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Another June 30 has been and gone, and just like that *clicks fingers* the 2015/16 financial year is all wrapped up. For many - this writer included - the most (and perhaps the only) exciting thing about EOFY is tax time!
Yes, unless you are self-employed, own positively-geared properties, or have sneakily/unknowingly skimped on your tax reductions throughout the year, you are probably due for some handy $$$ back into your bank account in the coming weeks.
This sum of money can vary greatly from person to person, and year to year. While you may have been gifted a hefty sum in previous years, there are countless variables that could see your return reduced this time around (tip: don't spend it before you have it, or you might receive a nasty shock when you go to lodge). Hey, it's not all bad - the reverse also applies!💰
There are countless myths surrounding what you can and can't claim, which can make it very confusing when you are trying to submit an honest tax assessment (and avoid quizzical follow-up calls from the ATO). Many tend to adopt a 'skim and submit' strategy, without taking time to read all of the information provided. To help out, we have put together a short list of tax deductibles that you may not have been aware of. Hopefully these pointers will help to bring some money out of the taxman's pocket and back into yours!
1. Gifts and Donations
Before you get excited and start exorbitantly splurging on birthday gifts for friends, make sure you read the disclaimer: "You can only claim a tax deduction for gifts or donations to organisations that have the status of deductible gift recipients (DGRs)." Unfortunately, that scented candle you gifted on Mother's Day is probably not going to meet the criteria. If you've been kind enough to donate to a friend's Movember cause, or you've called in and contributed to the Good Friday Appeal - good on you! Now, be kind to yourself and claim it back on your tax return. Everybody wins!
2. Cost of managing your tax affairs
If you weren't able to lodge your tax return online in the 2014/15 financial year, you may have had to splash some cash on an accountant. You can claim this cost on your upcoming tax return, as long as you were charged during the last financial year. In fact, any costs you incur in managing your taxes (travel to consultations, valuations on property, etc.) are deductible. As with all things finance related, it's best to err on the side of caution; you can only claim the cost of assistance if it was provided by a registered tax agent. There are no rules that govern who can label themselves as an 'accountant', so make sure you do background checks to ensure your chosen accountant is registered.
3. Overtime meals
Would you believe me if I said you could eat a delicious meal, and then claim its cost back on tax? You better believe it! When you are paid an overtime meal allowance (generally set by an award), the ATO allows you to stake a tax claim for the meal expenses. You can claim up to the reasonable allowance amount set by the ATO, so if you have expensive taste and regularly snack on caviar and aged cheese, you might end up slightly out of pocket.
4. $300 receipt free.
One of the most painful things about taxation is trying to keep track of all your tax deductible expenses. Receipts can wear, tear, and disappear without a trace. While as a society we tend to demonise the ATO and see them as an evil monster out to take from the little guy, maybe we should give them a little more credit. Recognising the fact that sometimes its not possible to retain all receipts, the ATO allow each individual to claim $300 of deductibles RECEIPT FREE - hallelujah!
What else can I claim?
Work related travel expenses
Depreciation on your car if it has been used for work activity
Cost of buying occupation-specific/protective work clothing. NB: Pro athletes can claim the cost of sunscreen, hats, and sunglasses as the fall under the protective clothing category.
Home office expenses, if your role requires you to occasionally work from home
Cost of completing work related study
Purchasing tools or equipment specifically related to helping you earn income
Union and association fees/subscriptions
Mobile and internet expenses if used for work purposes
What things can't I claim?
Speeding tickets or parking fines
Costs of parking at your work place
Travel expenses to and from work
Cost of your children's education
Medical bills
Clothes worn for work, that aren't specific to the occupation, or a safety requirement.
NB: if you could wear it on the weekend (like a suit), then it's probably not tax deductible
For more information on what you can and can't claim, be sure to visit the ATO website. Hopefully you have found some handy tips that will help to inflate your tax return and free up funds for the important things - a deposit on your next investment property, perhaps? Indeed, negatively geared investment properties can also add value when it comes to your tax return. For advice on how to start building your investment portfolio, chat to your local broker today.
Disclaimer: The advice provided in this article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. We encourage you to consult a finance professional before acting on any advice provided in this article or on this website.