How to boost your Tax Refund This Year!
Written on the 18 July 2018 by Nathan Drew, Fox Finance Group
How to boost your Tax Refund This Year!
Three Simple Rules of Tax Deductions.
Australian's claim around $22 billion each year for their work-related expenses. The ATO again this year will be focusing on exactly what claims are being made and have special algorithms in place to highlight potential issues.
To make sure you are not caught out, here are three golden rules when it comes to claiming work deductions. Stick to them and you should be safe.
Firstly, it must be directly related to earning your income. So, unless you are an outdoor worker and you wear your new (safety) sunglasses on the job, you won't be able to claim them.
Secondly, you must have spent the money yourself and weren't reimbursed. So, if you paid for the taxi fare home after the dinner meeting with a client but the boss reimbursed you, you can't put your hand out again. Finally, keep your receipts. You will need to keep your receipts for up to 7 years to prove the expense. A good idea is to photocopy your receipts as they tend to fade over time.
Common Mistakes with Car Expenses
The most common mistakes people make when claiming work-related car expenses is thinking they're automatically entitled to 5000 kilometres as a standard deduction. Some people think that they can just apply this under the cents per kilometre method and claim for their personal travel.
To avoid getting caught out on this it's important to understand the key rules. Generally, if you attend work-related meetings away from your normal workplace or travel directly between two separate places of employment (home doesn't count) you can include this in your claim.
The only time you may be able to claim trips to and from home is if you have to carry tools or equipment to work; for example, you're a builder and you have an extension ladder and or compressor that your employer requires you to use and there is no secure area to store them at the office and it saves you time each day having to go past the office everyday to get them before heading out to the job site.
A good way to calculate how much you use your car for work use is to use a logbook and use a cent per kilometre method to calculate your claims. Keep in mind that if your car is owned by your employer or part of a salary package, then you're unable to claim anything.
If you're unsure about what expenses you can and can't claim the ATO has a great work-related expense quiz that's worth doing. See how many you get right!
Are You Working from Home?
If you regularly work from home, you may be able to claim a deduction for some of your expenses. There are two main types of expenses you may be able to claim a portion of:
To calculate your claim for running costs, you can use a rate of 45 cents per hour. Alternatively, you can claim the work-related proportion of your actual running costs.
More details can be found at ato.gov.au.
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This article is not written as tax or financial advice and the information included in the article is only accurate at time of writing of this article. If you require tax or financial advice, please seek out a qualified professional. If you don't currently have a qualified person on your side to help you with this, please get in contact with us and we'll put you in contact with the right person to help.
Author:Nathan Drew, Fox Finance Group
About: Managing Director - Fox Finance GroupConnect via:LinkedIn