16 top tax tips for 2024

It's that time of year again - tax time. If you think you're likely to get a tax refund that might be music to your ears. On the flipside, if you think you're going to have to pay the Tax Office you might not feel quite so happy. 

No matter which end of the spectrum you are on, it's important to be prepared. Here are my top tips for the 2023-2024 tax season.

1. Take care with work-from-home claims

If you intend to claim a deduction for working from home expenses, it's important that you're on top of the changes that were introduced to the fixed rate method in the 2022-2023 financial year. 

With the new fixed rate method, you can claim 67 cents for each hour you work from home. But this higher rate also includes some of the expenses you could claim a separate deduction for under the old method such as internet, phone usage and stationery. So make sure you don't claim these on top of the fixed rate. 

Something else to be aware of is that you now need a detailed record of the number of actual hours you work from home - a four-week representative diary is no longer enough. 

2. Make sure you include all your income

Most of us know that we need to include our wages in our tax return but that's not the only type of income you need to declare. Investment income such as interest earned on savings accounts and term deposits, dividends, rental income and crypto asset income also need to be added to your tax return. 

When it comes to dividends, it's important to note that you have to declare all of your dividend income on your tax return, even if you use your dividend to purchase more shares through a dividend reinvestment plan.

You also need to include all taxable government payments you receive in your tax return. Some examples include JobSeeker, the age pension, Austudy and Youth Allowance.

3. Don't forget to declare money from your side hustle

If you've made extra cash this year from a side hustle then it's important to make sure you declare that income on your tax return. This includes things like driving an Uber, creating online content, breeding animals or renting out a room on Airbnb.

If you don't include that income on your tax return, there's a good chance the ATO will find out. New rules mean sharing economy platforms have to report transactions to the ATO. The ATO can match this with the information taxpayers provide on their tax return to work out if any income has been excluded. 

Ride-sourcing platforms such as Uber and Didi and short-term accommodation sites such as Airbnb started reporting in the 2023-2024 financial year. Other platforms including Uber Eats and Airtasker have to start reporting from 1 July 2024.

4. Check out the ATO's occupation guides

Knowing what you can and can't claim at tax time can be a minefield. You might have heard your friend can claim a deduction for their moisturiser, for example, but does that mean you can? If you work as a flight attendant the answer is likely to be yes. Work as a lawyer though? Unfortunately not.

The best way to work out what work-related expenses you may be able to claim for your specific job is to check out the occupation guides on the ATO website. 

About 40 occupations are covered including bus drivers, call centre operators, hospitality workers, tradies and teachers to name just a few. If you're a bus driver, for example, you may be able to claim a deduction for sunglasses if you're likely to be exposed to the sun for prolonged periods while you're working.

5. Understand the golden rules of deductions

True or false? An accountant who wants to become an opera singer who travels to Italy to learn how to sing can claim the trip and opera gowns as a tax deduction? It may seem obvious that the answer is false but it didn't stop one accountant from trying. Unsurprisingly, their claim was knocked back.

If you want to make sure none of your work-related deductions get knocked back, then stick to these three golden rules.

1. You must have spent the money yourself and weren't reimbursed by your employer. 
2. The expense must directly relate to earning your income. If you use something for private and work purposes you can only claim the work‑related portion of the expense. 
3. You must have a record to prove the expense.

6. Claiming tolls and parking

One question I often get asked is "Can I claim tolls and parking on my tax?" The answer is: It depends...

You can only claim a deduction for parking fees and tolls when you use your car for work-related purposes. So, if you used your own car to drive to an out-of-office business meeting and had to pay for tolls and parking then you can claim a deduction for those costs. If, however, you simply drove to work as part of your everyday commute then it's a no. 

It's worth noting that you don't claim tolls and parking as a car expense - you claim them as a work-related travel expense. 

7. Take care with investment property repairs deductions

Nine in 10 rental property owners are getting their income returns wrong, according to the ATO, which is why it's an area it is keeping a close eye on once again this year.

The Tax Office says it often sees landlords making mistakes when it comes to repairs and maintenance deductions.

The key is to understand the difference between what falls under general repairs and maintenance - which can be claimed as an immediate deduction - and what needs to be claimed over a number of years as a capital works deduction.

If you have owned your rental property for a few years and need to replace a broken window you can claim an immediate deduction. But if you rip out an old bathroom and put in a new one, this is deductible over time. Initial repairs on a newly purchased property also need to be claimed over a number of years. 

8. Don't buy something for the sake of a tax deduction

Claiming deductions may be the easiest way to minimise the tax you pay or boost your refund but that doesn't mean you should buy something just so that you can claim a tax deduction. After all, you'll never get 100% of what you spend back as a refund.

Just how much deductions will help you save depends on your tax bracket. Let's say your tax rate is 30% and you claim $1,000 worth of deductions, they are effectively worth $300. That means the $300 will either reduce the tax you have to pay or go towards your refund. 

For someone on the highest tax bracket of 45%, the $1000 worth of deductions are worth $450. 

So you may want to think twice before you buy something for the sake of a tax deduction. If you don't really need it you're better off holding onto your cash. 

9. Watch out for the Medicare Levy Surcharge

If you're single, earn over $93,000 and don't have private hospital cover you may be hit with a Medicare Levy Surcharge when you do your tax return. For couples or families the Medicare Levy Surcharge will kick in if you earn more than $186,000.

The surcharge ranges from 1%-1.5% depending on your income. A single person earning $100,000, for example, will be slugged with a surcharge of $1,000.

You can't do much about it for the 2023-2024 financial year but it could be worth shopping around for private hospital cover to avoid the surcharge next year. You may even be able to find insurance that costs less than the extra tax you have to pay. 

You can earn a little more in 2024-2025 before the surcharge kicks in - up to $97,000 if you're single or up to $194,000 as a family. 

10. Know what the ATO is watching

Each year, the Tax Office releases a watchlist revealing the areas it will be taking a closer look at. So what does the ATO have in its sights this year? Well, there are three areas it will be targeting.

The first is work-related expenses - especially working from home deductions. That's because changes to the fixed rate method are in full effect this year. The Tax Office has warned that copying and pasting your working from home claim from last year could result in a call for a 'please explain'.

Second on the list is rental property deductions. The ATO will be looking out for claims that may have been inflated to offset increases in rental income to get a greater tax benefit. 

The final thing on the ATO's radar is people who fail to include all their income when lodging their return. 

11. Don't rush to lodge

If you think you'll be getting a tax refund, you may be tempted to lodge your tax return in early July but that could backfire...

The ATO warns that by lodging in early July, you are doubling your chances of having your tax return flagged as incorrect. This could then slow down the progress of your return. 

Why? Well, according to the ATO, often people who file early forget to include interest from banks, dividend income, payments from other government agencies and private health insurers.

Wait a little longer and this information will be automatically pre-filled for you. For most people that will be by the end of July. It's still important that you check it to make sure nothing is missing.

12. Remember the basics

If you're filling in your own tax return, it's natural to focus on 'big' things such as making sure you get all your deductions right but be careful not to overlook the basics like your bank account details and personal information. Providing incorrect info can cause delays - which means you'll have to wait longer for your refund!

If you have lodged your own tax before, a lot of that information may be prefilled. Take the time to double check the details to make sure nothing has changed. If you've changed your name, moved house or have a different bank account then it's important to update those details. 

13. Free help might be available

Tax time can seem overwhelming but if you earn $60,000 or less and your tax affairs are fairly simple you may be entitled to free support through the ATO's Tax Help program. 

Tax Help volunteers can help you with anything from creating a myGov account and lodging your tax return to making an amendment if you made a mistake and claiming a refund of franking credits. 

The Tax Help service is available from July to October and you'll need to make an appointment to speak to a volunteer. You can arrange to talk to someone online, by phone or in person at one of the Tax Help centres across Australia. 

The ATO website has more information about who is eligible.

14. Know the deadlines

Something it pays to have in mind when you're thinking about your taxes are the deadlines. If you plan on taking the DIY route, you have until 31 October to lodge your tax return. 

If you are using an accountant or tax agent then you have more time up your sleeve. Just make sure you get in touch with them before 31 October to confirm the deadlines applicable to you. This is especially important if you're using a tax agent for the first time or using a different one.

If you think you're likely to end up with a tax bill, using a tax agent can help buy you some time to save up the money to pay any tax you may owe. 

15. What to do if you can't pay your tax debt

While we'd all love to get a tax refund, sometimes you end up owing money to the tax man. But what happens if you can't pay on time? One option is to set up a payment plan. This lets you break down your payment into weekly, fortnightly or monthly instalments but keep in mind you will have to pay interest.

You can use the ATO's payment plan estimator to work out a payment plan and see how much interest you'll be charged.

If you owe $200,000 or less, you can set up a payment plan online as long as you have a myGov account linked to the ATO. Another option is to call the ATO's automated phone service on 13 72 26. 

16. Watch out for scams

There's never been a better time to be a scammer. The cost of living crisis has made Aussies more vulnerable and improved technology means it's harder to be able to spot a scam. As a result Aussies lost over $2.7 billion to scams in 2023. And scammers tend to get especially active around tax time.

Something to watch out for is emails or text messages using phrases like "You are due to receive an ATO Direct refund" or "You need to update your details to allow your Tax return to be processed". The messages may use ATO branding and include a link to what may appear to be myGov but is actually a fake website. The ATO says it won't ever send you an SMS or email with a link to access online services.