So you’ve been filing your own tax returns? Are you sure you’re saving all the tax you’re entitled to save?
You don’t have to be a surgeon to claim higher tax deductions and save more of your hard-earned money. Speak to a business accountant and they’ll tell you there are probably a few tax-saving areas you’ve not thought of.
If you’re working from home due to the coronavirus, your circumstances are unusual. You’re probably paying for electricity, communications, and other things to do your job. You may be able to claim these expenses at tax time. Financial advisers at KPartners are there to help you work out your specific claims.
You could also be trying to run a small business in these trying times. Are you aware of all the small business tax deductions you’re eligible for?
When you’re managing your own money you might miss information professional tax accountants will know because that’s their job. Most potential savings will relate to costs that you bear to earn your employment income. There are also specific occupation-related savings depending on where you work. Whether you’re working from home, incurring travel costs to work, spending on education, etc., here is the information you need.
Note that for all claims, the following rules apply:
Are you paying for a study program that relates to your current job? Will you get a formal qualification at the end of the program? Then you may be able to claim a deduction for general course expenses, car expenses, and depreciating assets.
To be eligible, the course must be justifiably connected to your job. For instance, it should maintain or improve a skill you need to do your job. Or completing the course should lead to an income boost for you.
You can’t claim deductions for a course that will help you change your job. For example, a practicing nurse can’t claim deductions if he’s also studying to be a doctor.
If you’re working from home, there are home office expenses you can claim reimbursements for. These include:
You usually can’t claim the supplies in your office pantry, or home expenses like rent and mortgage interest.
There’s also a special ATO “shortcut method” you could claim for running expenses between 1st March 2020 and 30th June 2020. There’s more information on the ATO website about work-from-home expenses that you could refer to. Or the accountants at KPartners could help guide you.
If you’ve not been working from home and traveling to work, as usual, you can claim some expenses.
Your business can claim deductions on your behalf, for work-related travel expenses. They can claim airfares, bus, taxi, train, tram fares. They can claim car hires and related costs such as parking and tolls. They can claim overnight meals and accommodation. To be able to claim expenses for overnight travel, you must have proof of permanent residence elsewhere and your business must put in writing that they require you to stay out overnight. You can also claim for travel taken within a day, but not regular transport to and from work.
Note that if you decide to club your business trip with a visit to family or friends, you don’t get to make a claim. You also can’t claim expenses when you take a family member along on a business trip. There are a few other rules and caveats along the same lines, that you can check out on the ATO website.
If you’ve used your personal car for work, you can also claim expenses for it.
Some taxpayers don’t realise that if they pay yearly union fees, they can claim a tax deduction. This, although unions advertise to potential members the tax-deductible advantages to joining.
If you’re entitled to claim a rebate, you must include the item with D5, under “Other work-related expenses.”
Did you know you can claim a deduction for your rental property in certain cases? If your property is available for rent or rented out, you can claim expenses related to an income-producing use.
Types of expenses eligible include maintenance, council rates, repairs, interest on loans. These you can claim in the same year as the expenses.
Over several years, you can also claim depreciation.
Paying insurance premiums for your income protection plan when you’ve lost your job entitles you to some deductions. Note that you can’t claim against life insurance, critical insurance, or trauma insurance.
If you’re working in an industry that uses protective clothing or compulsory (or non-compulsory) uniforms, you’ll need to dry-clean or launder them from time to time. These costs can add up. But the ATO lets you claim deductions on the cost to buy, hire, repair, or launder your work clothes. You must show your receipts of purchase, and receipts against the costs of cleaning.
Note, the ATO will not reimburse you for cleaning everything you wear to work, such as your black skirt or denim jeans for Friday casuals. The claims can only be made for occupation-specific clothing. For example, a judge’s robe is occupation-specific, unlike a bartender’s black trousers, which can be worn anywhere.
Protective clothing such as fire-resistant clothing, steel-capped boots, non-slip nurse’s shoes, safety vests, sun-protection clothing are all covered under this rule.
There are two types of uniforms you can claim for: compulsory and non-compulsory uniforms registered with the AusIndustry.
Depending on the specific industry you work in, you may be able to apply for special deductions. The ATO website has an extensive list of occupations and the relevant guidelines for you. For instance, adult industry workers can apply for allowances for work that is dangerous or unpleasant, for holding special skills, or for working on holiday shifts due to the industry norms. There are guidelines for everyone including agricultural workers, gaming attendants, call-center operators, and meat workers.
If you give a donation or gift to a charity or another organisation, you can claim any donation over $2 if the recipient is a “deductible gift recipient” or DGR. You can check an organisation’s DGR endorsement status on the ABN (Australian Business Number) directory.
You may be able to claim for other work-related expenses such as:
These expenses depend on your individual job circumstances, and you’ll want to check out the ATO website for more information specific to your work. If you’re running a business in South Melbourne, a small business accountant will also be able to help you get the information you need.