TAX DEDUCTIONS

I’m often asked what tax deductions an individual may claim when completing their tax returns. This question comes as no surprise as deductions often lead to substantial tax refunds.
Generally speaking, you can claim most expenses you have incurred in the course of producing your taxable income. So, my advice is to make a list of everything, you have incurred, that you think is connected to earning your income. That way I can have a look and analyse whether the expense has the required connection to your income or is excluded by one or more sections.
In the meantime, I have identified certain deductions, to get you thinking and hopefully help you identify items that you may have overlooked in the past.Greg Jewell - Director Tweet
Is it tax deductible?
Everyone wants to pay less tax, right? To do that you need to know what you can claim… and what you can’t.
It’s not about cheating the system, or creative accounting. It’s all about claiming what you’re entitled to. That’s why we’ve developed the “Is it tax deductible” checklist for you.
Download a complimentry copy
The ATO has very specific conditions around what trips you can and can’t claim for between home and work, and between workplaces. These conditions may not be as straightforward as you expect, so I encourage you to ask us if you wish to clarify your personal circumstances.
Your deduction does not normally include the cost of travel between work and home. If you use your car for work or work in different locations, then you may be able to claim a deduction.
If you purchased occupation-specific clothing, protective clothing or work uniforms, you may be able to claim for the money spent, as well as the costs of cleaning those clothes.
If your employer gives you an allowance for clothing and cleaning, you must show the amount of allowance as part of your income on your tax return.
To legitimately claim the cost of a uniform, it needs be unique and distinctive, for example it contains your employer’s logo, or is specific to your occupation, like chef’s pants or coloured safety vests.
You can use a reasonable basis to calculate an amount to claim as a tax deduction such as $1 per load for work-related clothing, or 50 cents per load if other laundry items were included.
Tools and equipment such as computers, furniture and phones used for work purposes may be claimable, either immediately or over a period of time (via depreciation of the asset).
You may also claim for costs incurred in running your home office, including air conditioning, lighting, repairs and cleaning, stationary and computer running costs if some of your work is from home. But make sure you’re only claiming the work-related portion and not the portion for private use. If in doubt, speak to us.
Remember, you can only claim the proportion of expenses that relate to work, not private use.
If you work from home, you may be able to claim “occupancy cost” and the cost of using your personal computer, software, equipment, furniture, lighting, heating and a percentage of your rent/mortgage as a tax deduction.
However, you may not get the full main residence exemption if your home is your principal place of business, for more information visit the ATO website.
If you enrol in eligible education courses and your study is work-related, you may be able to claim a deduction.
If the study relates to your current job, you can claim expenses such as:
Textbooks, professional and trade journals
Stationery
Photocopying
Computer expenses
Student union fees
Student services and amenities fees
Accommodation and meals, only when participating in your course requires you be away from home for one or more nights
Running expenses if you have a room set aside for self-education purposes – such as the cost of heating, cooling and lighting that room while you are studying in it
Allowable travel expenses.
Self-education expenses are broken into five categories. If all of your self-education expenses fall into ‘category A,’ then you may reduce your deduction by $250.
Union fees and subscriptions to associations
Books, periodicals and digital information
Tools, equipment and other assets. If you buy tools or equipment to help earn your income, you can claim a deduction for some or all of the cost. Examples include protective gear, including sunscreen, sunglasses and hats if you work outside, office equipment, safety equipment and technical instruments.
Overtime meals
Mobile phones and internet
Internet expenses
If you ever work from home and you have your internet connection in your name, then it’s likely you could claim your Internet expenses as a deduction. Estimate your monthly work use as a percentage of the total household use.
Mobile phone expenses
As a business owner, you can claim the cost of your work-related calls, not your entire phone bill. It’s a good idea to keep a logbook of when you use your personal phone, to determine the average percentage of your calls that are work-related.
Sun protection
You’re entitled to a tax deduction for sunglasses if, as part of your employment, you are required to work outside for prolonged periods.
There’s no limit on how much you can spend on sunglasses but remember that if they are more than $300 the ATO expects that they should then last for more than 12 months – meaning you should claim the depreciation on the glasses rather than an upfront deduction.
(deduction can be claimed in the income year the expense is incurred)
Travel and accommodation expenses if for travel to a tax agent or other recognised tax adviser to obtain tax advice, have returns prepared, be present at an audit or object to an assessment.
Cost of other incidentals if incurred in having tax return prepared, lodging an objection or appeal or defending an audit.
Check if any organisations you donate to e.g. your favourite charity, have the ATO’s ‘deductible gift recipient’ status so you can claim for the gifts donated. A gift can be money or other financial assets e.g. property and shares.
Any amount you donate above $2 can be claimed back. For other assets, different rules apply depending on their type and value.
As the name implies, you must have given the gifts voluntarily without receiving material benefit or advantage. This means you can’t claim items such as raffle tickets or fundraising dinners.
You may have received interest payments on your savings, dividends from your investments in shares, rental payments from an investment property, or some other type of investment income.
If so, you may be able to claim for costs related to producing this income, such as account-keeping fees and interest charged on money borrowed to buy stocks or rental properties.
Money paid to seek advice on changing the mix of your investment may also be claimable.
Examples include interest, account fees, investing magazines and subscriptions, internet access, depreciation on your computer.
Claims allowed in respect of employees of your business. From 1 July 2017 employees are now entitled to claim deductions for their concessional superannuation contributions (self-employed business owners have always been entitled to). To claim your deduction, you need to provide acknowledgement from your superannuation fund that you have submitted an intention to claim form with them.
No deduction is available for interest on borrowed monies used to finance deductible personal superannuation contributions.
Allowed only if the proceeds upon a claim are assessable.
With tax deductions, every little bit counts. Prepaying your expenses can attract a tax deduction that is commonly overlooked. You can prepay expenses such as subscriptions, business travel expenses, training events, leases, rent, phone, internet, insurance and business asset repairs, not exceeding more than one year.
Rental property expenses often go unclaimed. The most forgotten deductions are: bank fees, gardening and lawn mowing, pest control, security patrol fees, secretarial and bookkeeping fees, travel and car expenses for rent collection, inspections of property and maintenance.
Industry-related deductions
Some occupations may have more specific circumstances when it comes to claiming expense deductions. The ATO has a list of occupations that you should check against to see what particular spending related to your job is deductible.