Handbags, dogs and sunscreen– did you know these were all tax-deductible for some professions? As tax time inches closer, we look at a bunch of things you probably didn’t know you could potentially claim.
It’s almost the end of the financial year. Which means it’s time to start thinking about your tax. Sorting out how you can keep the maximum amount of your income from the tax man can be a tricky dance, but the best way to boost your savings is through deductions. Get your deductions right and you could save yourself a bunch of money while you’re at it.
Tax is a fact of life
If you’re earning a crust in Australia there’s no question about it – you’ve got to pay tax. It’s a compulsory contribution set by the government and paid on the money you receive such as your salary and wages, Centrelink payments, investments or profits from selling your property. The money that the government collects from your taxes goes into things like building roads, running hospitals, and providing education.
If you’re smart about lodging your tax return though, you can reduce the total amount you pay each year by claiming certain deductions. But only those that directly relate to earning your income.
Each year around 12.4 million Aussies claim more than $30 billion in deductions against their income. Of that figure, 8.5 million Aussies claim over $19.5 billion in work-related expenses. That’s a lot of money the Australian Taxation Office (ATO) misses out on, so they tend to be rigorous with checking up with these types of claims.
What can I claim?
What you can claim as a work related expense varies from profession to profession. The ATO hosts extensive information on their website but if you’re still unsure of whether something qualifies, have a chat to an accountant.
Generally though, there are three golden rules you should apply to all work-related claims for them to qualify as legitimate:
- You need to have spent the money yourself
- The item or service being claimed must be directly related to your job
- You’ll need to have proof that it’s work related to back it up.
Ah the magic 300. If your total claims for tax deductions are under $300, then you don’t need to provide any evidence (like receipts), but it’s a good idea to keep these anyway just in case the tax office asks for them in future. If you’re claiming over that magic number, make sure you’ve kept all your receipts.
From the weird to the surprising, here are a bunch of things you may have never considered trying to claim:
For those of you who wear a uniform (like a chef or a waiter for example), the ATO lets you claim the cost of keeping that uniform clean. You can claim $1 per load of washing, ironing and drying or even dry cleaning costs under the magic $300 – anything over though and you’ll need to hand over the receipts.
Sunscreen and sunglasses
If you work outdoors you’ve got to protect your money maker right. The ATO agrees. And if you’re regularly exposed to the sun for lengthy periods of time, like a construction worker or a farmer, they’ll let you claim the cost of sunscreen and sunglasses.
There’s no limit on the cost for your shades. But if they cost more than $300 they’re above that magic 300 and in instances such as these, they’re expected to last you longer than 12 months. This means you’ll need to claim the depreciation of your specs on your tax return over a few years, rather than the lump sum of the purchase price in one year. The ATO has a handy depreciation tool to help you calculate the depreciation of your specs as part of their online claiming system myTAX.
Don’t just head out and pick yourself a pooch. Your pup is only tax deductible when - you guessed it – they’re part of your job. So if you’re in farming or security, you could claim a deduction on your four legged work-mate.
Did you know your income protection insurance is tax deductible? So be sure to claim your premiums. Other types of personal insurance – like car or home and contents – are only claimable when the home or car they insure is used primarily for business purposes. Making income protection the only type of personal insurance that’s tax deductible.
You may be able to claim your handbag if it is used to carry your work laptop, or is used for work. Proving work use can be tricky though and it may mean you need to keep a logbook (which can be annoying) for a period of time.
The list of deductions is huge and what you qualify for depends on your job or industry. If you think you might be eligible to claim something but you’re not quite sure if you qualify, it’s best to get some professional advice from an accountant.
Keen to get the most out of your tax return this year? If you’re thinking about income protection insurance, there’s never been a better time to get covered. Get in touch with us on 13 77 87, and we’ll help you find a level of cover that’s right for you.
TAL Direct is not authorised to provide tax advice, it is important to obtain advice from a qualified tax professional.