Top 5 Forgotten Tax Deductions

With the end of the income year just a few months away, it’s a good idea to start thinking about your plan for lodging your taxes this fall. Tax time is fun for no one, but it’s certainly a lot more enjoyable when you know that you’ve claimed every available deduction. According to a 2014 study from Officeworks, the average Australian loses $426 in unclaimed tax deductions!¹

The most common reasons someone didn’t claim a deduction? They didn’t keep complete records, they simply forgot, or both. This is why the most important thing you can do to increase your refund, as well as for overall financial success, is to have strong organization skills. Check out our past blog on making the most of your time, and remember to use “the cloud” to your advantage. Since TCA Darwin partners with names you know, like Xero, Quickbooks Online & MYOB Essentials, we can help you set up a cloud accounting service that will allow you to keep track of every little detail, so that organization won’t keep you from getting that big deduction. Contact us to get the information you need to be ready for your tax return well before your return is due, and read through the following most commonly forgotten deductions. Have you forgotten any of these?

Business Home Office Expenses

You may be surprised to learn that working from home for your business even only occasionally can result in a deduction for some of your home office expenses. If you work entirely from home, your available deductions rise even more. We can guide you through your specific deductions, because it can get complicated, but know that the ATO allows you to claim $0.45 for each hour spent working at home.² You can claim this fixed rate, or you can claim the actual costs of your work-related home office use if; this is where stringent record-keeping comes in handy. The best choice may be to keep a diary of hours spent working at home, as well as all of your expenses, including lighting, heating, and office furniture purchases. We’ll be able to determine what you can claim and use this information to maximize your deduction. Other work-from-home expenses, such as office supplies, are also a separate deduction, so keep track of those, too.

Work-Related Vehicle Expenses

If you use your own car mainly for business travel, it may be more tax effective to claim your motor vehicle expenses using the log book method rather than the cents per km method. If claiming via the logbook method, you will need to ensure that you have kept a 3 month log book of your personal vs work related travel so we can determine the business % vehicle usage. We could then apply the business usage % across the running costs of your vehicle for the year e.g. fuel, servicing costs, insurance, vehicle depreciation, vehicle loan interest etc.. Remember you will need to keep all of your receipts if claiming using this method. Download the free Fleetcare motor vehicle logbook app on your phone and start today in time for your next tax return!

Mobile Phone and Internet Expenses

If you make work calls from your personal phone, or use Internet services that are  in your name for your work, these are other possible deductions, and you’ll want to keep a record of the estimated time spent using the Internet for work, as well as the percentage of calls used for work (an itemized bill is helpful in this situation). However, if your phone is employer-provided, you can’t claim this deduction.

Union and Self-Education Fees

Any union fees paid during the year, including student union fees, may warrant a tax deduction. You can also claim the cost of any professional literature or textbooks that are necessary to increase your knowledge and skills at work.

Protective Clothing and Laundry Expenses

That’s right; if you are required to wear protective clothing or logo’d uniforms, the ATO allows you to claim the cost of cleaning the clothing, including the cost of dry cleaning. If the cost is under $150, you don’t even need to have evidence of this claim. That being said, it’s still a good idea to log these costs and receipts in your record. It will not only serve as a reminder of this available deduction, but allow you to see the amount of money that you have spent on caring for your uniforms, on the off chance it exceeds $150.

If you work in a position that requires a specific wardrobe, or a position that requires protective attire, this may also qualify as a deduction. The ATO website has a helpful list of deductions available by occupation.

Organize Early

Don’t wait until tax time to seek out records and receipts. Scan these items into the cloud as soon as you can. If you aren’t sure if something is a claimable expense, go ahead and log the information, or keep the receipt, anyway. The worst thing that can happen is that it isn’t deductible, but in the best case scenario, you just got yourself another deduction that will save you money. It may not always seem worth it to make a record of every dry cleaning trip, or of local trips for your job, but those little details can easily add up into sizeable deductions that could positively affect your finances.

There are a number of expense tracking apps available if you aren't using your accounting software. Pocketbook is a great free application which can help you track work related expenses you may have paid for using your own personal funds. By starting early, you can make this year the best year yet for your tax return!

References:

  1. Officeworks, 14 March 2018, www.officeworks.com.au

  2. Australian Taxation Office, 14 March 2018, www.ato.gov.au/