Drowning under a truckload of receipts? Here are our top tips for boosting this year’s tax return.
Tax time is both a time of celebration and dread. We all look forward to that hefty tax return and a well deserved splurge, but too often the task is so daunting that we’re stopped in our tracks. Here at finder.com.au, we like to make sure you get the best result with as little effort as possible. That’s why we’ve put together a list of our top tips for boosting this year’s tax return.
5. The gift that keeps on giving
Many people feel a sense of guilt when claiming donations they’ve made throughout the tax year. And, look, if you’ve only dropped some spare change in a bucket at a convenience store counter you’re probably not eligible anyway but if you are one of the many who make regular contributions every month, you might just be eligible to claim something back. There are just a few things you need to check before claiming a gift or donation: 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?
If your contribution falls under those two categories, you’re probably eligible to claim. But, just to be sure, 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
4. Car and travel expenses done right
Car and travel costs seem to be an expense most people are comfortable claiming on their tax return. However, taking a guess at the amount of expenses incurred can land you in hot water, as can 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.
Claimable vehicle and travel expenses include:
- Depreciation of your vehicle
- Registration of your vehicle
- Insuring 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
To claim your car and travel expenses, you must be able to backup your claim with a record of expenses. This can be done in one of two ways, claiming a third of your expenses or keeping a logbook.
The third of your expenses method is rarely recommended and should only be used if you have written evidence of your expenses, like receipts, service reports etc. As the method suggests, you can claim one third of your expenses incurred for work-related travel. To be eligible for this you must keep receipts for all transactions, except fuel and oil, as they can be worked out by calculating your odometer records (this method is not available after 30 June 2015, consider using cents per kilometre).
This method works best if you must travel over 5,000 kilometres for work during the tax year. If you’ve travelled less than 5,000 kilometres, you may consider calculating cents per kilometre or the logbook method. Be mindful that you must be able to demonstrate the distance travel from a diary or file notes for either method.
If you do decide to use the logbook method then you must include the following information to avoid trouble should an audit arise:
- The start and finish date for the logbook period
- The vehicle’s odometer reading at the start and the end of the logbook period
- Total number of kilometres travelled during the logbook period
- Number of kilometres travelled for each journey, also include start and finish times, odometer reading at the start and end of journey, kilometres travelled and reason or the journey
- The percentage of travel that was business related
It is a lot of trouble to go to for a tax return but it’s the best way to make sure you don’t get stung by an audit by the ATO. To start a logbook, you can simply make your own or purchase one from a stationery store.
3. Utilise your chosen career path
Many expenses that you accumulate through your chosen career path can be claimed in your tax return. 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 pay tv, so long as it is a direct consequence of their work? Or that performing artists may claim film and theatre tickets if it directly related to their work? These are just a couple of examples of the weird and wonderful expenses you can claim dependant on your occupation. Nearly every profession is covered for self-education, again, so long as it is related to tax payer’s current employment position.
There are too many possible claims to list in this article, but if you head over to the ATO’s website you’ll find over 40 guides to ‘deductions for specific industries and occupations’.Back to top
2. Working from home? Don’t count yourself out
There are many, many ways you can claim work related expenses, fortunately, this also includes working from home. 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 for to claim deductions on certain costs. These deductions include the following:
- Expenses incurred from cleaning office space
- Purchase and repair costs for office furniture and fittings
- Landline and mobile calls related to work matters
- A portion of your monthly bill (calculated by dividing work-related calls and personal calls)
- Air conditioning costs
Amazingly, you can also claim 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. Check the table below for a quick guide to claim eligibility when working from home.
- See more information about Capital Gains Tax about claiming or being able to claim deductions related to your home office.
|You work solely from home and have a dedicated office space||You don’t work solely from home but have a dedicated office space||You work solely from home but don’t have a dedicated office space|
|Rent, mortgage, home insurance etc.|
|Work related phone costs|
|Depreciation of office equipment|
|Maintenance costs (Office fittings etc.)|
|Gas and electricity costs|
Before you go ahead start claiming every possible thing in sight, make sure you’ve checked off each record below:
- Keep a journal to record small expenses of $10 or less (a maximum of $200), costs that you are unable to obtain a receipt for and a record of office equipment use over a four-week period (to distinguish between work use and personal use)
- Keep receipts for purchases large and small (some kind of system for organising receipts doesn’t hurt either)
- Retrieve an itemised phone bill from your provide and identify work-related (sometimes the best way is to simply go through and highlight work-related expenses)
1. Be cautious when claiming on your gadgets
Approaching tax time, many of us consider our most decadent purchases first – specifically, our desktop computers, tablets and smartphones. However, it seems we got a little carried away and as of last year, the ATO have been paying extra attention to the tech we claim as ‘work expenses’.
Last year, ATO commissioner Karen Anstis spoke to news.com.au, stating “The number one piece of advice I have for taxpayers is to claim the right amount– no more, no less– and have evidence to support to substantiate their claim.”
Never fear, dear reader, we’ve created a checklist below to ensure you’re making a legitimate claim on your gadgets.
As always, you can only claim on devices that are directly related to earning your income
- You can claim the full cost of a device under $300 AUD
- You can claim for the depreciation on devices over $300 AUD
If the device is also used for personal use, the portion of work-related use must be calculated
Keep a journal logging the amount of time you use your gadgets for business over a representative four-week period.
Speak to an accountant/tax specialist. If you’re a stickler for the finer details, this might not be necessary for you. But, if you simply don’t have the time to sort through wave after wave of receipts, then why not let an accountant do all the work for you. Not only is using an experienced accountant the best way to avoid making an illegitimate claim, it’s also the easiest way to maximise your tax return. Sure, there will be a fee to pay, but unless you’re a tax whiz, you’re likely to earn enough back to cover the consultations costs – even better still, most tax specialists will accept payment directly from your tax return, so you won’t have to worry about payment until you’re reeling in that bountiful return.
DISCLAIMER: Many of the comments in this article are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information applicability to their own particular circumstances.