With the end of financial year quickly approaching, now is the perfect time to think about your tax return – and how you can bring down your taxable income.
Depending on your job, there may be some purchases you can make before June 30, which are claimable items. There are two general rules that need to be answered when it comes to figuring out if an item is tax deductible. Firstly, is it directly related to the earning of your income? Secondly, has it already been reimbursed by your employer? The Australian Government has a comprehensive list of things that are tax deductible here.
During the EOFY sale period, from a customer’s perspective all we see is all those shiny sale signs, but from the business perspective they are trying to clear old stock before the New Year begins. So how can you use the EOFY sales to your advantage and get the best deal?
Consider these tips before you hit the shops:
1. Tick off the big ticket items
While clothes are discounted throughout the year, electronic and hardware stores often reserve their best prices for times they want to clear their stock like the EOFY and Christmas. If you’re required to work from home, you may be able to claim a portion of your home office expenses, such as your phone, computer and printer. The EOFY sales can be a good time to consider making some of those big purchases.
2. Make a list of what you’ll need
Once you’re at the shops, it may be tempting to splurge on some unneeded items. So think about the purchases you need to make, and whether they are tax deductable. That way they will not only benefit you at work but also help reduce your taxable income. Writing a list and sticking to it, can help ensure you only purchase what you really need.
3. Shop around
Just because it’s the EOFY sales, doesn’t mean you need to rush your purchase and pick out the first discounted product you find. Take your time to compare prices at different outlets, to ensure you’re getting the best possible deal for that item. You might even find retailers are willing to price match, if you can prove you can find a cheaper deal elsewhere.
4. Ask for bonus items
Also, don’t forget that you can still use your negotiation skills to get bonus items with your purchase. Let’s say you are a freelance designer and need to purchase a new laptop. If the shop assistant isn’t willing to provide you with a further discount, you might find extras like hard drives and speakers thrown in for free, so they can secure your business.
When it comes to making a purchase at the EOFY sales, remember that while great savings can be found, you may not be able to claim the full purchase price, as the ATO has specific caps on how much you can claim depending on things like your occupation and income. So it’s wise to only spend on items you genuinely need for work and won’t end up feeling buyer’s remorse for.
Insuranceline is not authorised to provide tax advice, it is important to obtain advice from a qualified tax professional.