With tax time is just around the corner,mistakes made in the next month can potentially cost you plenty at tax time.
While July is still a month away, taxpayers should be aware of the errors in June that can create financial pain — particularly around the timing of tax-deductible payments and selling assets.With investment or work-related expenses, delaying them until July means waiting an extra year to get a slice of that money back from the taxman.
Deakin University Business School associate professor Adrian Raftery said delaying tax-deductible expenses and failing to keep records were two common errors. Dr Raftery said many retailers were savvy in June and promoted tax deductions as part of their end-of-financial-year sales. “However, don’t go out and buy something purely for a tax deduction. Don’t buy a new printer for your home office if you don’t need it,” he said. A tax deduction only gives you back your marginal tax rate, not the entire expense. Individuals buying items for work or investment properties should also be aware than anything costing more than $300 could not be claimed instantly and would have to be written off over time, Dr Raftery said. Business owners get a much more generous $20,000 limit per item for immediate tax write-offs.