IMPORTANT Tax Tips That Will Save You Thousands!

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Hey guys, welcome back to the channel! In this video, we are going to be talking about 10 tax tips to help you guys get your tax returns sorted out. Because I'm doing this video specifically now, but as a bit of a reminder that if you're an Australian resident, you need to file an Australian tax return. You've got about two weeks left to do it!

Okay, for the financial year that ended on the 30th of June 2020, our tax returns are due on the 31st of October. So make sure you get it done in the next two weeks. I also wanted to chuck in a reminder that if you are someone that gets a little bit stressed, you're not quite sure what you're doing with your tax return, or you'd like a helping hand, then definitely check out Profitful. Remember, we've made two in-depth courses about doing your tax return here in Australia. One's called Tax, it's like tax for beginners, and then the second one is all about tax on your investments.

We do have them bundled together for a cheaper price, so if you want to do both of them to help you out, they're not the longest courses. You'll be able to do them in a weekend. So if you wanted to pick them up, definitely check out the links in the description below. It will make your tax time much, much easier.

I also wanted to use this time while I'm talking about Profitful to say one of the things we've been trying to get is we're trying to get more reviews for Profitful. If you are someone that maybe has already done that course or maybe you did the other courses, you did the ones about investing that I put together and you have something to say, then please leave us a Facebook review. Go over to Profitful's Facebook page. It'll be linked down in the description below, and if you wanted to leave a review, we're going to take all the reviews that are there in about two weeks' time.

We're going to pick someone at random and we're going to send them a 50 Amazon gift card. So you don't have to, you know, we're not going to pick people that have only 5 star reviews or anything, nothing like unethical like that. You can literally leave an honest review of what you think of Profitful, and then we'll just go through and select someone that's left a review at random, and we'll send you a 50 Amazon gift card. So if that's something you're interested in, please help us out, and if you like the courses, help us let other people know that these courses are out there and they're actually of high quality.

So I'd really appreciate that. And bit of an incentive if you do that as well, you're instantly in the running. Just leaving a review, you're in the running to win a 50 Amazon gift card. But with that said, let's get stuck into the video.

The first tax tip we've already kind of talked about, so let's get this one out of the way first. Up, the first tax tip to help you out with your tax return is to make sure you get it done. Okay, penalties apply if you don't get it done on time. Now, it's not the be all and end all if you don't file it by yourself by the end of October, okay? Because you can still go to a tax agent, you can still go to a tax accountant, and they can help you get it done because they've got a lot more time to be able to submit tax returns for the previous financial year.

But definitely don't delay, just get it done. Because if you know, even if you don't get it done by the 31st of October and then you do go and see a tax accountant, it's still going to cost you usually between 200 and 400 dollars just to get your tax return finalized and submitted. Because that's the only way you've got to go, okay? Unless you want to cop a fine, so definitely get it done.

Then the second tax tip is to make sure you check your deductions. Okay, definitely don't copy and paste what you did last year. Of course, a lot has changed in the previous 12 months, okay, about how we've been working. A lot of us have been working from home; a lot of us had a shutdown period. So don't think for a second that you can just copy and paste whatever your deductions were last year; let's put those in again this year. Actually make sure you have a record!

There are three key steps to follow with deductions. The first one is to make sure that you personally have incurred that expense. Then secondly, the expense has to be related, directly related to you generating your income. And then the third rule is you have to have a record. So that's the other big thing. A lot of people, there's rumors going around that you can just claim an x amount, 300 worth of deductions, and up to 300 bucks you don't need any receipts. Not true!

Okay, if the ATO comes knocking on your door and wants to audit your tax returns, you will need to prove every one of those deductions, right? Okay, you will need to prove to the ATO that yes, this is that expense; these are my motor vehicle-related expenses, and you'll need your receipts. So always keep your records.

Then the third tax tip I wanted to talk about is make sure you really have a good think about how much you worked from home in the last financial year. Because the ATO introduced a special rule because a lot of us were working from home for at least part of the last financial year because of the lockdown. What they've done is they've allowed a shortcut method of assessing your deductions for working at home, and they've allowed you to simply put 80 cents per hour for working at home.

Now that covers everything, but it is a very handy system just to get it all out of the way. So what you have to do is you have to make sure that you can prove that you were working at home for this amount of hours that you put into your tax return. But if you can prove that, then for every hour, you're allowed to claim 80 cents. So that's a pretty good deal.

It's a special, as I was saying before, it's special due to the lockdown, and it's only available between the 1st of March and the 31st of December 2020. So make sure you really have a think about it and note down all the hours you worked at home in your tax return. Make sure you take that deduction.

Now the fourth tip that I wanted to talk to you guys about is making sure that you're using the ATO app. Now a lot of people don't even know about this, and a lot of people refuse to use it just because, you know, it's ATO app. Oh, this means the ATO is watching my every move! But it's totally not like that. It's actually a really handy, completely free app, and really the purpose of the app is to give you guys a really simple way to track and record your deductions throughout the year.

So you don't have to go at the end of the year, you're doing your tax return, you're like, "Ah, what did I, I knew that I bought something in February, what was it? Do I still have the receipt?" The ATO app basically, you record the expense, you record how much it costs you, and you take a photo of the receipt right there on the spot. And then it will just log it, and it will keep a tally of all of your deductions through the year.

Now the cool thing as well is that you can actually sync this up to your My Tax MyGov tax return. So you can actually import all of your expenses straight into your tax return, which is a really cool feature. But more simply, it's just a really handy tool so that you can keep track of everything as you go. Because you've always got your phone on you, right? Even if you're out and about, you've always got your phone in your pocket. So if you're at Officeworks, just take a photo of the receipt. If you're a tradie, you're at Bunnings, just take a photo of the receipt, right? It's super easy.

It's a super simple way; just download the app, it's free, and it will really help you out tracking your deductions. Now the next few tax tips are going to be much more related to investors. Of course, a lot of us, following a lot of you guys following this channel, are going to be stock market investors, so I've got you guys covered as well.

One of the big rules for Australia that most people know about, but I'll chuck it in anyway just in case you don't know about it, is that if you hold your shares or your asset for longer than 12 months, okay, so you're a long-term investor, you've held that position for longer than 12 months, and then you decide to sell it, you only pay capital gains tax on half of your capital gain.

Okay, it's an incentive to encourage long-term investment, and it's a really handy rule for us Australians. If we held our shares for six months and then sold them, we have to pay capital gains tax on the full amount, the full capital gain. Okay, however, even if it's just ticked over 12 months and we sell our shares, then we only have to pay capital gains tax on half of our capital gain. Really cool rule! If you didn't know about it, it definitely encourages long-term investing.

Make sure you're taking advantage of that and factor that in, okay? Because it might be better to take the profit even before 12 months if you think if you've had a share that's just gone gangbusters. But factor it in; remember that, you know, if you're sitting at the 11th month of your share ownership and you're like, "Yeah, now would be an opportune time to sell," you might want to factor in the idea that if you just hold your shares for another month, you're going to get a big tax benefit from just holding the shares and not selling before the 12-month mark.

Moving on to the sixth tax tip, this one is about dividends, and it's to remember that dividends are always accessible income, okay? You are always going to add your dividend income onto your accessible income for your tax return, okay? And that's even if you've set up a dividend reinvestment plan. So even if you've signed up with your share registry service with the company that they're going to pay you that dividend, and then automatically it's going to buy you more shares, the ATO does not care what you're doing with that dividend.

If you're getting paid a dividend, even if it's a dividend reinvestment plan, the ATO wants to see it in your tax return as accessible income, okay? So whether you've got dividend reinvestment or whether the dividends are just flowing into your bank account, make sure that you record it in your tax return as accessible income.

Now the good thing about this is that now with the modern software that the ATO is using and the fact that it's all online and everything kind of talks to each other, if you just give it a little bit of time, then all of this should be pre-fill information. So it should automatically be updated in your My Tax tax return. The thing you've got to do is make sure that all of those numbers are correct, because at the end of the day, it all comes back to you, right? You have to sign the declaration that this is true and correct to the best of my knowledge, so you have to go back and make sure that everything in your tax return is absolutely correct.

So most of us pre-fill, but make sure you check it. Now moving on into the seventh tax tip, I wanted to talk about this one is about if you own shares internationally. This is one of the most frequently asked or the ones that I get anyway, the most frequently asked tax question related to investors here in Australia is how are my international shares being taxed?

Now the thing that you have to remember with international share ownership with your capital gains is that when you buy the shares, okay, you also have to remember the exchange rate on that day, the day that you buy, and then the day that you sell. You have to know the exchange rate on that day because they're the two dates that will factor into your capital gain: the buy date and the sell date. The exchange rates that are used to determine your capital gain or loss in Australian dollars are the ones that apply on those two dates.

So for example, let's say you bought some Tesla shares, five thousand dollars' worth of Tesla shares, when the exchange rate is one dollar, okay? So one US dollar equals one Australian dollar, and then you come back in, say, two months, and you've decided, "Actually, I don't want to own these shares anymore," but you sell the Tesla shares again for five thousand dollars, okay? Five thousand US dollars.

So overall, you might think, "Oh, I haven't made a capital gain," right? Well, you haven't technically in US dollars because you bought for five thousand and you sold five thousand. But what if over the two months the exchange rate has changed and say now one US dollar only gets you 50 Australian cents, right? In that case, then you actually have made a capital gain, and that capital gain has purely come on the change in the conversion rates in the foreign exchange.

So that's something that you definitely need to factor in. It's something that trips up a lot of people. A lot of people don't understand the rules around that, but make sure you've got that factored in. All right, moving on into the eighth tax tip, and that is to not forget about your super.

Now this doesn't apply; this won't apply because everything's been said and done for last financial year, but this is one that applies for years going forward because remember you can actually save yourself tax in a lot of instances by contributing extra to super. So they are called concessional contributions. You can make up to twenty-five thousand dollars per year at the current time anyway in concessional contributions to super.

And the thing to remember is that when you put that money into super, it's taxed at fifteen percent as it goes in. But if you didn't put that money in and you, in fact, kept it just as regular income to you, if you've got, say, a higher tax rate of say 37 cents on the dollar, well then you've actually saved a lot of tax by putting that money into super instead of keeping it as your own income.

So essentially, you can pocket the difference. So if you are putting money into super and it's taxed at 15 cents on the dollar, okay, and you're doing that instead of keeping it for yourself and you're getting taxed at 37 cents on the dollar, well then that's 22 cents on the dollar that you are benefiting. Literally, that's over a thousand dollars extra in your pocket, even if you just contribute five thousand dollars into your super.

So it's something to look at. If you wanted to learn more, I definitely recommend you reach out and talk to a tax expert, but it is definitely a common strategy for people to use to reduce their taxable income.

All right, finishing up ninth tax tip is to not forget about your capital losses. Because remember, in Australia, capital losses can be brought forward indefinitely, and they will be used to offset future capital gains, okay? So there's a lot of little tweaking you can do around your tax return when it comes to capital losses.

But the important thing to remember is to realize the capital loss before the capital gain, or as long as it happens in the same financial year. But if it's over multiple financial years, then you want to realize the capital loss, and then after that's all said and done, then in the future sometime you can realize your capital gain.

But don't get it the wrong way around where you've realized a big capital gain and then, you know, you've let that year pass. And you're down on your position quite a bit on another position, quite a bit, and then another year passes, and you go, "You know, I'm just going to realize this loss. I'm through with this investment." And you realized a big capital gain over here, but it's taken you years and years before you realize that capital loss.

Well, you can't, you can't take that loss backwards, right? You can't say, "Well, hang on, I had, I paid heaps in capital gains tax three years ago. Can I offset that capital gains tax with this loss that I finally realized in this financial year?" No, you can't. But that's why everyone says realize the loss first so that then when you make the capital gain in the future, the rule applies, and you can offset that capital gain with your capital loss.

So a little bit technical, but it's definitely a rule. Just make sure you keep track of your capital losses. Nobody likes to think about the losses, but there can be some redeeming features about them; they can help you out a little bit to soften the blow of a capital loss because they do offset future capital gains tax.

And then moving on to the last tax tip. The last tip I've got is to never freak out when it comes to tax. A lot of people get super scared about tax, and then that actually leads them to inaction, okay? But there's really nothing to be too worried about when it comes to tax because at the end of the day, there are always people out there that can help you, okay?

We've got the Profitful courses if you want to do it yourself and save the two to three hundred dollars that it will cost you to actually go to someone and get your tax return done. If you want to save that money and instead just do it yourself, then you can go to those Profitful courses, use them to help you out and to get through that tax return yourself. But otherwise, don't freak out!

Like a lot of the information that you have, that you've got around tax will be automatically pre-filled. So you don't have to worry! Even if you haven't been keeping track of your capital gains or your dividends, your brokerage site will have all the information you need on your capital gains. So it'll give you a transaction history of when you bought the shares for how much, when you sold them, how much, your dividend information, all of that is with the share registry service.

So you just make an account with the company's appropriate share registry service, and you've got all the dividend information. And then, at worst, at the ultimate worst, if you missed the time, if you missed the date to get your tax return in, if you have just been paying no attention during the year, then you can just go and see your tax accountant.

Okay, yes, it'll cost you two to three hundred dollars, somewhere around there, but it's not the end of the world. And at least in that case, they're going to help you get it right, okay? So at the end of the day, if you need to see someone, then there is that option. And as I was saying at the top of the video, tax agents get a lot longer to finalize people's tax returns. They don't have to get it done by the 31st of October; they've got all the way through the next 12 months to be able to do it, so they've got a long time.

But anyway, guys, that is it for this video. They are my 10 tax tips. Remember, if you're doing it by yourself, if you want to get your individual tax return done, do it! Set a reminder in your phone right now, okay? Do it! Pause this video right now, set a reminder for Saturday at 10 a.m. that you're going to sit down and you're going to do your tax return. Get all of your information together!

If you need help, as I've said a lot of times, check out the Profitful courses. They are both presented by my personal accountant, Scott, who's been an accountant for like 25 years. He does this stuff every day; it's his bread and butter, so check that stuff out if you're interested. And remember, if you wouldn't mind helping us out, if you've done some of those Profitful courses, leave us a Facebook review, help go into the running to win that 50 Amazon gift card, and you'd also be supporting me and helping out our business a lot as well.

So I genuinely do appreciate you guys doing that or thinking about leaving a review. Anyway, guys, that is it from me. Leave a like on the video if you did enjoy it. Thanks very much for watching, and I'll see you guys in the next video.

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