Tax time is around the corner, so you should start thinking about any work-related and income-generating expenses you paid over the financial year.
To identify expenses that may be acceptable as tax deductions, you should consider:
- Was the expense directly related to your work or income-generating activity?
- Did you spend the money, and you weren’t reimbursed by your employer?
- Do you have an official record of the expense – e.g. receipt or bank statement?
If the expense was for both work and personal use (e.g. home internet), you need to determine the portion of the expense related to your work or income-generating activity.
To help you we have identified 8 tax deductions you may be able to claim at tax time:
1. Home office expenses
With the crisis of the virus affecting us all most of us have had to result in working from home, there are several home office expenses you may be able to claim as tax deductions.
- Phone and Internet expenses
- Computer consumables (e.g. printer paper and ink) and stationery
- Home office equipment (e.g. computers, phones, printers, furniture and furnishings) – you may be able to claim either:
- The full cost of the items, if it’s less than $300; or
- The decline in value (also known as depreciation) for items over $300.
Most people won’t be able to claim:
- Home expenses, like mortgage interest, rent and rates
- Costs of general household items, like coffee, tea and milk
Please review the criteria’s before you consider on claiming an amount for home office expenses in your tax return.
For example, you should consider whether you can claim the temporary ATO-approved ‘shortcut method’ (of 80 cents per hour for all additional running expenses) for the period 1 March 2020 until 30 June 2020.
2. Vehicle and travel expenses
While you generally can’t claim expenses for getting to and from your regular workplace, there are some work-related vehicle and travel expenses you may be able to claim.
- Where your work requires you to attend multiple workplaces or locations
- Car expenses where you need your car to perform your work duties
- Accommodation expenses when you’re required to travel for work
3. Clothing, laundry and dry-cleaning
If you bought occupation-specific clothing, protective clothing or work uniforms specifically related to your job, you may be able to claim these costs, as well as related cleaning costs, as work-related expenses.
However, you’re unlikely to be able to claim costs for conventional clothing or non-compulsory work uniforms.
To claim these costs as tax deductions, you need to have written evidence of these costs, such as diary entries and receipts.
If your studies were work-related and you enrolled in an eligible course, you may be able to claim a tax deduction.
5. Industry-related deductions
You may also claim tax deductions for work-related expenses specifically related to your occupation and industry.
You can check the list of occupations and industries on the ATO website to see what industry-related tax deductions you can claim.
6. Other work-related expenses
There are other work-related expenses you may be able to claim as tax-deductible expenses, depending on your work and individual circumstances. Expenses to consider include:
- Books, periodicals and digital information subscriptions
- Safety goggles and protective sunglasses
- Overtime meals
- Union fees, subscriptions to associations and bargaining agents fees
7. Gifts and donations
If you gave a gift or donation to an organisation (e.g. your favourite charity), you may be able to claim a tax deduction. However, there are specific rules that apply.
Generally, you can claim any donation you made above $2 if it was to a ‘deductible gift recipient’. For gifts, different rules apply depending on the type of gift.
8. Investment income
You may be able to claim investment income tax deductions if you’ve received:
- Interest payments on your savings
- Dividends from your investments in shares
- Rental payments from an investment property
- Another type of investment income
If you’ve received any of these, you could be entitled to claim for costs related to this income, such as interest charged on money borrowed to buy stocks or rental properties.
You may also be able to claim money you paid for investment advice.
Once you’ve lodged your tax return, make sure you keep all your records of expenses. The ATO may ask you to provide evidence to support any claims you make.
You can find out more about the tax deductions you can claim at the ATO website.
Things to note
- It’s important to remember that tax laws are complex, and you should ensure that you’ve confirmed you can claim an expense before including it in your tax return. Contact your Kelly+Partners Client Director for further clarification.
- The Australian income year ends on 30 June. You have from 1 July to 31 October to lodge your tax return for the previous income year. If you use a registered tax agent to prepare and lodge your tax return, you may be able to lodge later than 31 October.
- The information provided is of a general nature and doesn’t take into account your personal financial or business situation – we suggest contacting us at Kelly+Partners if you need clarification.