It’s the end of the financial year. Which means it’s time to start thinking about your tax. Sorting out how you can get your deductions right so that you can reduce your assessable income could save yourself a bunch of money.
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, some 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.
Generally if your total claims for tax deductions are under $300, then you don’t need to provide any evidence (like receipts), but you should 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.
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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 $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 eyes. If you’re regularly exposed to the sun for lengthy periods of time, the ATO will let you claim the cost of sunscreen and sunglasses.
The ATO has a handy depreciation tool to help you calculate the depreciation of your specs as part of their online claiming system myTAX.
Did you know that the premium you pay for your income protection insurance is generally tax deductible? So be sure to claim your premiums.
Another item of your ensemble that you may be able to claim are your shoes – again, depending on your job. But the general rule is if you have a job that requires you to purchase specific shoes, then these are likely to be deductable. Take a tradie as an example who purchases steel capped boots. Not only are steel-capped boots directly related to the job, they are also considered protective clothing.
Paid television subscriptions
Do you work in the media industry? Then the cost of paying for your Pay TV plan could be tax deductable. Of course, just like with any deduction, only the work-related portion of your subscription fee is tax deductable. For instance, if you’re a journalist and need to cover sports matches, which are only shown on Pay TV, you can only claim that portion as a tax deduction, not the Jersey Shore episodes you watch after.
If you’re required to work from home, then you may be able to claim a portion of your electricity bill, as part of your home office expenses. The good news is there are plenty of other home office costs that you can claim on top of this, including your computer, phone and internet.
Anyone who has been to university in Australia, will know that the cost of courses can be pricey. However, taking up education that directly relates to your profession, could be a tax deduction. You’ll need to have paid for the course up-front (not on HECS) in that financial year and the course material will need to add to your current role, not towards moving yourself into a new field of expertise.
Travel from one job to the next
You might already know that you generally can’t claim the drive to and from work on your taxes, even if there’s no public transport available, you’re on call, or you do small work tasks (like picking up the mail) during your commute. However, not all travel expenses are off the table. You can usually claim travel between your first and second jobs, from your workplace to a client’s home, or between work sites.
Late night dinners
If you’re working overtime, you may sometimes have to buy food and drinks while still working. Claiming these expenses as a tax deduction, even without written evidence, is an option as long as you receive a meal allowance under an industrial law, award or agreement and only claim up to what the ATO considers a reasonable amount.
A furry employee
While the initial cost of purchasing a dog isn’t tax deductible, if you have a pooch for security or a working dog for a farm, you’ll likely be able to claim the costs of taking care of it, like vet bills, food or other equipment. However, you’ll have to convince the ATO that the dog plays a crucial role in you and your business earning income – the office lapdog generally won’t make the grade.
The list of deductions is huge but 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.