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Common Tax Deductions You Didn’t Know You Can Claim

As a smart taxpayer, it would be helpful to know some of the deductions you can claim against your tax. An Australian accounting firm surveyed their senior accountants to know what the most forgotten deductions are on individual returns and have come up with the list below:

1.       Expenses on Managing Taxes

If you used the services of tax agents to prepare and lodge your taxes in the previous financial year, you are entitled to claim the fees you incurred for managing your taxes the following year.

According to the Australian Taxation Office website, you can claim the expenses related to managing your taxes if you’re:

  • Lodging your tax return through a registered tax agent;
  • Obtaining advice from a recognised tax agent (includes travel cost attending the meeting with your tax adviser);
  • Purchasing tax reference material;
  • And dealing with the ATO

2.       Work-Related Car Expenses

Besides the items you use for work, like handbags or briefcases, individuals who use their personal cars for work can claim tax deductions if they are using their vehicles to drive between offices, or moving from their job-related meetings. Obviously, the cost of normal travel from your home to your office, and vice-versa, isn’t included as this is considered as private travel.

Also, to be eligible, you are advised to use the cents per kilometre method or a log book method to claim car expense deductions starting 1 July 2015.

You can review what you can and cannot claim on travel expenses from this link and car expenses on the ATO website.

3.       Union Fees and Subscriptions to Associations

If you are a member of a union or an association related to your profession, you are eligible for tax deductions for the total costs of fees that you incur for being a part of these groups. According to the ATO website, you can also claim payments for levies to a strike fund, provided that “the fund is solely to maintain or improve the contributor’s pay.”

4.       Home Office Expenses

If you are an employee who occasionally works from home, or if your job entails you to do office work at home, then you are entitled to a tax deduction for using your personal electronic devices as well as heating/cooling, and lighting as part of your home office expenses.

If you’re working from home full-time, you can also claim for the occupancy cost of your office space against your taxes. Some of the expenses that are tax deductible are computer software, office equipment, and a percentage of your home mortgage and electricity.

Like other expenses you can claim against your taxes, you must keep records of these home office costs in order to be eligible for deductions. Some examples of the records you must keep are receipts (for depreciating assets), dairy entries for small expenses (the total must not exceed $200), and a diary recording how much you used personal equipment for work (over a representative of a 4-week period).

5.       Mobile Communication Expenses

Using your personal mobile phone for job-related communications is generally considered to be tax deductible. However, you must take note that your deduction does not cover the entirety of your telephone bill. You can only claim for the cost of calls that is related to your work. Keeping a logbook is a good idea to itemise these calls. “You need to keep records for a 4-week representative period in each income year to claim a deduction of more than $50,” says an article from ATO.

Obviously, when your employer provides you with a mobile phone to use for work and also pays the expense for its usage,then you are not able to claim a deduction on this. Phone bills that are reimbursed by your employer also are not considered as tax deductible.

If you want to know more about how you can legally minimise your tax, you can consult with McKinley Plowman’s experienced tax agents at (08) 9301 2200 or contact us here.

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