Tax time is not far off and whether you plan to use an agent to complete your return or do it yourself, it’s vital that you claim deductions for everything that you’re entitled to.
Here’s a hit list of some of the tax deductions you might not have known you could claim that could end up saving you big this tax time:
Professional memberships and subscriptions
If you’re a member of a professional or trade association as part of your work, you can claim a deduction for the amount you pay in subscriptions. This also covers union fees if you’re a member of a trade union, as well as subscriptions to trade or professional magazines.
Don’t forget, if you prepay your fees or subscriptions for next year before 30 June, you can claim a deduction this year, which can be a useful timing benefit.
Rental Property Expenses
Most people with a rental property know that you can claim a deduction for the interest element of the mortgage but there are plenty of other deductions you can claim on a rental property, many of which are often overlooked. So, if you’ve paid out for any of these costs this year, make sure you claim a deduction:
- Gardening and lawn mowing
- Bank fees
- Pest Control
- Security Patrol fees
- Bookkeeping/Secretarial Fees
- Maintenance and repairs
- End of lease cleaning costs
- Letting agent fees, including marketing
If you use a bag for work purposes – e.g. to carry iPads, phones, calculators, stationary or anything else you need for work, you can claim a deduction for the cost of the bag. Be careful though; the handbag needs to be fit for work purposes and actually used for work purposes. You might struggle to claim that new Gucci bag but a more modest bag – genuinely used only for work purposes – should be claimable. For men, a work briefcase, satchel or backpack should also be claimable.
Income Protection Insurance
If you pay for insurance premiums against loss of income, those amounts are tax deductible. But be careful; that doesn’t include life insurance, critical care insurance or trauma insurance. It also excludes policies paid for out of your superannuation contributions.
If you travel as part of your work, you can claim the costs of your work-related journeys such as the cost of visiting clients or suppliers. If you use your own car, either claim 72 cents per kilometre up to a maximum 5,000 kms or keep a logbook and claim your actual expenses. You can also claim for parking, tolls and public transport if you don’t use your car.
Mobile Phone Expenses
If you use your personal mobile phone for work – either to make or receive calls – you can claim the cost of these calls as a deduction. You can only claim business related calls so in order to work out the split between business and personal use, keep a diary for at least four weeks in order to work out the business use proportion. For example, if you have a $100 monthly mobile phone plan and you determine – based on your diary – that 25% of your calls are work related, you can claim a deduction for $25 per month, or $300 per year.
Similarly, if you use your home internet service to deal with work related matters, such as responding to work emails, you can also claim a proportion of those costs. Remember, keep a diary!
Home working costs
If you work from home, you can claim the work-related portions of household costs such as:
- Heating, cooling and lighting bills
- Costs of cleaning your home working area
- Depreciation of home office furniture and fittings
- Depreciation of office equipment and computers
- Costs of repairing home office equipment, furniture and furnishings
- Small capital items such as furniture and computer equipment costing less than $300 can be written off in full immediately (they don’t need to be depreciated)
- Computer consumables (like printer ink) and stationery
- Phone (mobile and/or landline) and internet expenses
You can use the ATO’s “shortcut method” for calculating additional running expenses of 80 cents per work hour, or the alternative flat rate allowance for working from home of 52 cents per hour.
A further option is to claim the actual costs you’ve incurred.
Your tax agent will be able to give you advice on which method to use.
As a general rule, the ATO won’t let you claim tax deductions for a night out. The exception is where attending the function is actually part of your work. An example would be where a journalist attends a function that they will later report on through their media outlet; in that case, a deduction can be claimed.
The ATO takes quite a hard line around deductions relating to personal health and fitness but there are a few people who are entitled to claim gym memberships, typically those who require a level of fitness well above the norm. Examples might include professional sportspeople and those defence force personnel who perform duties designed to keep them in tip-top shape, such as members of the special forces.
An apartment in another city
Of course, if you own an investment property, you can claim deductions against the rental income but did you know that in some cases you can claim deductions against a place you live in yourself? Under recent guidelines issues by the ATO, if you’re required to work away from home by your employer, your assignment in the other place is only temporary (so you haven’t actually relocated) and you choose to rent or buy an apartment in the other work location rather than relying on hotels or motels, you can claim a deduction for the work-related costs relating to the apartment, including either rent or interest on the mortgage, depending on whether you rent or buy.
Remember to keep records!
Even if you’ve incurred any of the above expenses, the golden rule is that you can’t make a claim unless you can prove you spent the money (and also that you weren’t reimbursed by your employer). So, make sure you keep all relevant receipts, invoices, bank statements and credit card statements. If you’re not sure if you can make a claim, keep the receipt anyway and discuss it with your tax agent. Still have some questions about lodging your tax return? Talk to H&R Block. Our experienced tax consultants will be able to help.