Having helped over 1 million Australians with their tax returns over the past 50+ years, the tax accountants at ITP know a thing or two about maximising tax deductions and reducing the overall tax people pay. Most people simply don’t know all of their valid claims and pay more tax than they have to. So, what are the most common tax deductions people miss when they lodge their tax return?
The Cost Of The Tax Agent
Using a tax agent is actually a cost-effective expense. The fee is a valid tax deduction, and can even be taken out of your tax return so you won’t be out of pocket. Not only will your tax accountant get a better tax return for you, they won’t cost you a cent. In most cases, you’ll come out on top.
Not only that, but the Australian Taxation Office (ATO) recommends people use a tax agent when lodging their tax returns. The ATO recognises the role of tax agents in making sure their client’s claims are reasonable and valid, but the tax agent can also work as a go-between in case there is something wrong. They also have the authority to lodge your tax return after the October 31 date, giving you extra time if needed.
If you are behind on your tax, an ITP tax accountant can work with you and lodge previous year’s tax returns as well. Even if you’ve lodged your own return and didn’t get the refund you were expecting, all is not lost. A tax agent can amend any of your tax returns lodged within the last 2 years for you.
Union and subscription fees
Many workplaces require that a union be joined as a part of your job. Their fees are a deduction off your taxable income. Also available are subscriptions and membership fees to professional bodies, magazines, and associations if they are a direct link to earning your income.
Mobile phone
In today’s world, work doesn’t stop at 5 pm. Many people make work-related calls from their personal device, and many people miss this tax deduction. Make a note of your calls and highlight the business calls on 1 itemised monthly statement per year. If your phone calls directly relate to deriving your income, you can make a valid claim. Adding those extra calls during the year does make an impact.
The same deductions can be made for internet usage. Keep a track of the time spent on your home computer as you surf the net for work or respond to work-related emails. An hour each day adds up, and at the end of the year can tally up and amount to a sizeable tax deduction.
Self-Education
People across Australia like to hone their skills and keep up with the latest procedures and techniques. If you’ve undertaken a course that directly relates to your job, keep your receipts! You’ll not only be able to claim the course fee, but also textbooks, journals, stationery, computer expenses, and travel.
Vehicle
Some people use their own car for business-related travel as well as personal travel. You can’t claim your personal use, but you can claim any business-related trips you’ve had to make as part of your role at work.
There are two methods for calculating vehicle expenses. The log book method requires 12 continuous weeks of logging kilometres travelled, which are then averaged out over the year. The odometer reading of the car must also be recorded at the beginning and end of each financial year. Under this method, the business travel percentage worked out from your log book can be claimed of all maintenance, fuel, registration, insurances, washing and road association fees. You may also be able to claim depreciation on the value of your car based on when you first purchased it.
If you don’t want to keep a log book, you’ll be able to claim 68 cents per litre (2019 rates) up to 5,000 kilometres travelled.
Accommodation and meal expenses when staying away from home overnight for work can be claimed. Transport expenses such as airfares, train, tram, bus or taxi fares can be claimed when engaged in legitimate work-related travel other than normal home to work travel.
READ When Is My Australian Tax Return Due?
Accommodation and meals (away from home overnight)
Some Australians whilst travelling for work interstate or to Country areas overnight may pick up a takeaway meal without being reimbursed from their employer. Although you won’t be able to claim that expense while working at your daily place of work, if you have to travel away from home overnight in a distant location then these meals and accommodation expenses may be claimable. That dinner you paid for before you went back to your hotel room? Claimable.
If your employer reimburses you for the expense or pays you a non-taxable allowance to cover the costs then these expenses will not be claimable.
Pro Tax Tip: Don’t forget to keep your receipts as bank statements do not contain enough information to make a valid claim. If you’re a person who misplaces your paper receipts, a photo is also good enough. Logging your receipts into an app will also save you time and stress come June 30. It is also advisable to pay for everything on a credit card or Eftpos to also back up your receipts. Sometimes the ATO may question cash receipts.
DOWNLOAD THIS ARTICLE: Commonly Forgotten Personal Tax Deductions
Want to know ITP The Income Tax Professional’s key advice? Although it might not seem much at the time, little deductions do add up. Don’t pay more tax than you have to.
ITP The Income Tax Professionals help Australian individuals and small business with their taxes every year. If you’re a customer of ITP, you’ll have free advice during the year. Just ring and ask. It’s free! Speak with a Professional today and work out what you need to do reduce your tax.