There are many ways to top up your savings account or put a little extra into your superannuation fund. A pay rise, Christmas bonus, tax refund — even an unexpected cash prize could be the source of a much-needed extra boost to your savings.
One fantastic strategy that's often overlooked, however, is claiming tax deductions. There is a legion of expenses that can be claimed as tax deductions, netting you some useful savings. With June on the horizon, here's a breakdown of some of the costs that ought to be in your sights come the end of tax year.
Workers have a plethora of tax deductions they can claim, with perhaps the most notable one being clothing. If you have any work-specific items of clothing you've had to purchase — a work uniform for instance, or protective clothing such as particular types of footwear or a hard-hat — you can claim their cost as a deduction. This also applies to work-specific clothing like a chef's hat or an apron, as well as essential tools and equipment you've had to purchase.
It's not just the cost of buying these items, however. Any expenses you incur in washing, drying and otherwise taking care of clothing can also be claimed, too. You can even do this for any cleaning and drying you do yourself, at a rate of $1 per load.
There are a host of other deductions you can claim as long as they relate to how you earn your income. If you work from home, the cost or decline in value of equipment like your computer, phone or printer can be claimed. Similarly, if you went to any paid seminars or workshops to improve your skills, this can also be a deductible. These may seem like small savings, but once you put them in a high interest savings account, they can really make a difference.
Do you make a good chunk of your income through investments, whether it's property, shares or some combination? If so, there are numerous tax deductions available that can bolster the revenue you're earning.
Any expenses incurred in the process of earning interest, dividends and other forms of investment can be claimed. Are you being charged an account-keeping fee for an account you use to invest? Deduct it. Are you accruing interest on an investment home loan or another type of debt you used to buy assets? Claim it. Have you ever sought out the services of a financial planner or other advisor to give you guidance for your investment strategy? That's deductible.
Property investors are particularly advantaged here, because there are so many expenses associated with running a rental property. Council rates and body corporate fees, maintenance and repairs, pest control and cleaning, property manager fees — all of this and more can be claimed on your investment property as a deduction.
Finally, you may earn your income by being one of the 1.8 million business owners in Australia (as recorded by 2009-10 Australian Bureau of Statistics data). Small businesses, and young ones in particular, can often find it tough going to keep their cash flow in the positive figures, so any way they can reduce their outgoing costs could be a blessing. Thankfully, there are plenty of deductions available.
Business owners can claim everything from accounting and bookkeeping preparation costs, to legal fees, electricity, gas and fuel, and even salary, wages and bonuses they pay their workers. You'll also find costs like superannuation contributions, insurance premiums, and staff training and recruitment expenses on this list. This is just a small sample, and looking at the list of deductions available for business owners, you'd be forgiven for thinking the list of what can't be deducted is shorter.
For some, the resulting savings could perhaps be put toward paying off a home or business loan. Savers who want to place it into a high interest-earning account, however, will want to compare term deposits to make sure they get the most favourable rate possible for the amount they shave off their tax.