The three golden rules of tax deductions apply: you must keep a receipt, you must have incurred the cost yourself (i.e. not been reimbursed by your employer), and the purchase must be directly linked to income generation.
2. Prepare your car’s mileage
It’s a common tax myth that anyone can get away with claiming 5,000 miles a year in work-related car travel expenses and evade tax scrutiny.
It’s not, says Francis: “The 5000km package certainly gets less scrutiny, but I wouldn’t say it’s a surefire way to claim car expenses – I’ve had a number of customers on this point.”
Nevertheless, you are legitimately entitled to make a claim for work-related car travel (excluding, in most cases, home-work travel). This may include moving your office to an offsite client meeting, for example. Or direct trips between two jobs you do. Or go to a work-related conference.
You can use the logbook method or the cents per kilometer method, which requires you to be able to substantiate your claimed kilometers. So, a little time with your work schedule to understand that qualifying travel can pay dividends come tax time.
Remember that you can also claim expenses incurred for any overnight travel you are required to make for work, including meals, lodging, fares and incidentals. Keep the receipts!
3. Consult your tax guide specific to your profession
The Australian Taxation Office has prepared 40 separate guides for different professions detailing potential deductions, including for office workers, firefighters and civil servants.
Did you know that sex workers, for example, can claim the cost of lingerie used to produce income? Google “ATO and Occupation and industry specific guide” or click here to find out what niche claims you might be entitled to make.
4. Consider the work-from-home claim method
During the pandemic, the tax office introduced a simplified method of claiming work from home (WFH), equal to 80¢ per hour worked from home.
However, accountants warned that many people would still be better off claiming using the old 52¢ an hour method, or the somewhat more laborious “true costs” method.
“The simplified 80¢ WFH rule is cheeky,” says Francis. “It really only works best if the taxpayer has really, really cheap mobile and internet cost at home, and they haven’t incurred any home office furniture or computer costs (maybe that the work paid for it).”
“But in most cases I have seen – and I have filed over 4000 returns during the COVID period – reverting to the old 52¢ per hour WFH method for electricity and the decline in the value of furniture works better, with a percentage claim at the top for internet, telephone and computer consumables.”
If in doubt, consult your accountant.
5. Prepayment of investment property expenses
If you have an investment property, you can maximize this year’s tax bill by prepaying for expenses such as condo fees, insurance, or necessary repairs to your property(ies). This reduces the amount you can claim the following financial year, but the tax savings are always better served up front, if you have the money to deploy today.
6. Consider self-education expenses
Workers have the right to claim the cost of self-education to improve their skills or increase their ability to earn income in their current job. These may include purchases of books, magazines, journals and newspapers relevant to their work.
Investors can also claim the cost of materials needed to build and manage their stock portfolio. Self-study expenses may also include attendance at seminars or conferences relevant to your field.
7. Don’t Forget Union Dues
The cost of union dues and relevant professional association memberships is tax deductible. Keep receipts and consider prepaying if possible.
8. Contribute to super
If you are a middle-to-high-income earner and are still under the $27,500 annual limit for making concessional contributions to your superannuation, you may consider making a one-time fiscal year-end transfer (EOFY ) into your after-tax savings super.
Remember that the limit includes both your employer contributions and any voluntary contributions you have made throughout the year.
Instead of having to pay taxes on that money at your marginal tax rate, you’ll only have to pay 15¢ tax for every dollar invested in the super, which will potentially result in a tax refund. important.
If you do and want to claim it as a tax deduction, make sure the money is received by your fund this fiscal year, and also complete a “Notice of Intent to Claim” form and have it acknowledged by your fund before filing your tax return.
9. Consider a charitable donation
Donations to registered charities as “deductible donation recipients” are 100% tax deductible. You can check a charity’s tax status at abr.business.gov.au/Tools/DgrListing.