It is a great feeling to have your financial house in order and that means being organised and proactive when it comes to preparing and submitting your annual tax return. So, as we are now into the new financial year, it’s time to assess and compile your work related expenses and any allowable deductions for inclusion on your personal income tax return. To help you along the way, below are 9 Top Tips for Claiming Your Tax Deductions.
Go to it, sports fans
As the Australian Tax Office explains:
“When completing your tax return, you’re entitled to claim deductions for some expenses, most of which are directly related to earning your income.
To claim a work-related deduction:
- you must have spent the money yourself and weren’t reimbursed
- it must be directly related to earning your income
- you must have a record to prove it.”
9 Top Tips for Claiming Your Tax Deductions
Tax deductions for work- related expenses can be quite confusing, but unless you take the time to find out what you can, and cannot claim, you could be missing out on the benefit of receiving a deduction for these items. In general up to $300 worth of deductions can be claimed for without receipts, however it is always best to retain receipts and use diary entries to record your expenses. But, as a rule of thumb, if you need to spend money to earn income, you can usually claim it as a deduction, either as immediately or over time. For example, the cost of tools, equipment, professional, industry or trade journals, union or professional subscriptions etc.
Some depreciable items, or items which decline in value over time and use, such as work tools, computer equipment, office furniture and equipment, technical software etc. can be included in Depreciation Claims. Where items cost $300 or less, these can be claimed in full on your return whilst those which cost more than $300, can have a deduction claimed for a portion of their decline in value.
Car Expenses for Work-Related Travel
Under the ATO rules, you can claim vehicle and other travel expenses directly connected with your work as a deduction on your return. However, generally you can’t claim for normal trips between home and work because they are considered as private expenses. To claim costs associated with travel you need to keep records of your expenses- these can be done via the log book method or the cents per kilometre method. With these expenses the allowable rate for claims changes, so check with your accountant or refer to the ATO site for details. Usually, a portion of your car repair and maintenance expenses will also be claimable.
If you work from home you may be entitled to claim deductions for home office expenses including a computer, phone or other electronic devices you need to use for work purposes. Furthermore, you may also be entitled to claim deductions for running costs of your home office and equipment, such as heating and cooling costs, internet connection, lighting, cleaning and repairs to office furniture and fittings.
These can sometimes be tax deductible, particularly if your study and educational course is directly related to your work and professional development. There are special rates regarding the first $250 of self-funded education expenses, so it is always wise to check with your accountant or the Tax Office directly.
Clothing, Laundry and Dry-Cleaning Expenses
You can make a claim for costs involved with occupation specific clothing, protective clothing, work uniforms and the cleaning of these in your tax return. To make an allowable deduction it is best to have receipts of purchase and written evidence or diary records of your cleaning costs. Please note, if you receive an allowance for these from your employer this must also be included in your tax return.
Gifts and Donations
If you are personally making regular, or even one off donations, or giving gifts to registered charities or organisations which have the status of deductible gift recipients (DGRs) these can be tax deductible. There are a number of rules around what is permissible as a donation, so check with the ATO or your accountant, if unsure.
Interest, Dividends and Other Investment Income
If you are receiving income from interest, dividends or any other investments, you may claim a deduction for expenses incurred in earning this income. Such as account keeping fees on investment accounts, interest charged on money borrowed to purchase the investment, ongoing management fees, retainers etc. more info is available on the ATO site.
Offsets and Rebates
These items can directly reduce the amount of tax payable on your taxable income and include rebates and offsets for items such as Health Insurance, Medical Expenses, Government Benefits, Low Income, Pensions etc. For further info go to the ATO site and follow the links.
Wishing you a rewarding and successful Financial Year ahead,