As June 30th edges closer, the conversations about what we can and can’t claim become more and more prominent. You might catch yourself at your next social engagement becoming engaged in a heated discussion over just exactly what is a tax write off. Before you embarrass yourself or your bank account this EOFY, we’ve put together a simple guide to help you know exactly what you’re entitled to this tax time.
To claim a work-related deduction:
You must have spent the money yourself and weren't reimbursed,
It must be directly related to earning your income, and
You must have a record to prove it.
If the expense was for both work and personal purposes, you can only claim a deduction for the work-related portion.
Vehicle and travel expenses
Generally, you cannot claim for normal travel between home and work, as this is considered private travel. You can, however, claim vehicle and travel expenses directly connected with your work. Also, it’s vital that you keep records of your travel expenses in order to claim them.
Clothing, laundry and dry-cleaning expenses
If your work requires you to own occupation-specific or protective clothing or a distinctive uniform, you can claim the cost of buying and cleaning these items. In order to do this, you must have written evidence of both the purchase and cleaning costs.
Gifts and donations
You can only claim a gift or donation to an organisation that has the status of a deductible gift recipient (DGRs). There are conditions that apply in regards to claiming a gift as a tax deduction, so if you’re curious, contact our friendly accountants today to find out more.
Home office expenses
If you work from home, you may be able to claim items such as a computer, phone and running costs as a tax deduction. Generally, if you are an employee, you can’t claim occupancy expenses. That is things like rent, mortgage interest, council rates and house insurance premiums. If you do work from home, contact a Next Level Accountants to see what you’re entitled to claim.
Interest, dividend and investment income
If you have incurred expenses whilst earning interest, dividend or other interest income, you can claim these as deductions. For a full list of what you can and can’t claim, click here.
If your study is work-related or if you receive a taxable bonded scholarship, you may be able to claim a deduction for self-education expenses. View a full list of expenses you can claim here.
Tools, equipment and other assets
Some occupations, such as tradesmen, require tools and other equipment to help them earn their income. If this is the case for you, you may be able to claim a deduction for some or all of the cost.
For items that cost $300 or less, you can claim an immediate deduction. For items that cost more than $300, you can claim a deduction for their decline in value. You can also claim the cost of repairing and insuring your tools and/or equipment.
As a general rule, if you need to spend money to earn money, you can usually claim this expense.
In summation, to be a legitimate expense, you need to be able to show:
You need to incur the expense to earn the income,
The expense is not private or domestic in nature, and
The expense is not an outgoing of capital or of a capital nature related to a capital asset.
Hopefully, this blog post has enlightened you as to what you can and cannot claim this tax year. If you need any help, guidance or just a bit of professional advice, don’t hesitate to give Next Level Accountants a call today. We are the friendly accountants that can make things easier for you this EOFY.