Tax Time is the perfect time to review your finances and ensure you're maximizing your deductions to reduce your tax bill. While many taxpayers are familiar with common deductions, there are several often-overlooked expenses that can lead to significant tax savings.
Here's a closer look at some top tax deductions you might be missing out on in Australia, along with what you need to substantiate them:
1. Work-Related Expenses
Australian taxpayers can claim deductions for work-related expenses incurred in the course of performing their job. This includes expenses such as:
Uniforms and protective clothing: If your job requires you to wear a uniform or protective clothing, you can claim a deduction for the cost of purchasing, repairing, or cleaning these items. (sometimes referred to as "laundry expense"). Always consider your type of Industry what what protective clothing aligns with your Industry. Think Sunscreen, non slip shoes, sun hats.....
Work-related travel: You can claim deductions for expenses incurred while traveling for work, including transportation, accommodation, and meals. Keep detailed records such as receipts, invoices, and travel logs to substantiate these expenses. Talk to your tax agent or accountant on this, as meals can sometimes fall into "non deductible entertainment" and work travel can't include home to work commutes - Getting it right is important.
Home office expenses: If you work from home, you may be able to claim deductions for home office expenses such as utilities, internet, and depreciation of office equipment. You'll need to keep records of your home office expenses, including bills and receipts, and calculate the proportion of your home used for work. Changes were made to this deduction during covid, and then again for the 2023 year in relation to the statutory home office cents per hour method so be careful of certain inclusions. Speak with your accountant.
2. Self-Education Expenses
If you undertake self-education courses or training related to your current employment, you may be eligible to claim deductions for certain expenses. This includes tuition fees, textbooks, stationery, and travel expenses directly related to your studies. To substantiate these deductions, keep records such as receipts, invoices, and course outlines that demonstrate the relevance of the education to your current employment. It's very important to ensure that you have a close nexus between your income and your study. You cannot usually claim self education expenses when they are incurred before the start of employment, even if there is a close association. Always speak with your tax agent, as the ATO are meticulous about both the timing and nexus that the expense has to the actual income.
3. Donations to Registered Charities
Not all donations are tax deductible. The Charity must be a Registered Charity organisation in Australia and be a registered deductible gift recipient (otherwise known as a DGR). You can check their registration status on https://www.acnc.gov.au/charity/charities or https://abr.business.gov.au
Donations of $2 or more made to registered charities in Australia are tax-deductible. Keep records of your donations, such as receipts or bank statements, to substantiate these deductions. Note that donations to overseas charities may not be tax-deductible unless they have a specific arrangement with the Australian government.
4. Investment Property Expenses
If you own an investment property, you can claim deductions for expenses related to the property, including:
Interest on loans: You can claim deductions for interest expenses on loans used to purchase or improve the investment property.
Property management fees: If you engage a property manager to oversee your rental property, you can claim deductions for their fees.
Maintenance and repairs: Expenses for repairing and maintaining the property are generally deductible. Keep receipts and invoices for these expenses to substantiate your deductions. Always speak with your Tax Agent or accountant as there is a complicated difference between Capital Works deductions, Capital Allowance Deductions and Repair deductions. The Tax outcome is vastly different and can certainly confuse even the most avid property investors. For more information : https://www.mqaccountants.com.au/post/how-does-depreciation-work-on-my-investment-property
5. Vehicle Expenses
If you use your vehicle for work-related purposes, you may be able to claim deductions for vehicle expenses such as fuel, repairs, and depreciation. Keep a logbook to track your work-related mileage and maintain records such as fuel receipts and service invoices to substantiate your deductions.
You can also claim the "unsubstantiated km's travelled" however, the maximum you can claim in this method is only 5,000 km's, so if you have travelled more than that, it is often better to use the logbook method. There are other limitations on travel expenses too, because you cannot use the unsubstantiated method for commercial (over 1 tonne) vehicles. It's important to understand the type of vehicle before you rule out the logbook method. Potentially, the log book method may be your only option. Always speak with your Tax Agent or accountant to understand your eligibility and the substantiation requirements.
for more information : https://www.mqaccountants.com.au/post/do-i-need-a-logbook-to-claim-travel
A further list of other possible deductions ideas may include:
Safety equipment, like sun screens and sunglasses (depending on your industry)
Meals during overtime and travel
Telephone and internet costs (subject to whether or not you have claimed the work from home allowance)
Union Fees
Income Protection Insurance
Personal Superannuation Contributions (speak with your tax agent, as you will need a letter of intent from your superannuation fund)
Laptop expenses
work from home allowance https://www.mqaccountants.com.au/post/work-from-home-deductions
Reach out to us, or your local accountant or tax agent for more information or help with your tax return.
This articles intention is to inform rather than advise and is based on legislation at the time. Each Taxpayer’s circumstances vary so we strongly recommend that you discuss this information with your Tax Agent, Accountant or Bas Agent before implementation. If you take, or do not take action as a result of reading this article, we accept no responsibility for any financial loss incurred. This is general advice only.
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