With just five days left until the end of the financial year, crafty consumers are hitting the shops to ensure they maximise their tax return.
Mark Chapman, the director of tax communications with H&R Block, has revealed the biggest mistakes Australians make when lodging their tax refunds
The tax specialist has also given a break down for the surprising items you can buy that will boost your refund.
Mr Chapman told Daily Mail Austraila the best products to buy this weekend would be items under $300, as you can get an immediate tax deduction on them.
Money expert Effie Zahos says buying items under $300 such as headphones are good to buy this weekend as you can get an immediate tax deduction on those items (stock image pictured)
Australians who work outside, such as gardeners or teachers, can claim a tax deductions on sunglasses (stock image pictured)
‘There’s a limit for things you can write-off straight away because it has to be less than $300, you could buy you a cheap mobile phone or cheap laptops.
‘If you use head phones for work then you could get head phones.
‘A lot of people have gone out and bought desks, chairs, and filing cabinets for their home offices since they’ve been working from home.’
Employees who tend to work outside can claim a deduction on sunglasses.
You can also claim a deduction on a handbag, so long as it is for work purposes.
Mr Chapman said claiming work-related purchases up to $300 don’t require receipts but he advised against going out and buying products that aren’t work-related.
For bigger ticket items, it’s a bit trickier, he said.
When it comes to items over $300, he said one of the biggest mistakes many people make is not keeping a record of their purchases.
‘One we see most often is people not keeping receipts, proving they spent some money. You’ve got to be able to prove you incurred the cost.’
Money expert Effie Zahos says you can claim a tax dedication on your handbag as long as it is for work purposes (pictured: Mimco bag)
Finance expert Effie Zahos told the Today Show shoppers shouldn’t go crazy while spending at the EFOS sales this weekend.
‘You’ve got to remember that you are using your cash, it’s coming out of your hard earned money and how much you get back does depend the proportion of business use versus personal use and also your tax bracket.
‘If you’re earning between $37,000 to $90,000, then you’re looking at getting around 34.5 cents back on what you spend. So you have got to remember it’s not just instant money back. So take it easy on the shops this weekend.
‘When you are buying a car, a lot of people don’t realise there is a car limit. $57,581 is the max that you will be able to get a deduction on.
‘That’s if the vehicle only has nine passengers or less that can handle it. So do take care on that. If you buy it by lease, it’s not eligible under the instant tax write-off.’
The financial year comes to an end on June 30 and with so many Australians working from home due to the COVID-19 crisis, many people could be in for a larger tax return this year.
The ATO has simplified the rules for those working from home, providing an automatic ‘COVID-hourly rate’ for workers who want a shortcut to calculate how much money they will earn back.
The shortcut claims a deduction of 80 cents for each hour worked from home from between March 1 to June 30 this year.
if you’re looking to upgrade your home office, now is the time to do it as you can claim a tax deduction on those items (pictured: Furniture from Ikea)
Mr Chapman warned that while the shortcut may save on paperwork, workers may be forgoing generous tax refunds of more than $1,000.
He calculated that someone claiming the flat rate of 80 cents since March would typically get back $400 to $450 – or only a quarter of the $1,600 they could possibly claim.
‘Generally speaking, whenever the ATO puts forward these flat rate allowances, you can pretty much guarantee that there’s a trade-off,’ he said.
‘The ATO is saying: ‘We’ll make life easy for you, we will take all this difficult record keeping and all of these difficult calculations off you but we’ll give you this flat rate.’
‘In exchange, you’re not going to get as big a deduction as you would otherwise.’
Mr Chapman said someone claiming a lower 52 cents an hour rate, on top of their work-related phone, internet and electricity bills, was more likely to get a refund of $850 to $900.
A tax refund could stretch to as much as $1,600 if an individual working from home claimed the cost of a new desk, chair or occupation-related item worth up to $300.
‘If you’ve got your paperwork, if you’ve got all of your expenses, if you can work out the amount that relates to your home office, the amount of time that you’re using that home office for work purposes, and you can prove all of that, you’re going to be a lot better off,’ Mr Chapman said.
More expensive items like laptop computers and mobile phones can only be claimed as tax deductions over two years to account for depreciation.
In the first week of April, the tax office and Assistant Treasurer Michael Sukkar announced that Australians working from home could claim a flat 80 cents an hour rate for work done at home between March 1 and June 30 as an alternative to ‘needing to calculate specific running expenses’.
‘The short-cut deduction method will make it easier for many Australians who are working from home for the first time due to COVID-19 when it comes to accurately completing their tax return,’ Mr Sukkar said at the time.