Tax. We all have to pay it, but there are legal ways to minimise it. The facts are, the Australian Taxation Office (ATO) want you to minimise your obligations. It won’t put you in hot water or call undue attention if you claim the legal way. A little bit of knowledge will take you a long way.
The average tax return is around $2,500, so if you’re not getting anywhere near that back at tax time, kick off those apathy heels, and let’s take a look at how you can put some welcome cash back into your pocket.
Working From Home
Due to Covid-19, many Australians were subject (and still are) to working from home. This led to an increase in working expenses most people normally wouldn’t incur, including extra electricity, heating, cooling, phone and internet bills that you wouldn’t incur if you were working out of the home. These costs do add up. Unless you’re a pro at noting every little expense, you’re going to be out of pocket.
The ATO brought in a short cut method. A flat rate of 80 cents per hour can be claimed and all you have to do is show a timesheet, diary or roster of hours worked at home and you’re good to go.
There is more to consider. If you normally work from home, there may be more claims you can make by using the fixed rate method of 52 cents per hour or the actual cost method. These methods may allow you to claim more than the quick, flat rate method.
If you do work from home, using these other 2 methods, you’ll be able to claim a deduction for the work-related portion of your:
- Heating and cooling
- Phone and internet
- Electricity and gas
- The cost of cleaning your home office, including cleaning products
- Depreciation of home office equipment, furnishings and computers
- Costs of repair and maintenance of work-related assets
- Small capital items
- Consumables
Pro tax tip: To claim using the flat rate method or the actual cost method, you’ll need receipts, bank statements, tax invoices and other paperwork such as work contracts and rental contracts to prove your costs.
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Donations
Giving away your cash has a sweet side – when you donate to the right people. Not only do you support your charity and help some people out, you’ll be able to claim donations of $2 or more if your charity is a Deductible Gift Recipient (DGR). This means they are legally able to give you a receipt for the amount you donate.
Stick to the rules, and you’ll be good to claim. Make sure your gift or donation isn’t repaid to you with goods or services, that your payment is voluntary and complies with relevant gift donation conditions. For example, if your receive a badge, pen or get raffle tickets then this is no longer classified as a donation and therefore not tax deductible. Any donation over $2 must have proof of your donation. If you’ve dropped coins into a bucket, you can claim up to $10 worth of donations.
If you’re worried that your charitable organisation isn’t a registered DGR, just ask them! They’ll provide you with proof because they have to go through a strict registration process.
Education
Sign up for that course – as long as it directly relates to your current job. Self education expenses are claimable. Courses aren’t just limited to the classroom variety. Need to update your work qualification? Sign up. Need to update your licenses? Do it.
Study, qualifications and licenses that relate to your current job can knock some dollars off your tax bill. You’ll need to show that your study maintains or improves the skills your need for your current job, or results in an increase of income or job role.
There are some courses that can’t be claimed if there is not a sufficient connection to your job. Say for example, if you work as a personal assistance and would like to move into a role as an accountant. If your employment is casual and you’re studying full time, then that’s going to be a private expense.
Newsletter and Subscriptions
Anything industry specific that relates directly to your job in the way of books, periodicals, digital information, subscriptions to magazines or journals, technical or reference books and academic journals should be on your list.
If the amount is less than $300, you’ll be able to claim an immediate deduction. Just make sure these subscriptions and information are for generating an income and not just running a business.
Organisations
Had your eye on a professional organisation or union and haven’t joined? It’s time to consider those options. The ATO allows claims for union fees, subscriptions to trade, business or professional organisations.
Pro Tax Tip: You can also claim up to $42 per year for the cost of each subscription you incur for membership of a trade, business or professional organisation that is not directly related to your employment income.
Tax Agent
Getting help with your tax is not an expense. The ATO allows you to not only claim the cost of your tax appointment, but the cost of getting to and from your appointment and any costs relating to keeping your tax affairs in order. It’s just about one of the only professional services you’ll get without it being labelled as a private expense.
Pro Tax Tip: In order to make any tax deduction, you’ll need to prove your claim with receipts and tax invoices, it must be a private expense and you must already be out of pocket. ITP Accounting Professionals have helped Australian individuals and businesses with all aspects of their tax, businesses finances and business growth.
Phone 1800 367 487 and chat with a friendly tax accountant today.