Owing VS Knowing: How To Maximise Deductions
Written by: Krystine Canny-Smith | Accounting Team
This tax time, a lot of people have been asking me what they should be doing to maximise deductions. It’s a great question, but a better one is…
“What should I be doing between now and June 2026 to maximise deductions?”
The opportunity for the 2025 financial year is gone, so let’s look forward and plan for next year!
Start Preparing For Next Year’s Income Tax Return
It’s time to get ahead of the wave with your tax returns. Staying current and being prepared could save you money. There are some simple, no-cost things you can do now to maximise deductions.
Here are five actions you can start today:
Tax Returns Tip #1: Keep Good Records
I can’t say this often enough – keeping receipts for an entire year is a long time.
It may feel like it’s easier to throw them out than to look at them a year later and try to work out what they’re for. However, you will thank me when I do your return and you have all your receipts.
In my experience, most people spend a lot more on work expenses than they think, and it’s only by keeping track that they find this out.
So, how do you keep “good” records? Simple, take a photo of the receipt and save it in a folder called “tax receipts”. It won’t fade, you won’t lose it, and you can send the whole lot in next year to claim on your tax return.
Don’t get caught unprepared by the Australian Taxation Office (ATO), be sure to know what they’re keeping an eye on! Check out this article we previously put together: ATO Tax Time Targets For 2025.
Tax Returns Tip #2: Keep Motor Vehicle Records of Kilometres Travelled For Work
There are two ways we can keep track of the motor vehicle travel we do in our own vehicle for work purposes.
The first is to claim up to 5,000 kilometres of travel, at a set rate (88 cents per kilometre for the 2026 financial year). You can find out more information here: Expenses for a car you own or lease | Australian Taxation Office.
Using this method, you can claim total kilometres travelled for work-related purposes. You don’t need to keep a logbook for this method, but you do need to be able to substantiate the number of kilometres travelled.
When I sit down with clients and we calculate the actual kilometres they have completed for work-related purposes, it is often greater than they originally estimated.
Tax Returns Tip #3: Keep a Logbook of Work-Related Travel
The second way to claim a motor vehicle is by using a logbook.
A lot of people misunderstand how to keep a logbook and think that if they keep their kilometres in a logbook, it allows them to claim more than 5,000 kilometres in the financial year.
That’s not the case. The way it works is you keep track of all travel over a three-month period. At the end of that period, we work out what percentage of the travel was for work.
For example, if you travelled 10,000 kilometres in three months and recorded 7,000 of those as work-related, we would consider your travel as 70% work. This allows us to claim 70% of your:
- Fuel;
- Insurance;
- Registration;
- Repairs;
- Maintenance; and
- Depreciation of the vehicle (depending on the age of the vehicle).
The logbook is valid for up to five years, provided it’s valid. For the logbook to be valid, it is vital that you complete all the details in the logbook regarding the purpose of the journey.
If you are a tradesperson or salesperson, or your job requires you to go to constantly changing destinations, this simple act can save you thousands of dollars each year. Most people who complete logbooks tell me they wish they had kept them sooner!
Tax Returns Tip #4: Private Health Insurance
This makes a difference because we are entitled to an income-tested rebate on our private health insurance premiums. Generally given in the form of a reduction in premiums, it can lead to an amount repayable on your tax return if you have received too much.
What I see happen more frequently is that people receive too great a reduction in premiums because they provided their income details to their health fund years ago.
For example, if you took out private health insurance ten years ago and you were requested to provide your income so the insurer could calculate your premium reduction, it would likely be quite different from the figure you would provide them now. In the ten years since you joined, you may have had pay rises and your income has increased.
Now, when you complete your return, you may have to repay the reductions received during the year to your fund. A simple way to avoid this is to check that your income details are up to date, so you don’t repay from your tax refund.
Tax Returns Tip #5: HELP Debt
If you have two jobs or a salary package, check if your HELP debt reduction is enough.
There are two big traps with HELP debt repayments that can be tricky to understand.
- The first occurs when someone has two jobs. The way HELP repayments are structured is that if you have taxable income of $67,000 or less, you repay nothing toward your debt, but if your income is higher than that, you pay 15% for each dollar above $67,000 up to $125,000.
Let’s give an example:
Chloe has one job and earns $65,000. Based on that, she is not required to pay any of her income towards the HELP debt.
Let’s imagine Chloe has a second job during the year. It is a small, casual job that only earns her $5,000 in total. Once we add this to Chloe’s taxable income, she then has an income of $70,000 and is required to pay $450 of her income towards her HELP debt. As Chloe didn’t earn more than the HELP threshold for either job, this was not deducted, and she will potentially owe $450 when her return is lodged.
This can also occur where the employer allows salary packaging, or you take advantage of salary sacrificing to super.
We usually see this with people working in hospitals and charities, but it can also happen to those who have employer-provided cars that fall under the Fringe Benefits Tax rules, or to those who salary sacrifice to super.
Let’s give another example:
Andrew works at a hospital and has a HELP debt. He can salary package expenses with his employer and package the maximum amount. That means that when his payroll information is completed at the end of the year, he not only has income of $65,000 but also Fringe Benefits from his employer of $17,000 and salary sacrifice to superannuation of $10,000.
Andrew’s employer may have deducted tax correctly; however, their software package would likely calculate no HELP repayments, the same as Chloe’s above.
After the ATO adds back the salary packaging and salary sacrifice, making his income for HELP repayment purposes $92,000, the HELP repayment is $2,750. As this hasn’t been deducted from Andrew’s pay, he will have a debt when his return is lodged.
Still not sure where to start? Sounds like you might need a checklist to work from. Check out this article we previously put together: Your 2025 Income Tax Return Checklist
Canny Accounting + Maximising Your Income Tax Returns
Those are some no-cost options that you can start now to maximise your 2026 refund.
There are more options around superannuation contributions and tax planning opportunities, but that’s a whole other topic I’ll leave for another day!
Coming in to see us will always prove to be your best option. Our accountants are tax experts and client-centric people, always looking to help you get the most out of your income tax return!
Get in touch today to see how one of our talented accountants can help you navigate taxation law and income tax returns!
