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Maximising Your Tax Return: Insights from Ben Nash
Tax time may not be the most thrilling period on the calendar, but it presents a significant opportunity to boost your financial health. Financial adviser Ben Nash highlights that the average tax refund for Australians is approximately $2,228. However, with strategic planning, you could increase that amount to $3,550 or more—an extra $1,322 simply by being proactive.
Planning Ahead: Don’t Wait Until July
Most Australians traditionally approach their taxes after the financial year has concluded. This reactive attitude often results in missed opportunities for maximising refunds. To effectively enhance your tax return, it’s essential to start planning well before 30 June.
Understanding Your Deductions
A critical step to keeping more of your earnings is to fully leverage work-related deductions. Many taxpayers overlook several deductions, including:
- Home office expenses
- Mobile phone and internet bills
- Costs for professional development and training
- Work-related tools and equipment
The Australian Taxation Office (ATO) provides comprehensive resources to help you navigate what can and cannot be claimed. Familiarising yourself with these deductions is crucial for maximising your tax benefits.
Timing is Key
By ensuring your tax-deductible expenses occur before 30 June, you not only secure your deductions sooner but also position yourself to receive a tax refund a year earlier. For instance, if you prepay $2,000 in deductions, and your taxable income is above $45,000, you could potentially receive an additional $640 in your tax refund.
More complex strategies, such as investing in franked dividends, debt recycling, or negative gearing, can lead to substantial long-term tax savings. While these strategies require careful consideration and planning, understanding their potential can hugely benefit your tax position both presently and in the future.
Superannuation Contributions
Any contributions you make to your superannuation fund up to the cap of $30,000 are tax-deductible. This includes employer contributions and can potentially provide you with significant tax savings, given that earnings within superannuation are taxed at a maximum of 15%—a stark contrast to personal tax rates that can reach 47%.
The Value of Professional Advice
With the increasing sophistication of tax regulations and the availability of information, employing a financial expert can be invaluable. Statistics show that taxpayers who use a professional tax agent receive an average refund of $3,550, which is notably 59% higher than those submitting returns through the ATO site themselves.
Having the right support allows you to sift through the complexities of tax laws, identify optimal options for your situation, and develop a tailored strategy to enhance your tax return.
Future Planning
For those with increasing incomes and rising tax bills, engaging in tax planning early is essential. By strategising before the financial year begins, you can make informed adjustments that could substantially impact your tax position by the next 30 June. This proactive approach enables you to implement diverse strategies, including prepayment smoothing, spreading superannuation contributions, or even establishing trusts.
Taking Action
Improving your tax refund requires deliberate actions. Whether maximising deductions, prepaying expenses, or employing advanced tax strategies, the time to act is now.
In summary, understanding and strategically managing your taxes can yield considerable benefits.
Ben Nash is a renowned financial commentator and adviser, as well as the founder of Pivot Wealth. His latest book, Virgin Millionaire: The Step-by-Step Guide to Your First Million and Beyond, is currently available on Amazon.
For personal financial guidance or investment advice, you can book a consultation with Pivot Wealth here.
Disclaimer: The information in this article is general and does not consider personal financial situations. It is recommended to seek professional advice tailored to your individual circumstances.
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