Hien Hoang: 0448 012 728 and Brian Spurrell: 0412 011 946

Regardless of whether you plan to prepare and lodge your own tax return or alternatively use the services of a registered tax agent, you will need to get your paperwork in order to facilitate the preparation of your tax return.

Assessable Income

Identifying and recording your assessable income is relatively easy. You can use the ATO app which can be downloaded from Google Play or the App Store. If you haven’t already done so you will need to create your myGov account and link it to the ATO. You will then be able to access full details of your various sources of taxable income including salaries, interest, dividends and distributions from trusts etc. You will however have to wait until late July until the ATO has received your income details from the various sources including employers and financial institutions.

Alternatively you could identify your sources of income from employer income statements, bank statements, dividend distribution notices and trust distribution advices etc.

Deductible Expenses

Regardless of whether you have been utilizing the ATO myDeductions app throughout the year to record your deductible expenses or filing all your supporting documents, you must ensure all deductions comply with the following ATO requirements:

  • You must have spent the money yourself and have not been reimbursed.
  • If the expense is for a combination of income producing and private use, you can only claim the proportion that relates to producing income.
  • You must have a record to prove it.

ATO Warning

On 17th May the ATO issued a warning revealing the following four key areas it will be focusing on during tax time 2022.

  • Recordkeeping
  • Work related expenses
  • Rental property income and deductions
  • Capital gains from crypto-assets, property and shares.

Rather than over claiming expenses in the hope of increasing your tax refund I suggest you give thought to relying upon the following opportunities.

1) Prepaying annual deductible expenses
If you are claiming deductible expenses such as insurance, subscriptions, union fees etc. consider paying these annual expenses prior to June 30th rather than when the renewal falls due in the subsequent financial year.

If you have income protection insurance cover that is paid for out of your super fund, consider transferring it into your own name and paying it personally. When paid by your super fund it claims the deduction against your earnings in the fund at a rate of 15%. If your taxable income is likely to be $45,000 or more you will save tax at your personal marginal tax of 34.5%, 39% or 47% less 15%, depending upon your tax threshold.

2) Making a personal concessional super contribution
Personal super contributions are made from after tax funds and are either:

  • Concessional (deductible) contributions currently with a cap of $27,500 and $25,000 for years prior to 2021-22 and taxable at 15% to your super fund.
  • Non-concessional (non-deductible) contributions currently with a cap of $110,000 and nontaxable to your super fund.

If your taxable income is expected to be between $45,000 and $120,000 where the marginal tax rate of 34.5% applies or up to $180,000 where the 39% rate applies or in excess of $180,000 where 47% applies then making a concessional contribution will save tax at a rate that is the difference between your marginal tax rate and the 15% rate paid by your super fund on the contribution.
Clearly the higher your marginal tax rate the impact of reducing your taxable income becomes progressively more compelling.

Making a concessional super contribution is very attractive in years when you have a significant increase in your taxable income due to a capital gain from selling a rental property or shares or any other asset attracting capital gains tax or receiving a lump sum payment from your employer.

Check with your super fund or use the ATOapp to identify:

  • Your total super balance (TSB) at 30 June 2021
  • Super contributions to date for the 2022 tax year comprising employer super guarantee and any salary sacrificed contributions

Add the total of contributions to date plus any remaining employer contributions up to 30 June from the cap of $27,500 to determine the maximum concessional contribution available for the 2022 tax year.

If your TSB is less than $500,000 at 30 June 2021, in addition you are eligible to carry forward unused concessional contributions starting from the 2018/19 financial year which can be added to your 2022 contributions once you have equaled or exceeded your 2022 contributions cap.

If your TSB is greater than $500,000 at 30 June 2021 you are not able to access this opportunity.

If you choose to make a personal concessional super contribution irrespective of whether you also elect to utilize carry forward contributions, you must obtain a Notice of Intent to Claim a Deduction for Personal Superannuation Contributions from your super fund and also receive an acknowledgement from your fund which will contain information required to complete your tax return at Item D12.

Timely Warning

If you intend to make a concessional super contribution this financial year you must act immediately to determine the amount you plan to contribute, contact your super fund to obtain relevant information and the Notice of Intent and seek advice from your accountant, if necessary. This is because it takes time and you should aim to make your payment to your super fund by 20th June to ensure the funds reach your superfund account by 30th June.

The content of this article is not intended to be relied upon as professional advice and should not be used as such. If you have any questions you should consult a registered tax agent.
Brian Spurrell BA, B Com, Dip Ed, FCPA, Registered Tax Agent.
Director, Personalised Taxation & Accounting Services Pty Ltd
PO Box 143 Warrandyte 3113 Ph: 0412 011 946
Web: www.ptasaccountants .com.au