Ok, back into it all for the new year now, and on the ATO site we found a page that you guys might be interested in checking out. You can have a look and find out if there are any specific things you could be claiming for your 2010 tax returns that you may not have known.

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If you’ve got the cash lying around, I’d like to encourage you to consider making another donation before the end of the year.

It feels good, it makes a difference, and you’ll probably get a tax benefit.

Everyone wins.

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In the lead up to tax time, we’ve received a handful of letters from the tax office letting us know some of our clients may also receive letters from them. In particular, the tax office have warned people about claiming work-related expenses, rental property expenses, share trading and dividend-related expenses, and about declaring capital gains. So, we figured that now’s as good a time as any to educate you a little bit ourselves.

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June 30^th is fast approaching and we still have a few strategies and ideas that you may want to look at before the end of the year. These particular strategies are most effective when you are nearing retirement but may still be worth considering if you’re a little younger. One great benefit of super is that along with a lower tax rate, you still get to keep the money as well; but, you may not be able to access it again until you start approaching retirement age, either.

So if you’re not already doing so, you may want to consider looking at a salary sacrificing agreement with your employer. If you are 50 years or older, then you may have $50,000 worth of concessional contributions into your superfund until you will be taxed at a rate higher than 15%. That’s not bad at all; especially considering you won’t be taxed at all in your name for the money contributed! This may work particularly well with EOFY bonuses, for example, or as an on-going tax planning measure to carry into the next financial year.

Also don’t forget if you’re self employed and less than 10% of your taxable income comes from salary and wages then you may be eligible to claim personal contributions to your superfund on your tax return. Otherwise personal contributions are not claimable. You’ll also need to notify your superfund of your intention to claim those amounts.

Lastly – and this isn’t tax planning so much, but everyone likes free money! – if you haven’t made any personal contributions this year yet and would like to claim the government co-contribution, you can only do this once a year so you may want to hurry! You may be able to receive $1 for every $1 contributed (up to $1,000), but your superfund must receive the contribution before June 30^th.

Danny’s post last week spoke about spending up on your children’s education expenses to take advantage of the 50% rebate. We also get a lot of enquiry from clients about claiming their own education expenses, referring in particular to investment education.

There are a couple of things to be aware of, on that one. The first thing is that the first rule of claiming tax deductions is found in Section 8-1 of the ITAA 1997. The short version is that for the expense to be deductible, it needs to relate to your existing income.

So, learning about new ways of earning income doesn’t really fall under that description. According to the tax office, neither do courses for personal development, wealth psychology and general wealth creation seminars.

Education expenses that do relate specifically to your existing income streams (say, books and seminars about property management, accounting concepts for property, strategies for increasing rental returns, etc) will usually be much easier to claim.

Often, a course or product will explore a range of different concepts and it’s these that fall into more of a grey area. In some cases, you might be able to claim based on the portion that is relevant to you. For example, Positive Real Estate suggest that about 25% of their content is about accounting and depreciation ideas, and so that gives a basis for claiming at least part of their course fees. On the other hand, a book about vendor finance structures might not be deductible at all, for an investor who isn’t already wrapping properties before making that purchase.

With this in mind, developing your knowledge and abilities won’t always result in a deductible expense for you, but it’s always worth asking the question. The real benefit – often overlooked for the tax advantage – is going to be in your increased likelihood of making a profit, anyway!

Getting very close to the end of this financial year now… Make sure you make the most of the next 2 weeks. This one’s for those of you with kids in school. If you’re eligible for the education rebate, you’ve got yourselves a perfect opportunity for some tax planning.

Much like our previous tax planning tips, the concept is simple; bring forward the spending you would be doing sooner or later anyway, to reap the tax benefits in this financial year.

So, if you were thinking of buying, say, some stationery for your children’s education in the near future, see if you can pop down to Officeworks before June 30 (Any excuse to go to Officeworks!). Some of the things claimable are:

• Laptops and computers (along with associated costs)
• Software
• Textbooks
• Prescribed trade tools
• Everything else here

It may also pay for you to familiarise yourself with those items not claimable before you go out on a spending spree.

Now, do note that these expenses are not just claimable as a deduction. You will get a full rebate of 50% of these expenses; up to $1500 for a secondary school student and $750 for a primary school student. Pretty good eh? Anything in excess of these amounts should carry forward until next year, as well, but clearly there’s no real point in loading up beyond those thresholds if you don’t need to.

And one more thing… The ATO has decided that the brand new Apple iPad qualifies for the rebate! So if you can manage to pick one up before July, to be used for your children’s education, you can look forward to that 50% rebate.