Can you differentiate surcharges from rebates? Levies from lifetime health cover loading? You can save hundreds of dollars on tax season if you know how your health insurance affects your financial situation.

Here are 5 important things you should be aware of about your health insurance and your tax:

1. Save money by paying for private hospital cover.

Australian singles with an income of over $90,000 annually, or couples and families with income of over $180,000, who don’t own a private hospital cover, can pay an additional tax called the Medical Levy Surcharge (MLS). People who are included in this category will pay no less than 1% of their annual income on the MLS (for singles earning $90,000, that’s $900 annually). This amount may well be greater than the cost of getting private hospital cover, of course, depending on the scope of cover and the provisions in your policy. So you might actually save money by joining health cover.

2. You may claim rebate on the money you pay for your health insurance.

As another inducement to get private health insurance, individuals with income below $140,000 or couples and families earning less than $280,000, you may be qualified for a rebate on the cost of your health insurance. Depending on your income, you may qualify for a rebate of between 9% and 28% if the oldest member in the insurance policy is aged below 65 years. This rebate can be claimed either as a one-time cost at tax time or as a discount in your health insurance cost for the full year.

3. The rebate is higher, the older you are.

When you hit 65 your rebate is higher to assist you in paying your private health insurance premiums. This helps retirees afford health insurance. It also serves as an additional financial support if a person needs to get a policy that has a broader coverage, giving them added protection against exorbitant medical expenses.
The rebate increase is triggered when a person turns 65 years old and then again at 75 years old.

4. If you haven’t taken out a private hospital cover when you hit 31 you could be burdened with higher health insurance costs for the remainder of their life.

Don’t procrastinate with regards to taking out a private hospital cover. If you delay too long, the costs of your private hospital cover could be more expensive. You have until July 31 following your 31st birthday to decide. If you fail to take out private hospital cover before the cut-off date, you could be responsible for a loading on your private hospital cover once you finally decide to become a member. Every year you procrastinate taking out a private cover, you could be liable for a loading of 2% on your total hospital cover premiums (the highest loading is 70%). If you postpone for 10 years, your loading is 20%!

5. Add your spouse’s details to avail of the right rebate.

For individuals with a partner, their combined household income determines their income threshold for the private health insurance rebate. Make sure you are assessed correctly by including your partner’s income when claiming your rebate. You could end up repaying a part or the entire amount of your formerly claimed rebate if you don’t state your partner’s income details.

Understanding how your health insurance impacts your tax can help steer you in the right direction when considering your options. With the existing Government incentives, taking out private hospital cover may be cheaper than you think.

The article provides general information only. Seek advice about financial and taxation issues from an independent taxation expert. PJS Accountants offer expertise in managing your tax affairs with a complete range of compliance, corporate and individual tax services. We service large companies, SMEs, family businesses and individuals. The ever-changing tax laws and requirements could put businesses and individuals at risk. Putting nothing to chance! Contact PJS Accountants and talk to one of our team members now!

The ever-changing business scene is putting pressure on small business owners and single traders to improve their accounting systems annually. This is to make sure that every dollar spent is accounted for. What are some of the tax deductions that employers may overlook when lodging their tax returns?

Donations to Charities

Monitoring bigger, direct charitable contributions is easy, but it’s the small things that are harder to keep track of. You have to donate $2 or more and be sure to give the donation to a deductible gift recipient charity. This will allow you to claim the money on your tax return. Don’t forget to save receipts or bank statements as proof.

Gifts

A “gift” can be deducted if you really voluntarily transferred money or property where you don’t get material advantage or benefit. However, you can’t claim certain things, such as art union tickets or raffles, things such as pens and chocolates, and the money spent on going to fundraising dinners.

Home Office Deductions

The number of small businesses based at home is increasing but many are still unaware of the tax deductibles they can claim for using their home to run a business. They mistakenly believe that the tax deduction process is complicated, or that it would have a negative impact on their property taxes in the future. You should not let these issues prevent you from claiming the deductions that apply time. You can guarantee transparency by seeking tax advice from the very start to know which part of property use you can claim as use for business purposes. The best person to talk to about the process for claiming home office costs is your accountant or bookkeeper.

Startup Expenses

A lot of startup companies, especially in the chaos of getting the business up and running, fail to keep a record of all spending incurred beforehand. So, immediately after making sales, don’t forget to track those startup costs as deductions. It is important to keep accurate and complete records and receipts from the very beginning.

Software

Originally, deducting desktop software costs had been simple, as it is basically a complete deduction in the financial year the software was bought and set up. However, that is now a bit complicated due to the rising number of cloud-based solutions, automation tools, marketing platforms, and tracking systems. For the cost of cloud-based solutions, you are entitled to claim the monthly costs that fall within the applicable financial year. You can claim whatever amount, but you need to show documents on your ongoing payment plan.

See a qualified tax advisor, accountant or bookkeeper for tax enquiries specifically concerning your industry or business situation. Each business is unique, so each one is entitled to claim different tax deductions. PJS Accountants can help you organise your tax affairs. We work with large companies, SMEs, family businesses and individuals. For enquiries, contact PJS Accountants.

Read ahead to find out what tax depreciation you can claim and cannot claim, and who ask for the right advice.

Depreciation Deductions for Investors

Two types of depreciation deductions apply to property investors. They are:

• Division 43 capital works deduction
• Division 40 plant and equipment depreciation

Division 43 capital works deduction covers the structural parts of a home or building. These include the roof, tiles, walls, doors, concrete floors, and more. So basically, this type relates to virtually anything that makes up the building, including structural makeovers done before or after the property was bought.

How to Calculate Depreciation

Under capital works deduction, you can claim 2.5% of money you spent on construction from the year it was built for a maximum of 40 years. For example, for a property that was constructed in 2015 at a cost of $400,000, a 2.5% deduction amounting to $10,000 annually can be claimed until 2055, or equivalent to 40 years.

Remember that properties constructed after September 15, 1987 are covered by capital works deduction. Capital works deduction on buildings constructed before this date cannot be claimed. If the property is older, then Division 40 plant and equipment deduction applies.

How to Claim Plant and Equipment Deductions

Plant and equipment deduction relates to items in the property that are unattached or can be removed. Many investors have the mistaken belief that not a lot of deductions can be claimed on older buildings. However, this tax write-off can deliver major savings.

Here are some deductible items in an investment property, together with their actual tax write-off periods:

• Garden watering systems (5 years)
• Smoke alarms (20 years)
• Kitchen appliances (10 to 12 years)
• Carpets and blinds (10 years)
• Ceiling fans (5 years)

These are just examples. The ATO says that roughly 6000 plant and equipment items in an investment property can be claimed by owners. To help you search information related to this topic, use the Resi Rates app. It can quickly find a residential property’s depreciable assets and their actual life spans.

What Depreciation you Cannot Claim

Depreciation cannot be applied on a few items, including a property’s land and any soft landscaping expenses. The full residual value of a scrapped item you dispose of can be claimed, but demolition is not included. There is a larger issue concerning depreciation claims and that is investors missing significant deductions that they can claim, not the opposite.

Where Can you Seek Advice

Investors should maximise their depreciation so that they can maximise the return on their investment. Just some simple questions and a certified quantity surveyor can tell you whether obtaining a depreciation schedule for your property before you commit to having one done would be advantageous. There’s no risk involved because a significant number of competent quantity surveyors offer a money-back guarantee on their services.

A lot of investors are not benefitting from invaluable deductions annually, so make sure you know what claims apply to your investment property. This will help increase your savings at tax time.

Seek advice from a tax specialist to help you identify what deductible items apply to your investment property. Engage the services of PJS Accountants to manage your tax affairs. We offer a full range of compliance, corporate and individual tax services. Our experienced staff will help you navigate the ever-changing tax laws and requirements in Australia. For enquiries, contact PJS Accountants.