Tax season is well and truly upon us, and the question on every Canberran’s lips right now is… how do I pay less tax?
With so many enticing ways to spend our money, paying more tax than we need to certainly isn’t one of them.
A few weeks ago, the Federal Government’s plans to increase the low and middle-income tax offset became law – helping roughly 70 per cent of taxpayers shave up to $1,080 off their tax bill.
This is great news for taxpayers, but for those who meet the requirements for certain tax breaks, there is still plenty of shaving left to do!
Region Media spoke with RSM’s expert accountants to find out which deductions public servants shouldn’t overlook this tax season…
Cost of managing tax affairs
You can claim a deduction for any costs incurred in managing your tax affairs. These costs generally relate to expenses paid to prepare and lodge your previous years’ tax return, such as your accounting fees.
Depending on your situation, there may be other costs associated with managing your tax affairs that can also be claimed as deductions.
Have you spent money to attend a conference, or are you studying a degree to further yourself in your current career? If so, you may be able to claim some of the expenses you’ve incurred if:
- the study or course is directly related to your current occupation, and
- it helps maintain or improve your job-specific skills
Depending on your situation, possible deductible expenses include travel and accommodation, study materials (textbooks, software, etc.), course fees, and other study-related expenses.
Home office expenses
If you worked from home for any period of the year, you may be able to claim your home office expenses, such as work-related phone and internet, the depreciation of work-related equipment and devices, and others.
Deductibility of home office expenses depends on your employment and home office situation, so you should seek specific advice from your accountant.
Clothing and laundry
You cannot claim deductions on the purchase or cleaning of general clothing that you wear for work. However, taxpayers that wear occupation-specific clothing (such as a shirt with your employers’ logo) and/or protective clothing may be able to claim deductions for cleaning costs. You may also be able to claim a deduction for purchasing the clothes if your employer requires that you buy them yourself.
You may need written evidence of laundry expenses if they total more than $150, and you have over $300 in total work-related deductions.
Car and travel expenses
The ATO recently announced they are targeting untrue or unsubstantiated deductions for travel, including cars.
You can only claim your car-related expenses if you travel between two separate workplaces, travel to attend work-related conferences or meetings away from your normal place of work, or occasionally travel to an alternate workplace.
Keep in mind you should maintain a logbook or track your kilometres to calculate how much you can legitimately deduct.
If you’ve made charitable donations in the last financial year, you can claim these as a tax deduction if they are more than $2 and were donated to a registered ‘deductable gift recipient’.
You must keep all donation receipts, and you can only claim these as deductions if you don’t receive any personal benefit from your donation (such as a raffle).
Tools and equipment
If you’ve purchased any tools and equipment to help in your occupation, you may be able to claim a deduction for these expenses. Equipment can range from personal computers and tools to safety equipment and sun protection.
Items that cost under $300 can be claimed as an immediate deduction – but they must be partially or completely work-related if you want to claim some or all of the cost.
Get professional advice
There are many moving parts when completing a tax return and missing out on some helpful tax breaks is an easy mistake to make; especially if you are attempting to do your own tax return.
If you really want to get the most bang for your buck this tax season, it’s worthwhile consulting a tax professional to ensure you pay no more tax than you should!
For help with your tax return this tax season, contact the accounting team at RSM on 6217 0300.
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