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Avoid these top tax misconceptions

As tax time continues, the ATO has announced the top misconceptions many individuals make when completing their claims for tax deductions.

Four popular tax misunderstandings include:

1. Individuals can give credit card statements as proof of claim

Debunked: When making a claim, individuals must be able to show they spent the money, what the money was spent on, the supplier and the date the purchase was made unless record-keeping exceptions apply.

2. Individuals can automatically claim $150 for clothing and laundry, under $300 for work-related expenses or 5000 kilometres for car-related expenses

Debunked: While taxpayers are not required to provide receipts relating to the above in certain circumstances, these are not ‘standard deductions’ everyone can just claim. An individual can only claim if they have spent the money, and the expense relates to earning their income. They must also be able to explain how they calculated the amount.

3. Individuals can claim home-to-work travel

Debunked: Individuals can only claim home-to-work travel in limited situations, i.e., in some circumstances where they must transport bulky equipment.

4. Individuals can claim work clothes when required to wear a particular colour

Debunked: Individuals can only claim a deduction for work clothes if they are required to purchase a uniform that is unique and distinct to their employer or because they are required to buy occupation-specific or protective clothing to earn their income.

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Basics of SMSF investing

January 21, 2021

Setting up an SMSF fund is the simplest step. Establishing a fund which delivers you consistent returns from your investments is much more difficult.

Investing successfully involves determining precise goals and picking investments which will effectively achieve those goals. The advantage of SMSFs is that you can build a portfolio which reflects your short-term and long-term goals in response to changing market conditions.

In an SMSF fund, your investment options are:

Before you begin investing, consider what might be the best way to diversify your portfolio. How you portion your investments will depend on your funds, the market, and your goals. Regardless of what your plan is, diversification should be a priority.

Choosing an SMSF as opposed to an industry or retail super fund provides you with more flexibility, but also with more responsibility. Researching before investing is key if you want the best out of your SMSF.