Our tax tips can help you understand which deductions and benefits are available to you.
If you’re new to tax, or want to do your return yourself, then read through our guide to some terms you might not have heard and deductions you might not know you can make.
If you’re an Australian resident, you’ll be pleased to know that the first $18,200 of your yearly income is not taxed. This neat little thing is called the tax-free threshold and it works to reduce the amount of tax that is deducted from your pay each year.
The rules differ slightly if you are not an Australian citizen, or if you spend part of your time living and working abroad. Tax case for non or partial residents is slightly more complicated, so you might be best consulting a tax professional if you’re struggling to get your head around it.
If you use your car for work then you might be eligible to claim the expenses that relate to the business costs of running your car as a tax deduction. There are four ways in which car allowance deductions are calculated. You’re advised by some tax services to try all four and use the one that gives you the largest deduction in your return.
- 1 - Cents per kilometre
You can claim a set amount for each kilometre that you drive for work up to a maximum of 5,000 kilometres. You do not need to provide formal evidence for this method, but may need diary or meeting records to explain certain trips.
- 2 - 12% of original value
If you have travelled more than 5,000 kilometres in a year then you might be better served by claiming 12% of your cars original value. Although luxury car limits may also apply to certain vehicles.
- 3 - One-third of actual car expenses
Again, if you’ve travelled over 5,000 kilometres in a business year then you can claim one-third of your total expenses, including fuel and oil. However, for this you will need to provide written evidence of all expenditure.
- 4 - Logbook
In this method your expenses claim is based on the business use percentage of your car expense, as determined by a log book which must have been kept for a 12 week period. You will need odometer readings for the start and end of your work related travel and will need to keep all receipts to justify expenses claims.
In all instances you must own the car that you are claiming for and you cannot claim the cost of your daily commute to and from work, as the Australian Taxation Office considers this private travel.Back to top
If you’re an employee who works from home then you might be able to claim your computer, phone or other electronics that you use for work. Some people can claim running costs including:
- Home office equipment, such as computers or printers, you can claim the cost for items costing up to $300, or the decline in value, for items costing $300 or more.
- Work related phone calls, line rental or mobile phone calls.
- Heating, cooling and lighting.
- Costs of repairs to your home office furniture and fittings.
- Cleaning expenses.
You must be prepared to present bills, call logs, and receipts if required, so it is wise to work out exactly what you can claim and stick within your limits.
If you paid out of pocket for medical expenses for you or your dependants then you might be eligible to claim a tax offset. You must first figure out the amount that you remained out of pocket after any medicare or private health insurance rebates. The Medical Expenses Tax Offset is set to be phased out by the year 2019, and will change slightly every year until then.
It is also income tested and so can be quite complicated. At finder.com.au we are not able to advise you on your tax return or to tell you if you are or are not eligible for any tax programs. If you think you may be entitled to an offset on medical costs you might want to contact one of the professional tax providers that we have previewed. They will provide you with full advice and assistance with your return.Back to top
If you rent a property for income then you may be able to claim expenses relating to your property for the period that it has been rented or advertised for rent:
Possible expenses might include:
- Advertising for tenants
- Bank charges
- Body corporate fees and charges
- Borrowing expenses
- Capital works
- Council rates
- Decline in value of depreciating assets
- Gardening and lawn mowing
- Interest expenses
- Land tax
- Legal expenses
- Pest control
- Property agent fees and commissions
- Repairs and maintenance
- Stationery and postage
- Travel undertaken to inspect or maintain the property or to collect the rent
- Water charges.
The amounts that you can claim on a property used to earn income will vary depending on the percentage of the property that is rented. For example, if you rent a whole apartment that may be 100%, but if you rent a room in your house or a granny flat then that will be less.Back to top
Salary sacrificing is an arrangement where you give up part of your salary to your employer in return for benefits of a similar value. This can work to reduce your tax rate, as it reduces your taxable income while providing you with services of a similar value to the cash you would have gained.
Sacrificed salary can be used for:
- Car fringe benefits
- Expense payment fringe benefits, such as school fees, child care costs or loan repayments.
This is complicated arrangement that will impact your and your employer in a couple of ways. If you’re serious about it you should discuss it with the relevant authority at your company or seek out professional financial advice.
Remember that at finder.com.au we do not provide financial advice, we help you to compare and find the products and services that are best for you, but ultimately desicions are your own.Back to top
If you’re not an employee or only gain a small portion of your income from work as an employee, then you may be eligible to claim a tax deduction for contributions that you make to your superannuation. This might include people who get their income from:
- Self employment
- A business that they own
- Government pensions or allowances
- Partnership or trusts
- A foreign income source
The best piece of general advice that we can offer when it comes to tax is preparation. Try to gather your documents and lodge your return with plenty of time. This will help you keep stress and worry to a minimum, and may also prevent you from receiving a Failure to Lodge (FTL) penalty.
If you’re using a tax service, give them plenty of time and plenty of information, this will help your return be submitted in a timely fashion, as well as ensuring that you are maximising your deductions.
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.