With tax time nearly upon us, you might be interested in the following deduction tips, which may help increase the amount of money you get back.
Lots of things can affect your tax return, including sources of income from work, investments and any government assistance you may have received during the financial year.
Other factors that can play a part, include whether you have work-related expenses, such as from travel, equipment, clothing or what you might’ve forked out if you’ve been working from home.
Here’s a quick rundown of things you could consider when preparing, lodging and hopefully maximising your tax return for the financial year ending 30 June 2021.
What tax deductions could you claim when you lodge your tax return?
Most tax deductions will be work related. However, a work-related expense will only be deductible if you weren’t reimbursed by your employer, it directly relates to you earning an income, and you have a record, such as a receipt (unless the amount you’re claiming is $300 or less, in some instances).
Work-related tax deductions may include:
- Vehicle and travel expenses
- Uniforms, as well as occupation-specific and protective work clothing, including footwear
- Working-from-home expenses, including electricity, phone and internet costs. Note, a short-cut method for claiming these deductions will apply again this year (more info on this below)
- Education costs relevant to your job, such as course fees, textbooks, memberships and subscriptions
- Tools and equipment, such as sunscreen and sunglasses if you work outside, or laptop and relevant software if you work in an office or home office.
For more information on deductible items related to your specific industry, see the ATO’s occupation and industry specific deduction guidesi.
Meanwhile, if your expenses are for both work and personal use, you can only claim a deduction for the work-related portion, which could for instance be 50% of your phone and internet bundle.
Another example might be if you go on an interstate study trip or conference, but are taking a holiday at the same time, you wouldn’t be able to claim the entire trip as a work-related expense.
Additional deductions you may be able to claim:
- Certain personal super contributions if you’ve made any
- Interest, dividend and other investment-related expenses
- Gifts and donations to deductible gift recipients, such as charities
- Last year’s tax return fee, if you engaged a tax agent.
If you’re having trouble keeping track of all your receipts, checkout the myDeductions tool in the ATO app. This allows you to save a record of your deductions throughout the financial year, which you can then upload at lodgement time.
Extra info if you’re claiming working from home deductions this year
The ATO has announced that a ‘shortcut’ method will again apply as an option for calculating relevant tax deductions for anyone who has worked from home during the financial year (1 July 2020 to 30 June 2021)i.
What this means is you can claim 80 cents for each hour you worked from home to cover any eligible tax deductions (noting, you may need proof such as a timesheet), rather than doing calculations for specific items.
As the shortcut is ‘all-inclusive’, you can’t claim the shortcut and then claim for individual expenses, such as phone and internet bundles. However, if you wish to, you can still claim under the existing arrangements.
Aside from the short-cut method, a fixed rate method (52 cents per each hour you work from home) may allow you to claim other deductions, or the actual cost method can be used. For details, check out the ATO’s home office expenses page, as further research may be required if you’re considering an existing method.
Where to go if you need a bit of help?
To make sure you have all the relevant information you need ahead of lodging your tax return, check out the ATO’s tax time checklist. Alternatively, give us a call at 08 82314709 or you may also reach us at firstname.lastname@example.org.
©AWM Services Pty Ltd. First published May 2021