Maximising Tax Refunds: A Guide for Individuals and Businesses

By Kaleem Ulah

January 17, 2024

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Everyone, both individuals and business owners, aims to have a huge refund every tax season. It’s the end of the fiscal year, and you are wondering what could be the right motivation for filing your tax: the refunds! This is the only way to recover some dollars to cover the stress and inconvenience. What makes this more fulfilling is when you maximise your refunds. Now, how do you do this? A refund of income tax is typically issued when the taxes paid are greater than the amount assessed. This blog will go through the top steps to follow if you want to maximise your tax refund in Australia.

Steps to maximise your tax refunds in Australia

According to the recommendations of several tax professionals, once you have submitted your income tax return, you can maximise your tax returns by utilising the following strategies.  

Steps to maximise your tax refunds in Australia

1. Keep your medical expenses record

Your health insurance plan does not cover several necessary medical expenses. These costs qualify for a tax credit that isn't refundable but is still worth claiming. Whether it be the payment you make to the doctor, the fees associated with attendant care, or even the cost of the ambulance service. All of these items can be included in your tax return. For this reason, you should ensure that all of your medical expenses are recorded, as doing so could result in significant cost savings.

2. Itemise your deductions  

If you have significant deductible expenses, such as mortgage interest, medical bills, and charitable donations, itemising your deductions may be more beneficial to you than taking the standard deductions, which most taxpayers use because they depend on the taxpayer's filing status. It is only beneficial to itemise your deductions if the sum of those deductions is greater than what you would receive if you took the standard deduction.

3. Keep accurate books

Keeping detailed records is absolutely necessary if you want to get the biggest possible tax refund. You run the risk of not being able to take advantage of potential deductions and credits if you do not have the appropriate documents. Be sure to keep careful records of all the money you spend on your company, including any receipts, invoices, and statements from your bank. You should also note any travel and entertainment expenses relevant to your business, as these costs can be tax deductible. Your accounting and bookkeeping records will be up-to-date and correct if you outsource them to a reputable local accounting and tax agency like The Kalculators. This will give you a clear picture of your company's financial performance.

4. Charitable donations  

You can deduct the value of any items you have given to charitable organisations if you have made gifts to those organisations. It is essential that you maintain all of the receipts or other records as evidence of the cost or value of the property that was donated. In 2021, a taxpayer who filed their return as a single person was allowed to deduct up to $300 worth of charitable contributions made in cash to organisations that qualified for charitable deductions while still claiming the standard deduction. On the other hand, you cannot claim this deduction if you are filing your taxes in 2022 or later. If you wish to consider charitable contributions, you must itemise your deductions.

5. Reward employees

As a business owner trying to maximise tax returns, you should never ignore this. When we talk about being polite to our employees, we show appreciation by providing incentives such as bonuses, presents, and awards. Not only is this beneficial for employees and employers, but it may also result in tax deductions for the incentive recipient. Review the guidance on fringe benefits provided to develop incentives that can also be used as tax deductions.

6. Check the home office deduction

You will need to continue working even while at home if you own a small business. If you work from home and have an office there, you can take advantage of the home office deduction, which provides allowances based on the total square footage of your office. You can also deduct a portion of your homeowner's insurance cost, the money you spend on utilities, and the value your home loses over time as a business expense.

7. Examine your bank and credit card statements

Although you should never mix business and personal funds, it's possible that you used your personal bank account or credit card to make a purchase that was relevant to your business at some point throughout the year. Check the statements from your personal bank account and credit cards to see if there are any company spending you may have overlooked otherwise. Your business accountant must know how to properly record these expenses in your records to deduct them as legitimate business costs on your tax return.

Tip: You can read The ABC of Small Business Financing to learn how to do this.

8. Bad debt

The terms "accounts receivable" (AR) and "accounts payable" (AP) are used when referring to the financial records of a company that uses the accrual method of accounting. These two accounts represent the future income and expenditures that will be paid into or taken out of the business. Unpaid accounts receivable, which indicate revenue not received in full, are challenging for many companies.

Unpaid accounts receivable can be seen as a bad debt expense by firms, which is a positive element of the situation. A company that has made several attempts to recover payment on accounts receivable but has not been paid can deduct the amounts as "bad debt." If, at some point in the future, the company is paid for this amount, then the company will count that amount as revenue. 

9. Hire tax experts  

Finally, consulting with tax professionals is a good idea to get the most money back from your taxes. To get the most out of your company's tax refund in Australia, meticulous planning and attention to detail are required. You may boost your chances of maximising your tax refund and keeping more money in your business if you maintain accurate records, claim all eligible deductions, take advantage of tax credits, and hire expert tax consultants. Keeping proper records is one of the most important steps in this process. Regarding your taxes, it is in your best interest to be proactive since, as you should remember, every dollar matters. You can check out how to find the best tax preparer around you.

Contact The Kalculator for a free consultation if you are in Adelaide or its environs. 

Conclusion

Many taxpayers look forward to receiving a tax refund each year. It is an easy and automatic way to save money, and it might give you the sense that you are being rewarded for paying your taxes. When tax season comes, your primary attention should be on how to maximise your tax refund; the larger it is, the better. And to be on the safer side, ensure you know tax scams and how to avoid them; it is important.

The Kalculators’  group of highly knowledgeable tax experts offers individual and business tax preparation services. We can assist you in navigating the Australian tax laws and regulations and ensuring that you are making full use of all of the deductions and credits to which you are entitled. We can also assist you in identifying potential risk areas and developing methods to reduce the tax liabilities you are responsible for.

Frequently Asked Questions

What factors can impact my tax refund?

Several factors can impact your tax refund, including income, deductions, marital status, and tax filing status. Any changes to the tax code or your personal circumstances can also affect your tax refund.

How can I maximise my tax refund?

To maximise your tax refund, you can consider the following strategies:

  • Educate Yourself: Stay informed about the latest tax changes, deductions, and credits to maximise your tax benefits.
  • Track Your Expenses: Keep accurate records of your yearly expenses, including work-related expenses, charitable donations, and medical expenses.
  • Invest in Tax-Advantaged Accounts: Take advantage of tax-deferred retirement accounts, such as 401(k)s and IRAs, to reduce your taxable income.
  • Consider itemising: If you meet certain criteria, itemised deductions can potentially increase your tax refund.
  • Use Tax Credits: Explore tax credits available to individuals and businesses.

How do I claim deductions and tax credits?

To claim deductions and tax credits, you must provide supporting evidence, such as receipts, invoices, or itemised statements. Additionally, you may need to complete additional paperwork or attach the appropriate forms to your tax return. Consult with a tax professional or refer to the relevant tax guidelines to ensure proper and accurate claim submission.

When should I file my tax return?

The deadline for filing tax returns in Australia varies from year to year. The tax year in Australia runs from July 1st to June 30th, and the deadline for filing tax returns is usually October 31st. However, filing your tax return as soon as possible is advisable to avoid penalties or delays in receiving your refund.

What are some common mistakes to avoid when filing a tax return?

Mistakes made when filing a tax return can have serious consequences, including penalties and delays in receiving your refund. To avoid common mistakes, consider the following:

  • Accuracy: Double-check your calculations, including deductions, income, and tax withholdings, to ensure they are correct.
  • Documentation: Ensure you have all the necessary documents, such as receipts, invoices, and tax forms, to support your claim.
  • Timeliness: Don't miss the filing deadline or submit an incomplete tax return, which can result in penalties.

Consulting a tax professional can provide additional guidance and expertise when filing your tax return.

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About the Author / By Kaleem Ulah

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Kaleem is CEO & Author at "The Kalculators". With more than 10 years of experience in financial services, He built Kalculators to transform your financial challenges into strategic triumphs!

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