When it comes to tax time, it’s a good idea to familiarise yourself with these expenses you may be able to claim as tax deductions. To assist you in deciding whether you are entitled to claim it back in tax, ask yourself three simple questions:
1) Do you have proof of purchase, such as credit card or bank statements or receipts?
2) Was the money directly related to work or generated from a side hustle which you have an ABN for?
3) Were you reimbursed or compensated by your boss?
Things can get a little more complicated if there is a percentage of deduction that includes personal use. For example, if you’ve been working from home and the office, using your own internet or mobile for work purposes.
Tax time can be tricky – if you’re not sure what you’re entitled to claim, you could be missing out on more cash in your pocket. If you claim for deductions you’re not entitled to, you could end up being scrutinised by the ATO. Your best bet is to hire a certified taxation agent, someone that’s familiar with tax legislation.
While you’re looking for an accountant, here are some of my top tax tips to avoid paying more tax.
Tax and working from home
With working from home, there are several tax deductions you may be able to claim, such as a portion of the phone and internet, office stationery and consumables, cleaning of your home office and depreciation of home office furniture, such as furniture, computers, printers, tablets and mobile phones.
You can only claim the expenses not reimbursed by your employer. Unless you have an ABN and operate a side hustle, you won’t be able to claim on your mortgage, corporate body fees, council rates or rent. Also, you can’t claim for groceries.
Tax and travelling for work
If you’ve been claiming for working from home, claiming for travel may cause the ATO to raise their eyebrows. Unfortunately, the trip to and from work is not tax-deductible but you may be eligible to claim:
- If your employer requires you to do offsite visits to client premises or different locations.
- If you’ve been asked to use your own car to carry out official duties. For example, picking up marketing collateral, picking up deliveries, conducting property management inspections, taking business clients to dinner.
- Any expenses where your job requires you to travel away from home and stay overnight (airfares, accommodation, meals). This does not include any personal portion of the travel, for example, if you left a few days earlier to go sightseeing.
For more information about transport and travel deductions, you can find information on the ATO website.
Tax and work related clothing or uniforms
You can only claim for industry-specific clothing, health and safety clothing and footwear or work uniforms that are directly related to your work. For example, if you need to purchase a hi-viz vest or fluorescent clothing, you can claim for the cost of this clothing and any laundry-related expenses. You can claim $1 per load for compulsory work uniform and 50 cents a load if it contains work items. Safety goggles and protective sunglasses cam also be claimed.
Tax and making personal superannuation contributions
If you make personal contributions in addition to the contributions your employer makes on your behalf, you may be eligible for a tax deduction providing you haven’t exceeded the capped rate and put more cash in your pocket at tax time.
Tax and professional financial advice
Did you know you may be eligible for a tax deduction if you’ve sought out advice from an investment expert? Any costs related to advice that directly links to a specific investment that produces passive income may count as a tax claim. For example, you can claim fees for arranging a loan for an investment property, but not if it were your own private residence.
For more advice on tax tips to keep more cash in your pockets, talk to a certified financial advisor.
Gerry Incollingo is the Managing Partner of LCI Partners, a firm that specialises in accounting advisory, lending, wealth, property, insurance and legal.