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Sydney small business owners thinking personal

For most of you reading this, tax time is all about maximising your refund or conversely minimising the amount of tax you need to pay. One area of claim that is often neglected due to a lack of knowledge by Sydney and Australian small businesses is the rebate on net medical expenses. There are some important changes that you need to be aware of in order to be able to claim a rebate for medical expenses.

If you claimed a net medical expenses rebate in your 2012/2013 income tax return, then there is no change to what you can claim in your 2013/2014 income tax return. Note that the rebate is now means tested, so the higher your taxable income, the less rebate you are entitled to. Should your income exceed $176,000.00 for a couple ($88,000.00 for individuals) then you are only entitled to claim 10% of net medical expenses exceeding $5,100.00, under this and you can expect a rebate of 20% on net medical expenses over $2,162.00.

Now the more important change is to note that if you did not claim any medical expenses rebate in your 2012/2013 tax return then your rebate claim for 2013/2014 is strictly limited to disability aids, attendant care and aged care. Any other expenses such as dental care, doctor’s bills and so on are not claimable. I have no doubt that this will catch out many self-lodging individuals that are not aware of these changes and will do what they did last year, because that’s what they’ve always done. This change really does stress the importance of entering everything legally possible into each year’s tax return.

You may not have bothered entering a rebate claim for medical expenses in 2012/2013 because the amount claimable wasn’t worth the trouble and now you have a high amount of expenses in 2013/2014 that you cannot claim for. In such cases, it may even be worth lodging an amended tax return for 2012/2013 to create an eligibility for 2013/2014, but weighing up the costs of doing so should be assessed on a case by case basis. As a final note, when we say net medical expenses, we mean all out of pocket expenses (net of health fund rebates) paid for yourself and on behalf of your family members, so ideally only one taxpayer should lodge a claim per family unit to maximise your potential rebate claim.

For all the Sydney small business owners thinking about their personal tax circumstances, there are certainly some key points of accounting and tax information to be clear on going forward.

 
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