With the end of the financial year fast approaching, it’s a good time to discuss tax deductions – especially those deductions often missed by taxpayers.
We’ve compiled a list of Often Forgotten Tax Deductions. Take a look below – do any of these deductions apply to you? Are you keeping proper records to make sure you get the best possible tax refund?
1. Work related Car Expenses
People who use their personal car for work-related reasons, apart from driving to and from work, can usually claim fuel and maintenance costs as a tax deduction. As of 2016, these claiming methods have changed – you can either use a 12 week logbook (which generates a business use percentage you can re-use for 5 years!) or the cents per kilometre method, which is currently 0.66c / km.
The ATO defines work-related kilometres as kilometres travelled in your car while you are earning your income. To be eligible, you must be the owner of the car and your travel must be part of your working day – e.g driving between offices, special trips to the post office or bank (not including stop-offs on the way home) or moving from one job site to another. Remember, you cannot claim trips between work and home unless you’re carrying heavy equipment for work, or transporting heavy tools required to do your job.
Depending on your personal circumstances, either a logbook or the cents per kilometre may be a better method for you. If you’re unsure which to use, keep records for both options and one of our accountants will help choose which method gets you the biggest tax deduction or contact us at [email protected] with your situation.
2. Union/Membership fees are tax deductible
Are you part of a union? How about a membership body related to your profession? If you pay work-related union or membership fees you can claim the total cost of these fees.
3. Claim home office expenses
Do you ever find yourself working from home? How about checking and responding to your work emails in the evening or on the weekend? If you do, then you may be able to claim the cost of using your personal computer as a tax deduction. The ATO allows employees who work from home occasionally to claim part of their home office expenses. Keep a record of hours worked from home to claim the expense.
Even better, if you work entirely from home (either self-employed or as a home-based employee) you can typically claim the ”occupancy cost” of your home office space as a tax deduction. These expenses can include software, equipment, furniture and a percentage of your rent/mortgage and electricity.
4. 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. How? Simply estimate your monthly work use as a percentage of the total household use.
Mary lives on her own and pays $60 per month for her internet connection that is in her name. She estimates that 40% of her home internet use is for work purposes.
- 40% of $60 = $24 per month
- $24 x 12 = $288 per year
Mary can claim $288 of Internet deductions on her tax return this year.
Please note: If you share the cost of internet with a spouse, partner or housemate, you should only calculate the percentage of total internet cost that applies to you.
5. Mobile Phone Tax Deduction
Using your personal phone to take and make work calls? Are you sometimes required to call clients or other staff members on your personal mobile phone?
If you answered yes, then you generally can claim these cost of these calls as a deduction on your tax return.
Remember, you can only claim the cost of your work related calls, not your entire phone bill. It’s a good idea to keep a logbook or record (for at least one month) of when you use your personal phone, to determine the average percentage of your calls that are work-related.
Sarah pays $49 per month for her mobile phone plan. She estimates that 50% of her monthly phone calls are work related. Therefore:
- 50% of $49 = $24.50 per month
- $24.50 x 12 = $294 per year
Sarah can claim $294 on her tax return as a deduction for mobile phone expenses
6. Tax agent fees are also a tax deduction
Did you use SBS or another tax agent to prepare and lodge your tax return last year? If you did, then you can claim the amount you paid last year – on this year’s return. The fees you pay for a tax return is always tax deductible. Likewise the travel to your agent is also tax deductible.
Is it worth the hassle to claim my deductions?
While some of these items may seem small, when added together they could save you a decent amount of money. For example, if we used just the examples we listed in item 4 and item 5 we would have almost $600 of extra deductions to add to a tax return. For someone earning $50,000 per year this could see approx. $200 increase in their tax refund.
So when you start preparing for your 2017 tax return, make sure you don’t forget any of these deductions!
There are many other deductions available and we encourage you to keep the receipts and supply an itemised list when you have your tax return prepared.