Each and every year we highlight what you can and cannot claim along with the red flags the ATO are on the lookout for.
Once again, we have had another year to add to the yearbooks. Or to forget entirely….
So what can, and can’t you claim this year?
Make the most of your tax deductions
Deductions you can claim
If you are looking to write off a work-related tax expense, there are 3 things you need to tick off:
- You must have spent the money yourself and not be reimbursed for the expense
- It must be directly related to earning your income
- A record to prove it (ie receipt)
You can claim any expenses up to the value of $300 without a receipt, as long as they are related to your work and you have not been reimbursed. If the expense is over $300, it will be depreciated with an amount claimed each year for the rest of the items effective life.
If the expense is related to both work and personal use, simply apply the work portion to the expense total.
Employees are now entitled to claim contributions to superannuation against their salary income so be sure to expense any additional super contributions you make.
Deductions you cannot claim
With many of us working from home, be sure to be accurate when claiming your working from home expenses. This includes travel related to your work.
You cannot claim travel from your place of residence to your workplace. Also, if your movements have changed with COVID due to working from home and lockdowns, be sure to adjust your travel expenses.
The ATO will be on the lookout for any overexaggerated working from home expenses.
Useful tax tip!
Don’t spend money to simply save on tax as you only save tax on the marginal tax rate proportion that you spend, NOT the full amount. For example, if your tax bracket is 34.5%. You buy an item for $100. You will receive $34.50 back from the ATO but you are still out of pocket $65.50. So remember, buy what you need – not for spending’s sake!
Specific deductions
The ATO has a comprehensive list of items you can and cannot claim on their website to cross-reference.
- Clothing, laundry and dry-cleaning expenses
- Gifts and donations
- Home office expenses
- Interest, dividend and other investment income deductions
- Self-education expenses
- Tools, equipment and other equipment
- Vehicle and travel expenses
- Other work-related deductions
- Other deductions
Engaging a qualified and experienced accountant will ensure you are claiming the maximum (and correct) deductions this year.
Make an appointment with the team to start preparations for the lodgement of your 2021 tax return.
