Tax Return Deductions
As a law-abiding Australian, you are obligated to lodge your tax return every year. Usually, this can seem like you are losing loads of money. However, this is just you keeping up with your legal obligations. Regardless, you can save on your tax payments while satisfying your legal obligation. This is where tax return deductions come in.
What is a Tax Return Deduction?
This involves an expense that allows you to reduce your tax obligation. You achieve this by deducting those expenses from your taxable income. In turn, you can save on tax payment.
What to Consider When Identifying a Possible Tax Reduction
Especially if you are not an accountant or financial planner, identifying expenses that may count as tax deductions can be challenging. However, you can easily achieve this by considering the following.
- Did the expense directly relate to your business, work, and other income-generating activities?
- Did you make payment and did not get reimbursement from your employee?
- Did you keep an official record showing the expense – for instance, your bank statement or a receipt?
In such cases, these expenses will qualify for tax deductions. However, you will need to keep in mind that this becomes tricky when you make such payment for both home and work. In such as a case- for instance, home internet payment, – you will need to determine what percentage relate to your income-generating activities.
Also, keep in mind that where necessary, the Australian Tax Office can contact your employer. This occurs in cases where they believe that you might have claimed reimbursement for the expenses.
Regardless, you can always claim a deduction for various work-related expenses like:
Vehicle & Travel Expenses
This does not include expenses to get to and from your workplace. However, it comes in where you need a car to discharge your duties. Or when your work necessitates you being in multiple locations.
This refers to the cost associated with work-related studies to develop yourself. However, keep in mind that this does not extend to education you undertake to get a new job. Or better, education to start another business or create a new income channel.
Clothing, Dry-Cleaning, Send Laundering Expenses
This includes the cost of industry-specific clothing that you purchase. You can then claim the cost of these clothing. And of course, the cost associated with this maintenance such as laundry.
Equipment, Tools, And Various Other Assets
You can obtain a tax deduction for your work-related equipment and asset. This includes electronic equipment, like computers and smartphones. It also extends to power tools and toolkits.
Home Office Expenses
This has become even more important following the emergence of remote working. Typically, this involves expenses such as internet and phone expenses, home office machinery, and computer consumables, among others.
You get the full value if it cost below $300 and the depreciated value if it is more than $300.
Other Work-Associated Expenses
You can also claim tax deductions for various work-related expenses that relate to your circumstances. This includes expenses such as overtime meals, protective sunglasses and safety goggles, information subscription, and books.
Always remember that for tax return deduction, it must never be domestic, private, or capital expense. It must always be work-related.