So, it’s getting closer and closer to tax time and you’re starting to think about your tax deductions. You know you should be deducting as much as you can, but you don’t know exactly what it is you’re allowed to deduct. Am I right?
Millions of Australians are losing thousands of dollars on their tax return every year because they don’t know how to maximise their tax refund with tax deductions. Do not be one of these people and underestimate the influence you can have.
If you don’t know what you’re allowed to deduct, don’t worry! In this article we will discuss 8 of the most common tax deductions people often forget to include in their tax return.
What Makes Something Tax Deductible?
For something to be appropriate for an individual tax deduction, and recognised as an ATO deduction, it has to meet 3 criteria outlined by the taxation department. These things include:
- It has to be a work related expense
- You need to have spent money on it yourself, and not be reimbursed
- You need to have proof
If you’re unsure if something is work related, or you partially use something for personal use and work use, you should contact a tax accountant to work out what you can deduct.
An Important Tax Update For The 2021/2022 Financial Year
Heading into the 2021/2022 tax return season, the COVID-19 tax cut brought in by the government has been extended until June 30. This means you’ll be able to claim the boosted rebate if you earn up to $126,000 a year. More on that here.
8 Of The Most Common Tax Deductions People Forget To Include In Their Tax Return
As previously mentioned, if you want to make sure you include everything you can in your tax return, you should see a professional. You can also check out some of these industry specific tax deduction checklists. However, here are 8 common things you can claim on tax in the 2021/2022 financial year:
- Working From Home Expenses
If you sometimes have to work from home, which is likely thanks to COVID-19, there are work from home tax deductions you can claim. There are three different ways to claim these working from home expenses and the best way will depend on your needs. The first thing you must do is record how many hours you spend working from home. You can read more on working from home expenses here, or contact a professional tax agent.
- Mobile Phone Expenses
If you use your personal mobile phone to make calls and arrange meetings for work, and you aren’t supplied with another phone by your employer, you can claim some of your phone bill as a tax deduction. How much you claim depends on how much you use. Don’t stress over how to claim phone tax, let the experts do it.
- Internet Expense
Your home internet is another product like your mobile phone where you will use it for both personal use, and for work. Claiming your internet on tax can be tricky. Some of the tax calculation methods in the previously mentioned working from home section include your internet use, so if you are unsure how to include it you should click the link above. Alternatively, you could lodge an online tax return in Australia with a professional.
- Computer/Laptop Expense
When you first buy a computer, if it is solely for work reasons you can claim it as a work related expense. If it is for personal and work use, you can claim a portion of it. Additionally, things like computers depreciate, and you can claim this depreciation expense as a tax deduction.
- Union Fees and Expenses
This one is especially forgettable as it’s usually shown in your income statement and isn’t a tangible expense like a computer. So if you’re a member of a union, make sure you remember to include your membership fees in your tax return, or remember to tell your accountant. Additionally, if you are thinking of joining a union, remember that your fees will lighten your tax load.
- Work/Industry Related Expenses
Anything that you get done for your work is a tax deductible item and tax work related expenses. These related expenses include:
- Travel and accommodation
- Subscriptions and magazines
For more extensive tax deduction lists, check here.
- Car Expenses
If you are just using your car to go to and from work, then you can’t claim your car expense on tax. You can only claim your car expenses on tax if you are using your car for work related activities, such as travel between clients. Additionally, you can claim expenses on your car as a tax deduction if you have to move heavy equipment between your house and work, because you have no other safe space to store it.
When claiming car expenses as a tax deduction, you need to keep a logbook of all the work kilometres you drive. You will then get back a nominal rate for every kilometre you drive, depending on the size of your car.
- Tax Agent Expenses
Another tax deduction not many people realise is legitimate are tax agent fees. If you’ve paid for the services of a tax agent, don’t forget to include those fees in your tax return. If you are hiring a tax agent for your tax return, then no doubt they will do this automatically for you.
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