Well, it’s tax time again.
And, before lodging your tax return, you should make sure that you are claiming all that you can, including the most commonly missed tax deductions listed below.
There is a great resource here provided by the Australian Tax Office (ATO) outlining tax deductions for specific industries and occupations. Click here to access.
Now, let’s have a look at the 10 most commonly overlooked tax deductions for individuals in Australia.
Generally, you are unable to claim a tax deduction for any expenses if you are reimbursed by your employer for the cost incurred and, if unsure about claiming any deduction, consult a tax accountant.
1. Mobile Phone and Home Internet Expenses
In today’s working environment, it is inevitable that our mobile phone and home internet will be used for work related purposes to some degree. You are unable to claim the portion of your mobile phone costs and internet bill that relates to personal use; however, you can claim a tax deduction for the use that was used for work purposes. This is generally calculated as a percentage of use. For example, if your mobile phone is used 80% for personal use and 20% for work, then you should be able to claim 20% of your mobile phone cost as a tax deduction. The same goes for your home internet.
As with most tax deductions, it is best to keep a record to justify the proportion of use. To do this, record all phone calls made or received over a one month period. If 100 calls were made or received and 20 were for work purposes, then you can claim 20% of your mobile phone bill. This diary record for a month provides the ATO with justification for the tax deduction claimed. You can use an ‘hours used’ method for the internet. Read more here.
2. Tax Accountant Fees
Remember last year when you drove to your tax accountants office to complete your tax return and they charged you a fee for completing and lodging your tax return?
Well, now it’s time to get some of that back. The costs of managing your tax affairs are a tax deductible expense, including the fees charged by your accountant. In addition to that, you can claim a deduction for the car expenses that relate to your commute to the tax agents office. Read more here.
3. Home Office
Do you take work home with you or check and respond to work emails? If so, you can claim a tax deduction for the use of your personal computer.
Even better, if you work from home or run a home-based business, you can claim a tax deduction for occupancy costs, including lighting, heating and cooling, furniture and equipment. You can also claim rent or mortgage expenses for the portion of your home that is used for work purposes. However, be careful; claiming a portion of mortgage repayments will likely affect the capital gains tax-free status of your home when sold. Read more here.
4. Training & Education
The fees and costs associated with undertaking training or education relating to your employment or work can usually be claimed as a tax deduction. This can include course fees, textbooks, stationary, travel expenses, photocopying and much more. This means that knowledge is not the only benefit of professional development; you can get a tax deduction too! Read more here.
5. Seminars & Conferences
Do you attend seminars and conferences as part of your work? If so, the cost of attendance is tax deductible, as are other costs incurred such as travel and accommodation, excluding any private portion of the travel. Read more here.
6. Prepaid Expenses
If you have the ability to pre-pay any expenses in this financial year for costs that would otherwise be incurred in the next financial year, you can often claim a deduction for those expenses in this year instead of next. For example, you may pay for next years’ subscription costs, or pre-pay deductible interest expenses (fixed-rate loans only), or insurances, or seminars, etc. You can only pre-pay one year in advance.
7. Income Protection Insurance
Income Protection insurance is a type of insurance cover that provides you with a replacement income in the event that you are unable to work due to injury or illness. The premiums for this type of cover can be claimed as a tax deduction if the policy is owned in your own name. If the policy is owned by your business or within superannuation, you are unable to claim a personal tax deduction; instead, a tax deduction will be claimed by the relevant entity. Read more here.
8. Clothing & Laundry Expenses
If you have a work-related uniform or occupation specific clothing, then you can claim a tax deduction or the costs of laundry and dry-cleaning. Such clothes must be specific for your work (i.e. clothes you wouldn’t wear elsewhere). This clothing will usually need a work logo on it, or be a distinctive type of clothing (e.g. chef’s checked pants/hat).
You can also claim the cost of purchasing occupation specific clothing or protective clothing such as safety coloured vests, steel-capped boots, gloves, lab coats, aprons, fire-resistant clothing, etc. Read more here.
9. Sun Protection
If the type of work you perform requires you to be outdoors for prolonged periods, then you are generally able to claim the cost of sunglasses. Read more here.
10. Subscriptions / Memberships / Union Fees
Subscriptions to work-related journals, magazines, newspapers, etc. can be claimed as a tax deduction, as well as the portion of pay-TV subscriptions that is used for work purposes.
Any memberships to industry-specific organisations and associations can be claimed as a tax deduction too. Fees relating to union membership is also a tax deducible expenses. Read more here.