onwards.

According to tax expert and author Adrian Raftery, here’s what will be different from Thursday:

  • Your super will increase

The amount of your pay that goes towards superannuation will rise from 9.5 per cent to 10 per cent.

This change was politically controversial and nearly didn’t go ahead. The superannuation guarantee is scheduled to keep rising by 0.5 per cent every year until it hits 12 per cent in 2025-2026.

  • The work-from-home shortcut is scheduled to end

When COVID hit, the ATO introduced a new 80c-an-hour shortcut to claim work-from-home expenses. This was extended again to cover the entire 2020-21 financial year, but there have been no announcements just yet about extending this again beyond 30 June 2021.

READ MORE: ATO explains exactly how to claim your remote work hours

  • Corporate tax rates drop

Good news for small-medium businesses with turnover below $50 million: the corporate tax rate will fall from 26 per cent to 25 per cent in the 2021-22 financial year.

“Note that companies which have passive income (such as interest income, rent, royalties, dividend income and net capital gains) constituting more than 80 per cent of their assessable income are taxed at 30 per cent regardless of their size,” Raftery said.

  • Beer could get cheaper

This should be good news for everyone: the May Federal Budget announced that the Government was raising the excise refund cap for small brewers and distillers from 60 per cent on $100,000 to 100 per cent on $350,000.

  • 10,000 single parents get a crack at buying a home

The Family Home Guarantee is being renewed in the new financial year, supporting a further 10,000 single parents with a deposit of at least 2 per cent and income under $125,000 wanting to get into the increasingly pricey housing market.

The First Home Loan Deposit Scheme is also being extended, which sees the government guarantee up to 15 per cent of the property’s price for an extra 10,000 eligible buyers.

  • Businesses must use Single Touch Payroll

The Government has been slowly rolling businesses onto the Single Touch Payroll system.

Businesses with 20 or more workers have had to use STP since 1 July 2018, and businesses with 19 or less employees have had to use it since 1 July 2019.

“We have provided several concessions depending on business, industry, or employer types. Most of these end on 1 July 2021,” the ATO states on its website.

“If you have a current concession you will need to be reporting each pay day through STP by this date.”

“If you haven't started reporting through STP, you need to start reporting as soon as possible as penalties may apply.”

So if you’re not already on an STP-compatible platform, you’ll have to be from 1 July.

Do you have questions about Tax Time 2021? Send them to editor.australia@yahoofinance.com and we'll get them answered.

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