Tricks for Australians in Tech Sector to Optimize Their Tax Returns

In the fast-paced world of technology, it's essential for professionals to ensure their cash is working hard for them. Here are some strategies that can help tech experts in Australia make the most of their finances.

Superannuation: A Valuable Asset for Retirement

Superannuation funds in Australia get invested and grow over time, becoming a valuable security blanket for retirement days. Adding extra to super can reduce taxable income and grow retirement savings over time. For instance, a cloud engineer adding an additional $3000 to super before the end of the financial year would reduce taxable income while building retirement savings.

Australian IT professionals can minimize their tax by claiming work-related expenses such as home office expenses, software licenses, and a portion of their internet bill if they work from home. If an internet subscription is $100 per month and half of the consumption is for work, $50 a month can be claimed as an allowable deduction, reducing taxable income by $600 over a year.

However, record-keeping and saving receipts are crucial for utilising these deductions. Without these, deductions cannot be claimed. Keeping records and receipts organized throughout the year, digitizing them as they come, can reduce the risk of missing deductions and make tax filing smoother and faster.

Side Income and Salary Packaging

In the technology industry, side income from freelance work needs to be reported, but so do the expenses of keeping these businesses running. By reporting both the income and expenses from a freelance business, the two can essentially cancel each other out, reducing what is paid in taxes.

Some technology firms offer salary packaging benefits, such as including the price of laptops or company trips, which minimizes taxable income. A network engineer can negotiate to receive a portion of their salary as a contribution to a new work laptop, paying less overall tax through salary packaging.

Seeking Professional Advice

Given the complexities of tax law, which is constantly evolving, it's beneficial for tech professionals to seek professional advice when needed. Getting professional advice from an accountant can highlight deductions or methods that the tech professional may not have thought of, potentially increasing their refund.

For example, a UX designer working freelance and buying a new drawing tablet for that work can report both the income and expenses, reducing their taxable income. For a cybersecurity specialist working on multiple contracts, professional guidance can help them claim foreign travel allowances and education expenses appropriate to their role.

Planning for the Future

Australian technology professionals should view tax time as an opportunity to plan, with every choice made throughout the year contributing to the end return. A data analyst can create a special folder in the cloud to store each receipt, invoice, or donation slip as soon as it's received, creating an organized library for tax season.

In 2023, several Australian tax consultation firms offer specialised services for technology experts to support them in tax preparation and planning. Some of these well-known firms include KPMG, offering comprehensive tax consultation, including international tax law and transfer pricing. By implementing these strategies and seeking professional advice, tech professionals can make their finances work harder for them.