Top tips on the hottest tax deductions
Working from home
This is a big one this year. So many people that normally would not work from home have potentially spent months doing so. If you are not used to the working from home life, you might not know that you are eligible to claim this as a tax deduction. Even if you normally work from home, you might be surprised by the things that you can include as a deduction in your personal tax return!
Some things you can claim in your personal tax return include:
- Cleaning costs
- Office furniture and supplies
- Phone bills
- Internet
- Electricity
- Even a portion of your rent, mortgage and home insurance is possible, depending on your situation.
Maximise your work-related expenses
This is a tricky one, but if you educate yourself properly, it can definitely be well worth while claiming these expenses on your tax return. There are quite a few things that can be claimed, but you need to be careful as incorrectly claiming things can lead to a penalty from the ATO.
Some potential tax deductions are:
- Courses and conference expenses
- Tools and work-specific clothing
- Safety items
- Laptops and mobiles
Car and travel expenses
This is a pretty well-known one that can be claimed in your tax return but again, you want to really educate yourself on how and what you can claim to avoid any kind of penalty. It is well worth the research as it can save you a lot of money come tax time.
If you use your vehicle for work, you can claim deprecation of your vehicle, registration costs, insurance costs and the general costs of running your car (eg. fuel, oil and servicing) as a tax deduction.
You can also potentially claim vehicle and/or travel expenses if you are required to travel between work spaces or travel to different locations for things like meetings.
To correctly claim your car and travel expenses, you either need to follow the cents per kilometre method or logbook method.
Charity donations
Charity donations aren’t just good for karma, they can also help when it comes to tax time. However, not all donations are eligible for a tax deduction.
Here are some examples that are most likely claimable on your personal tax return:
- If the organisation is a Deductible Gift Recipient
- If the gift is a true gift, and you received no benefit or advantage for your contribution
- If you have a proof of payments in either a receipt or bank statement form
- The donation was money, not assets
- The gift was over $2
Use a tax agent
When it comes to all these different claims, seeking professional help to complete your personal tax return is always a good idea. Not only does it make the whole process easier, it also helps you avoid making mistakes on your tax return that can potentially cause you to get in trouble with the ATO.
Some benefits of seeking help from a tax agent to complete your tax return include:
- You can claim the tax agent fee as a tax deduction in itself
- You can maximise your deductions as tax agents know all the ins and outs and the things you’d miss if you were doing it yourself
- Avoid fines from the ATO which can occur if you don’t do your claims correctly
- Helping with the calculations of things like travel and home office expenses which can be tedious, time consuming and difficult. It makes the process a lot easier when you’re working with someone who knows exactly what they are doing.
- Tax agents can offer you general knowledge and support, as well as extra tax tips. This not only helps you during tax time to get the most out of your tax return but can also generally help you with your financial situation.
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