Tax tips to ease the squeeze

It's that time of year again. Although it can be painful to think about your finances, the end of the financial year is a good time to review the state of play. It is also a good time to look forward and to initiate your savings strategies for the new financial year.

According Tony Beck, Head of Corporate Responsibility at Members Equity Bank, the end of the financial year and the new tax year present opportunities for Australian Families to play catch up with the finances and possibly, get off the debt treadmill.

"With the proposed tax cuts announced in the recent Federal Budget, it would be an idea to consider paying a little bit extra into your mortgage or a fee-free Online Savings account such as provided by Members Equity Bank. The ME Online Savings Account is currently delivering 7.5% returns with no fees, every cent you deposit goes into the account, " he said. "There are a number of deductions that the Australian Taxation Office allows that will boost family finances if you pay attention to the detail."

Family Tax Benefits
2008 is the last tax year you can claim the family tax benefit in your tax return. In future the benefit can be claimed as a fortnightly payment or a lump sum through Family Assistance Office.

Child Care Rebate
You can no longer claim the 30 per cent child care rebate in your tax return. The Family Assistance Office now pays the rebate after you lodge your tax return and your childcare benefit has been reconciled with Centrelink.

Review your salary package
If your employer offers salary packaging, this can be an effective way to obtain tax savings, particularly if you are on the top marginal tax rate. Some of the most common and tax-effective items that can be salary packaged include superannuation and motor vehicles. Consider reallocating salary into superannuation can reduce your tax liability by up to 31.5c in the dollar (46.5% v 15%).

Deductions for personal Contributions
Personal super contributions you made to your super fund can be claimed as a tax deduction. If you claim deduction for personal super contributions you wont be eligible for a super cocontribution on the claim amount. Make sure your super fund has your Tax File Number to avoid excess tax payments.

Government co-contributions
If you earn less than $58,980 per year the government is willing to match your superannuation contributions dollar for dollar up to a maximum of contribution of $1,000 per year.

Spouse Contributions
Consider making a contribution to your dependant spouse’s superannuation. If your spouse earns less than $13,800, you can make a contribution to their superannuation and be eligible for an income tax rebate.

Medical Expenses
Don’t forget to claim your net medical expenses over $1,500.00 Obtain Medicare levy and Medicare levy surcharge relief
Increases in the Medicare levy thresholds for low-income individuals, families and certain pensioners announced in the 2008/09 Federal Budget can be claimed in this year's return.

• An additional one per cent surcharge may also apply to married or de facto couples with a combined income in excess of $100,000 if they do not have adequate private health insurance cover.
• The surcharge also applies to single individuals without similar cover where an individual's income is in excess of $50,000.
• For surcharge purposes income will also include reportable fringe benefits.

Work-Related Expenses

• While up to $300 of work-related expenses can be claimed without receipts, the claims must be for items necessary for your work and you must have incurred the expenditure?
• Uniforms and work clothes
• Laundry
• Self Education (as long as its in the same field as your work)
• Tools
• Computer and home office equipment
• Subscriptions
• Union Membership

Maximise your motor vehicle deduction
Where you have used your motor vehicle for work-related travel. If your claim for kilometres travelled for the year does not exceed 5,000 kilometres, you can claim a deduction for your car expenses on a cents per kilometre basis to the extent you have used your car for work. The allowable rate for claims changes from year to year.

Deduct your accountant fees
The fees you pay a registered tax agent to prepare your return or to manage your tax affairs are allowable in the year the fee is paid.

Deduct Donations to Charities
Donations to charities and other gift deductible recipients should also be claimed.

Optimise your tax offsets
Tax offsets directly reduce your tax payable and can add up to a sizeable amount, so it pays to know all the offsets you are entitled too. Long standing examples of tax offsets include the dependant spouse rebate, low-income rebate, mature aged worker rebate, the senior Australian tax offset.

These tax tips were provided with courtesy of MembersEquity Bank - The Super Fund Bank, as at 19.06.2008.