22 May Tax deductions guide – What can you claim?
With the end of the financial year looming rapidly, it’s time to organise all your invoices so you can make the correct tax deductions in your tax return. However, knowing what and what you can’t claim as deductions can be a challenge, so here is a quick tax guide to help you maximise your claims.
What are tax deductions?
These are work-related expenses. If these expenses are part work/part personal, then you can only claim the work-related portion of the expenses. Specifically, you must have proof that these expenses are related to your work, and you must have spent the money yourself and not been reimbursed.
Categories of tax deductions
There are eleven different categories for these deductions, so it pays to start getting everything in order, well before the end of the financial year. A prompt return usually results in a quick reimbursement, if you qualify for a refund.
Clothing and laundry:
There is a lot of confusion around claims for work clothing, particularly for retail workers who have to wear clothes that are sold to customers in their shops. For tax deductions, you can only claim clothes and laundry costs if the clothes are specific to your occupation (it must have your company’s logo or be included in their uniform policy), and you can also claim for protective workwear.
Vehicle and travel:
You can claim all work-related expenses for your vehicle and travel, provided you have proof (the easiest method is to keep a log book). Travelling to and from work to your home is not valid a tax deduction.
If you use your phone for work-related calls, you can claim these costs, but you need to have proof.
Work from home:
If you work from home there are specific expenses you can claim, generally related to your computer, printers and internet charges. Any other tools or equipment you need to operate your home business may also be tax deductible as well.
Union fees, professional associations and magazine subscriptions are all allowed, but you need to show that they are work-related.
Gifts and donations:
You can claim gifts and donations to charities and other organisations, but only if they are considered to be DGRs (deductible gift recipients).
Account keeping fees for investment portfolios can be claimed as tax deductions, as can interest on money borrowed to purchase shares.
If your studies are directly linked to your work, you can claim a deduction for these expenses. There are also a number of related claims you can make for your education, including computer costs, equipment, campus parking, textbooks, etc.
You can claim income protection insurance as part of your end of financial year deductions, but not other insurances.
Tools and equipment:
If these items are required for your work, you can make a claim, but whether as tax deductions or depreciated assets depends on the type and cost of these items.
If you used the services of a professional tax accountant last year, you could include their fees as a deduction in this year’s return.
Remember, this is only a very short tax guide, so to maximise your deductions, it’s best to consult a tax accountant who knows exactly what you can and can’t claim.
Preparing your tax returns
Make sure you compile your records together. These include any payment summaries, bank statements, lump-sum payments, business expenses, records of shares, investments or rental properties, payments from foreign pensions, donations, insurance payments, and your private health fund end of financial year statement.