Tax time is fast approaching, but what can you do to maximise your refund?
Most baby boomers will be thinking about reducing your income with deductible expenses, that will help lower your tax bill. It’s important that you take the time to understand what rules the Australian Taxation Office has in place when it comes to deductions to make sure it is valid.
If you are still working, consider deductions on expenses that relate directly to your work in your industry. Consider things like professional memberships, work-related travel and work-related assets like iPads and computers, mobile phones and even calculators.
Donations to registered charities are also tax-deductible.
Those in the habit of filing receipts and invoices will know how beneficial being organised can be. If you have the records to validate what you are claiming, tax time will be that much easier.
Starts at 60 recently caught up with finance guru Noel Whittaker to discuss his top three tips for tax time for retirees.
While many retirees look forward to not having to lodge a tax return, there are specific tax and superannuation issues you should consider if your are over 55 years of age.
First, cut capital gains tax. Selling a bunch of shares or an investment property pushes all the profit into one year, according to Noel Whittaker, and this can create a heft tax bill.
Whittaker recommends using your superannuation wisely, which can help cut your capital gains tax to zero. A strategy to sell your investments gradually can prove more beneficial, but he recommends you talk to your accountant and/or financial advisor about this for tailored advice.
Second, Whittaker highlights that pensioners can earn about $25,000 each before having to pay tax. To determine if it is more worthwhile keeping money in your superannuation, Whittaker says you should ask your accountant.
Finally, you need to understand there are different sorts of income.
“The best income is franked dividends because you get the imputation credit back in cash in most cases,” Whittaker says.
Most quality Australian shares pay dividends that come with an attached tax credit, and for retirees and super funds this means you are eligible for an extra tax refund.
You don’t have to fill out a tax return to claim back these franking credits, and the ATO has an online form that will assist you.
How will you be affected this tax time? Are there any finance topics you’d like covered by Starts at 60?