How to Pay less tax

By Allison Tait, ninemsn Money
Welcome windfall or nasty bill? What's your tax return going to deliver this year? So much depends on how organised you are, and how you play the tax game. Here's our guide to paying less.
Start with the paperwork
Don't wait until the last minute to get your paperwork together. Valuable deductions are lost because you can't find a receipt at the last minute.
Talk to a (good) accountant or tax agent
While many of us see accountant's or tax agent's fees as wasted money, arguing that our tax is simple, it's possible we're doing ourselves out of not only advice, but deductions. "For a start, the fees are tax deductible," says accountant and financial advisor Jason Cunningham, author of Where's My Money? (Wiley).
"But a good accountant is someone who can add value to your situation. Not just the guy who gets you the most back — a person who can help you with your goals and objectives."
Word of mouth or referral is the best place to start.
Don't overlook the obvious
There are several everyday deductions that people often overlook. "Most people can claim their motor vehicle expenses in some way," says Andrew Jeffers, CEO of Aussie Tax Time (www.aussietaxtime.com). "If you use it for work or to go from work to work-related study, you can claim that."
There are four methods of working out how to claim deductions, but Jeffers favours keeping a logbook. "If you keep one for 12 weeks, it lasts for five years," Jeffers says.
Jeffers also warns against falling into the trap of believing a car allowance is automatically a full deduction. "You need to add the allowance to your income and then claim a deduction using one of the four methods," he says. "If your allowance is more than your claim, you will be taxed on the difference."
Kids can be tax-deductible
Well, not exactly, but you can receive a rebate in the form of the Education Rebate, to the tune of $750 (primary) or $1500 (secondary school). "You need to keep receipts of expenses in relation to your child's education costs," Jeffers says. Before you get too excited, fees are not included, although it's worth noting that components of some school fees are. Check with your accountant.
All education is not equal
While any form of self-education is admirable, it's not all tax deductible. "It must be something that helps you increase your existing income," Jeffers says. "A plumber might do a law degree, but that's not tax deductible. It must be in the same strain." Choose your courses wisely to save tax.
Don't forget to take your medicine
The medical expenses tax offset is another area that can be forgotten. "There is a threshold, but it's particularly good for families as they can combine expenditure," Cunningham says. "Once you spend $1500, you get 20 percent back on any medical expenditure above that." Doctor's fees are not included, but you might be surprised by what is.
Make sure you offer a comprehensive return
Don't forget to declare that little bit of interest on your everyday bank account. "A year ago, you might have got away with it," Jeffers says. "But the ATO has comprehensive records and they cross-reference. Contact them for a pre-filing report, which helps you to see what they already have, and reminds you what you need to include."
Don't forget to claim what's yours
The Family Tax Benefit used to be administered by the ATO, but now must be claimed separately through Family Assistance. "People get confused and forget to claim it," Jeffers says. "There are different ways to do it — annually, for example — so do some research."
Think about next year

It matters when you do things. If you're putting money in a bank term deposit, for instance, you want it to mature after June 30. That way the interest is deferred into the following tax year.
Beware the trap, however: interest is taxable when it's credited to your account, not when the account matures. So if it's credited monthly or quarterly, you'll pay tax in the year that it's credited. The way around it is to choose a deposit where interest is credited only on maturity.
Start with the paperwork
Now that you've got the 2009-10 tax year out of the way, get your systems in place for next year. Put all your paperwork in one place, whether it be a shoebox or a filing cabinet, and put it in useful categories. Bank together, telcos together, utilities together — and no "miscellaneous". The key is to do it regularly. The more often you do it, the less unpleasant it will be.

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