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Tax tips: The top 5 tax deductions you can claim

One of the easiest ways to boost your tax return is by taking advantage of the deductions you’re able to claim. Here are our top five tax tips to help you get more money back at tax time.

1: Claim as many work-related expenses as you can

Many expenses that you accumulate through your chosen career path can be claimed in your tax return. However, many cannot, and incorrectly claiming these may result in a penalty from the ATO

Some are more obvious than others, like an apprentice’s tools or travel expenses (as explained above). However, did you know that journalists may be eligible to claim their pay-TV costs? So long as these are incurred in performing their work (for example, a sports journalist that needs to have access to the sports channels), they can be claimed as deductions. 

There are thousands of things you may be eligible to claim as work-related expenses.

Here’s a few examples that you might be eligible for:

  • Tools and work-specific clothing. The item is needed to perform your job, e.g. devices that tradespeople use, equipment that hairdressers use, special shoes such as steel cap boots.
  • Safety items. Item’s needed for self-protection or safety when doing your job, e.g. sunscreen and sunglasses if you are required to work outside
  • Laptops and mobile phones. If these are used for work purposes, you’re able to claim it on tax (if you have a computer you use for work and personal use, you’re only entitled to claim the portion you use for work).
  • Courses and conferences. Self-education expenses, such as courses and certificates, need to be directly related to your profession and help you get a promotion or a pay rise.

2. Claim tax deductions for working at home

If you work from home full time, part-time or only on the odd occasion, you’re eligible to claim this as a tax deduction. For example, if you’re running a business from home (full-time or part-time) that requires you to use computers, phones and other electronic devices, you could be eligible to claim deductions on certain costs. 

This even included the cost of your home internet and electricity bills!

Working from home tax deductions can include the following:

  • Cleaning costs. The expenses incurred from cleaning office space at home.
  • Office furniture. Purchase and repair costs for office furniture and fittings required to do your job.
  • Your phone bill. Landline and mobile phone calls related to work matters (you should get an itemised phone bill and highlight the work-related calls)
  • Your home internet bill. You can claim a portion of your monthly internet bill, in line with how often you use it for work purposes.
  • Electricity bills. You can also claim a portion of your home electricity bills, in line with how often you work from home.

Amazingly, you can also claim a portion of your occupancy expenses, like rent, mortgage, and home insurance, so long as you operate your business solely from your home and have a dedicated space for business activities.

You must claim to work from home expenses correctly to avoid a penalty from the ATO. You’ll need to show evidence and your calculations to justify how much you’re claiming. A tax agent can do this for you to ensure you’re claiming correctly.

3. Use a tax agent (they’ll help maximise your return and their fee tax-deductible be!)

For many people, using a tax agent to lodge your tax return is the easiest way to ensure you’re claiming everything you’re eligible for. Here’s how tax agents can help you this tax time:

  • Claim the tax agent fee as a tax deduction. You might be surprised to learn that the cost of using a tax agent is entirely tax-deductible.
  • Claim more deductions. Tax agents know the ins and outs of the tax system, so they’ll be able to help you claim everything you’re entitled to, even things you might not be aware that you’re entitled to claim.
  • Claim correctly. If you don’t claim your deductions correctly, you could be hit with a fine from the ATO. Tax agents will help make sure you’ve claimed everything correctly so you can have peace of mind after you lodge your return.
  • Help with calculations. Claiming things like home office expenses and car use can be tricky and time-consuming. You’ll often need to create a log book or show your work for figuring out how much you can claim. Tax agents are professionals at this, so it can save you a lot of time and stress.
  • Offer tax tips. Tax agents can also offer you extra tax tips and tips for organising your finances in general.

4. Car and travel expenses

Car and travel costs seem to be an expense most people are comfortable claiming on their tax return. However, taking a guess at the number of expenses incurred can land you in hot water, making an illegitimate claim like travel to and from work. 

That’s why it’s important to ensure what you’re claiming is considered a travel expense in the eyes of the ATO. 

Properly claiming these expenses can save you a lot of money come tax time, so it’s worth getting it right.

If you use your vehicle for work, claimable vehicle and travel expenses include:

  • Depreciation of your vehicle
  • Registration costs of your vehicle
  • Insurance costs of your vehicle
  • Costs of running your car such as fuel, oil and servicing

Vehicle and travel expenses that are not claimable include:

  • The initial purchase cost of your car
  • Parking tickets and other speeding fines

You may be able to claim vehicle and travel expenses if you fall into the following situations:

  • The cost of travelling between two separate workplaces
  • The cost of travelling from your workplace to other locations, e.g. client meetings, project work sites
  • If you are required to carry oversized work-related items such as tools or a ladder and these can’t be left at work

You’re not eligible to claim travel or vehicle expenses for the following situations:

  • Travel directly to and from work, as this is generally seen as a private travel
  • If you don’t live near public transport and need to drive to work

5. Don’t forget about charity donations

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There are just a few things you need to check before claiming a gift or donation.This is one of the most common things people forget to claim or incorrectly claim as a tax deduction. If you’ve only dropped some spare change in a bucket at a convenience store counter, you’re probably not eligible to claim this as a tax deduction. 

However, if you are one of the many who make regular contributions to a charity every month, you may be eligible to claim something back at tax time.

If your contribution meets the below conditions, you’re most likely eligible to claim it as a tax deduction:

  • Does the organisation have DGR (Deductible Gift Recipient) status?
  • Is the gift truly a gift and not something you receive material benefit or advantage for?
  • Do you have proof of these payments in the form of a receipt or bank statements?
  • The donation must be in the form of money or a financial asset (i.e. you can’t gift items like clothes and claim the cost as a deduction)
  • The gift must be $2 or more.

Below are the contributions that the Australian Tax Office (ATO) does not classify as a gift or donation:

  • Raffle or art union tickets
  • Items such as chocolates and pens
  • Cost of attending fundraisers
  • Membership fees
  • Payments to school building funds as an alternative to an increase in school fees
  • Payments that may provide a material benefit for the donor including raffle tickets which may win a prize

Bonus tip: Here’s how to claim work clothing correctly.

Work clothing is something that many people claim incorrectly, and the ATO had a crackdown on this in recent years, so it’s important to get it right. It must be specific work clothing that is required for your job and compulsory to wear. 

Despite what many people think, not everyone is entitled to claim laundry expenses as a tax deduction. Make sure your clothing meets one or more of the following criteria before claiming it as a tax expense:

  • It must have a logo or be registered with AusIndustry
  • There must be a strictly enforced policy making that item compulsory to wear. For example, simply having to wear black is not specific enough to claim as a deduction
  • It must be worn solely for work purposes and not worn outside of work or for personal use
  • The clothing is required for your protection at work (e.g. safety glasses)
  • The clothing is occupation specific (e.g. black and white checked pants for chefs)

As with all other deductions, it’s best to check anything you want to claim with your tax agent to ensure you’re eligible and avoid a penalty with the ATO. 

If you’re looking for a more comprehensive list of tax deductions, check out this guide.

How to Maximise Your Tax Refund in Australia

With 84% of taxpayers expecting a refund and the average size of refunds last year reaching nearly $3,600, it pays to spend time ensuring you’ve got every detail of your return right.

Here are our top tips for maximising your refund this year, and getting it back ASAP:

Be Organised And Claim What You’re Entitled To

Take the time to carefully prepare all your documents like payslips, receipts for work-related expenses, bank statements, logbook entries and summaries of your payments. 

It doesn’t matter if you’re relying on a tax agent or doing the work yourself; maintaining a spreadsheet detailing your expenses makes working out your spending more manageable. To ensure accuracy from the beginning, download the Tax Checklist to stay in the know about what to gather to ace your return.

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If you have spent money on something as part of your work and have the paperwork to prove it, claim it. 

Standard deductions many taxpayers claim include:

  • Costs of using your car for work – although this doesn’t include driving to and from work.
  • Costs of travelling for work. If you are required to work away from home and spend money on meals and accommodation, those costs are often deductible.  
  • Costs of tools and other equipment. Items costing $300 or less are deductible immediately. Items costing more than $300 are deductible over several years. Items you could claim include tools for a tradesperson, a laptop for an office worker or even a handbag or briefcase used to carry work papers.

And don’t worry about storing messy piles of paper receipts: the ATO is okay with unedited scanned copies. Just remember to save your documents and tickets for the full five years that the ATO requires.

Make Sure You Provide Accurate Information

You can only claim what you’ve spent. So don’t inflate deductions in order to get a bigger refund and only claim for costs you can prove you spent by producing an invoice, receipt or bank statement.

Also, make sure you correctly declare all your earnings, including investment property gains, any foreign income or earnings resulting from cryptocurrency trading. Be careful with your details because the ATO has access to a vast range of data sources to validate the data you’ve provided. 

Everything from financial institutions and banks to government agencies can be called upon to clarify your claims. If the numbers don’t add up, the ATO will question your tax return.

Don’t Rely On Pre-filled Data From The Ato

You can pre-fill lots of your income information straight from the ATO’s systems. But don’t assume this income data is correct or complete. Many third parties, such as banks, don’t pass information about you to the ATO until late July or early August, so early lodgers who use the ATO’s myTax system will often find lots of data missing from their pre-fill.

If you omit income and get questioned by the ATO, the legal burden is on you, even though you’ve taken the information straight from the ATO’s systems.

Most tax accountants won’t rely on pre-filled data but work from their source documents. This minimises the chances of missing income data for those who prefer to lodge early.

File Online

With most of us trying to fit into our 9-5, we need services to work around us. During tax time, life can be even more frantic, and that’s why we work outside business hours so you can get your tax done and dusted by lodging online or in person at any of our 470 offices.

To get access to an expert online, use our Online Tax Adviser and get your return lodged ASAP. After you’ve carefully reviewed all your relevant details and tax documents, upload them, and an Online Tax Adviser will contact busy getting your return ready to maximise your refund. 

As they work, our expert will contact you via our secure and safe online platform so that you can stay up-to-date with how your return is progressing. Or, if you’re a little more comfortable in the driver’s seat, you can opt for our self-service Online Tax Express Return and lodge anytime, anywhere.

Get Expert Help

Get your tax return wrong, and the comeback is on you, either with a lower refund or ATO penalties. Most people (74% of all Australians!) find it far less stressful to leave it to an agent to complete their return. This ensures the return will be accurate and complete, whilst an experienced agent will usually be good at finding obscure tax deductions you didn’t know you could claim. 

Plus, our maximum guaranteed refund means we go all out to ensure our paperwork is in top shape. In the rare case, you discover you’re due a different refund amount; we’ll repay your preparation fee, as well as file an amendment with the ATO. After you’ve lodged – login online to update how your return is progressing; access from anywhere means tax time is less of a stress. 

Best of all, the tax agent’s fee is deductible.

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