Getting ready for tax time.

When it comes to getting ready for tax time, a little organisation goes a long way. If you've sorted and stored your paperwork, tax time will be much easier and quicker. The amount of tax you’re required to pay is calculated on your taxable income, which is the total income you earn less any eligible deductions, and you’ll need to keep records of both to validate your tax return.

Any income you receive from employment, pensions, government payments, investments, trust fund distributions, business profits, and capital gains is part of your taxable income. Any income you receive from lottery wins, gifts, child support and some other government payments is not included in your taxable income.

Your income can be validated by:

• Payment summaries from your employer and any other paperwork showing your salary, benefits and allowances.
• Summaries of benefits received from Centrelink or Veterans Affairs
• Statements showing any dividends or investment income you've received, and
• Bank statements showing any interest you earned on your bank accounts.

Eligible tax-deductible expenses may be things such as:

• Motor vehicle expenses if your vehicle is used for work purposes. This may include fuel, insurance, registration, green slip, repairs and maintenance, roadside assistance and interest costs or lease payments. Maintain a log book and as well as your receipts if you wish to claim these expenses.
• Work travel expenses like airfares, accommodation, tolls, parking fees and luggage.
• Self-education costs like text books, course fees, stationery, photocopying, student union fees and travel.
• Work clothing costs such as uniforms, dry cleaning and home laundry.
• Donations to eligible charities
• Investment related expenses may include interest costs, management and maintenance costs.
• Other work-related expenses like Union fees, home office expenses, mobile phone, internet, computer hardware, computer software, seminar and course fees, subscriptions to associations, organisers, briefcase, stationery, electrical and photographic equipment.
• Tax preparation, financial planning and advice fees.

This list is not exhaustive but may help you get started. Check out our Jargon Buster video for more helpful information.

Another important consideration in the lead-up to tax time is maximising your super contributions.

There are a number of benefits that you may be able to take advantage of when investing in super. To make the most of these benefits though you need to understand the different types of super contributions and be aware of the limits that exist on how much you can contribute to super each financial year.

The two types of contributions are Concessional Contribution and Non-concessional Contributions.

Concessional contributions are those made from your pre-tax income, such as your employer super guarantee contributions, salary-sacrificed amounts, and self-employed personal (deductible) contributions. These contributions are taxed at the super rate of 15% instead of your personal marginal tax rate.

Non-concessional contributions are personal super contributions which you have made from your after-tax income or a transfer of assets (such as shares).

Given the advantages of investing in the super environment there are caps in place for the amount that can be invested there. The table below shows the contribution caps that apply to both concessional and non-concessional contributions for the 2022 financial year. It also includes details of the extra tax that would apply to any amounts that exceed the cap. It’s important that you stay within the limits.

In relation to the concessional cap, it’s worth considering how much of this cap you can use to get as much advantage of the concessional tax environment as you can. Currently, the employer super guarantee contribution is 10.5% pa, so if you’re earning about $80,000 then your employer is contributing approximately $8,400 to your super meaning there is still a gap of roughly $19,100 that you could consider salary-sacrificing. Salary-sacrificing means that the amount you contribute to your super:

• is taxed at the super rate of 15% not your marginal tax rate,
• reduces your taxable income, potentially reducing the amount of income tax you pay too.

We encourage you to talk to your tax adviser or financial planner for more information on how to prepare for the end of the financial year. Planning well ahead of your tax return is a great strategy to ensure you’re well prepared to both maximise your return and, if applicable, receive your refund sooner than later.

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice. © Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.