Tax Time! How to Use your Return Wisely
It’s Tax Time! As June 30 fast approaches Aussies are scrambling to get organised. Lost receipts and a lack of information about what you can claim can cost you big time when it comes to your tax return. If you are running your own business it can be even more stressful to get your lodgment right or you might wind up with a huge tax debt you can’t afford to repay.
The average Australian tax return in the 2013-14 Financial Year was $2300. If you are in debt, tax time can be a great time to get back on track with your finances. But if you aren’t careful, you could waste this very important opportunity. Here is a tax time guide on what you can do to put your tax return money to good use!
Don’t leave it all to the last minute
Start gathering all the relevant receipts and forms now so you can get your hands on them when the time comes. If you are struggling to find what you need, now is the time to start a routine to make tax time easier next year. Get a book or box to keep everything together. You can download aps on your phone to keep a digital version of receipts so you don’t have to worry about losing them or fading.
KNOW YOUR STUFF
Tax rules change year on year.
Do you have a new job? Did you change jobs part way through the year? Are you working from home or driving a company car? Make sure you are aware of all the things you can claim and be sure to claim for them.
SPLURGE FOR AN ACCOUNTANT
Accountants fees are 100% tax deductible.
They know exactly what you can claim without pushing the boundaries and they might even be able to boost your return with things you didn’t even know about. Using an accountant is also fast and easy. Save yourself the stress!
AVOID END OF FINANCIAL YEAR SALES
If you are lucky enough to get a sizable return you have been given an opportunity to catch up on your finances.
While you tax return might seem like ‘free money’ you can use to splurge at the EOFY Sales it’s better to put this money towards your debts. If you can pay off a credit card or debt with your return, I would recommend doing just that. If you didn’t get enough to completely repay off one debt, you could use it across several debts. If you have any late repayments or notices from creditors demanding payment, these debts should take priority.
START AN EMERGENCY FUND
Life doesn’t always go to plan.
If you don’t have any urgent debts to repay, you could consider putting your tax refund into a high interest savings account. Add more money to this account when you get the opportunity and let it grow. Next time you hit a financial wall, you can use this account instead of relying on credit cards or payday loans. Financial experts suggest having an emergency fund with at least 3 months worth of pay put away. This will take time, but even having a spare $500 in reserve can be handy in an emergency.