Tax deductions are the top way to boost your refund on tax. However, do you have an idea regarding how they work? Dive in the article to find out more.
There is a biggest misconception regarding tax deductions and that is:
“Tax deductions denote that you get the complete amount back from ATO after lodging your tax return ”.
However the truth is that:
Tax deductions can minimize your income that is taxable, which means you get a portion of the amount back for items that are deductible.
Most of the deductions on tax are for expenses concerned with work. However, deductions can also be for charity donations, insurance, rental property expenditures and tax agent charges.
You claim such expenditures at the period of taxation and the deductions are withdrawn from your taxable income. This minimizes the tax you are required to pay.
In the following article, we have covered some general “refund-enhancing” deductions, plus some major piece of advice about getting the refund on tax you are worth of, without risking trouble by the ATO.
It is quite simple to claim tax deductions if you are ready for it and know about your eligibility. So, let us clear you about How tax deductions can be claimed and What amount you can get back in your refund for tax.
Travel expenses related to work
Work travelling is quite popular nowadays. If you have individually paid for anything while you are on travel because of work and your employer has not reimbursed you, you hold the eligibility to assert tax deduction. If your employer gives you an allowance for your work travel that is involved as assessable income on your PAYG, you can assert accommodation and travel expenses up to the amount of the allowance, without the need for keeping the records. You should be able to vindicate for the expenses if asked and will be required to present evidence of the expenses over the amount of allowance.
Items which you can claim under this category are:
- Car hire fees
- Bus and train fares
- Tax fares
- Food costs, when you are away from your home overnight
- Overnight stays in a hotel during the work trip
Car expenses related to work
If you are using your car for purposes that are linked with work i.e. driving between diverse offices, transporting goods or/and visiting clients, you can claim the individual cost of utilizing your car on your return on tax.
The foremost thing you have to do is choose the manner which you are using to claim the car expenses; the logbook method or cents per kilometer method.
Each of the above methods can be used for claiming the deductions.
Protective clothing, uniform or occupation specific related to work
Most of the workplaces need their staff to wear specific clothing like protective footwear or uniform. At times, this is for showing off the business brand or for a professional look.
At times, this can be also for protection and safety.
If you are into a position where you have to wear;
- Protective shoes
- Protective clothing
- Uniform with logo included
- Safety equipment
- Gloves, glasses, goggles etc. or
- High-vis clothing
Then you can claim a deduction on tax for your incurred expenses. This also comprises of the dry cleaning and laundering charges of these items.
Tip: Make sure that you are keeping your purchase receipts and penning down how frequently you are washing your uniform. This will help you figure out the claim of laundering.
Charitable donations or gifts Tax Deductions
If in this financial year, you have made any donation to a charity along with having a receipt that is an evidence for your donation, you can add this section to your receipts. However, you need to affirm that the donation is made to a charity that is registered as such organizations are solely eligible to provide receipts that are tax deductible.
Tax agent fees
Expenses can also be claimed that are concerned with management of your taxes including the fees paid to your tax agent for lodging the return.
You can also claim back quantity surveyor reports, tax reference books or if applicable, the interest charged from the ATO.
Self education expenses related to work
Self study is the most substantial way to enhance your skill set and boost your career. Opting to carry forward your education while working in your study segment also bring you the benefit of claiming back a portion of your expenses related to study.
Tip: It is vital to not to forget that you are required to study the segment that is concerned with your present role for claiming tax deductions, not something you wish to do.
Other expenses related to work
In a number of roles and jobs, you can spend money on the things that are purely concerned with your job. In this case, you will not pay tax on such expenses and that is the reason you can claim them as deductions.
Other tax deductions related to work that can be claimed include:
- Mobile phone expenses
- Equipment and tools (like ladders, home printers)
- Union fees
- Home office, telephone and internet expenses (if it is home-based working)
- Notebooks, journals, stationary, trade magazines and tax books
- Software, computers and laptops (if you need to subscribe/purchase on your job’s behalf or working from home)
Tip: At accountsnextgen.com.au, you can upload the receipts directly into your online tax return. When your return is reviewed by our accountant, your deduction receipts are seen right there and assist you in leaving out the ones that are not qualified.