It’s never any fun trying to figure out what is or isn’t tax deductible, and scrambling to gather receipts from several months ago at the end of the year. Here we will give you some simple tips for making the most out of the upcoming tax return season.
Deductibles from working from home
2020 has presented many of us with a new kind of working environment, one involving sweatpants and virtual backgrounds. If you have been home this year, you should be aware that the expenses required for running a home office may be claimed as a tax deduction. Such expenses include the work-related portion of:
- any electrical costs in the home office room such as heating, cooling and lighting
- depreciation cost of home office furniture
- depreciation cost of home office equipment and computers
- computer, stationery, telephone and internet costs
Alternatively, a simplified $0.80 deduction per hour worked can also be used, but only between the period from 1 March 2020 to 31 December 2020.
(ONLY FOR PART FINANCIAL YEAR 2020 AND PART FINANCIAL YEAR 2021)
Deductibles from upskilling courses
If you have decided to go down the path of upskilling – that is, taking courses to improve your current career trajectory – not only will you be a more valuable employee at the end of it, but you may also be able to claim your course fees, meals, accommodation, and textbooks. Computer supplies and consumables, internet costs, and the decline in value of the computer you use to study can also be declared as a part of your tax return.
For these to be applicable, the course you are or were enrolled in:
- must have a sufficient connection to your current employment
- must improve specific skills or knowledge required in your current employment
- is likely to result in an increase in your income from your current employment
Deductibles for expenses incurred in earning your income
Generally, you can claim a deduction for any expenses incurred for work purposes. Some examples of deductions typically include work-related travel, meals, accommodation, and equipment costs or expenses.
Deductibles for expenses incurred for motor vehicles
You will be entitled to claim your motor vehicle expenses in two ways, the cents per kilometre method or the logbook method – to the extent that you have used it in earning assessable income.
Under the cents per kilometre method, you are allowed to claim a maximum of 5000 kms that are business related. (at the rate of $0.72 per business km from 1 July 2020)
Under the logbook method, you are allowed to claim the business percentage of all car related costs including depreciation incurred in the year, to the extent that you have kept a log of this for the past 12 weeks, and that 12 weeks are representative of your travel throughout the rest of the year. The logbook can be kept for use for up to 5 years.
Deductibles from rental losses incurred from investment properties
You will be able to claim the rental loss of your investment property on your tax return. This is calculated from your rental revenue received, less any expenses incurred with the investment property (to the extent that they are deductible under tax law).
PRO TIP: Obtaining a depreciation schedule can result in significant tax savings for investment properties, as it is a genuine tax deduction, without the cash outlay.
HOW TO HAVE A STRESS-FREE TAX RETURN
Prepare your receipts
Receipts or evidence of work-related purchases are the most important documents you require when preparing your tax return.
On a related note, the ATO now deems electronic copies of receipts legitimate, which will save you from the headache of looking for misplaced receipts around your home.
PRO TIP: Saving your receipts via a photo or PDF in a dedicated tax folder on the Cloud will enable you to be more organised during tax time.
General do’s and don’ts
Last but not least, here are some general do’s and don’ts to refresh you on the basics of preparing your tax return. Small mistakes could lead to an unnecessarily long wait time for your tax refund.
- Make sure you update your accountant with your current details such as your address and contact number.
- Check your bank details so that your funds can reach the right bank account.
- Get your spelling right – a simple spelling mistake could cause delays.
- Be organised and accumulate your receipts and documentation throughout the year instead of leaving it to the last minute.
- Always double check the pre-fill data from the ATO because it may not be up to date.
- Avoid declaring values that may exceed the actual deductible amount. If you are unable to provide sufficient documentation for your claims, you may face penalties with the regulatory bodies for incorrectly over-claiming a tax deduction.
Ask for help
Doing your taxes isn’t an easy task, but in this case, there is an easy way out. Our experienced accountants can smooth out the bumps and assist you in preparing your tax return hassle-free.
We can guarantee getting the work done accurately and seamlessly, while spotting deductibles that you may not have even known about before. To top it off, our fees are also tax deductible!
For any inquiries, contact us now at 02 7208 5065 or firstname.lastname@example.org