Tax return time. It’s that great time of year when the possibility of having $3000+ deposited into your bank account becomes a reality. So how do you make the most of your potential return?
We spoke to the Director of Tax Communications at H&R Block Mark Chapman to help us out with what can and can’t be claimed.
For example, Did you know you can claim:
- Sunscreen (if you work outdoors)
If you’re an outdoor worker, such as a tradie, construction worker or farmer, you can claim sunscreen that you purchase to protect you from the ravages of the sun. If its required, other outdoor related attire can be claimed, such as hats, gloves and waterproof clothing if you work in a wet climate.
- Make-up (if your makeup has sun protection and you’re required to work outdoors)
This is quite a specific deduction. General make-up can’t be claimed (even if it has sun protection) unless you work outdoors. Some specific types of make-up (such as rehydrating moisturisers) can also be claimed by flight attendants.
- Handbags (if you use it for work purposes – e.g. To carry iPads, phones, calculators, stationary or anything else you need for work)
Great care is required here. The handbag needs to be fit for work purposes and actually used for work purposes. You might struggle to claim that new Gucci bag but a more modest bag – genuinely used only for work purposes – should be claimable. For men, a work briefcase, satchel or backpack should also be claimable.
- Art (using the $20,000 instant asset write-off, you could get a deduction with an art purchase for your office)
If you own a business where an ambience is necessary, claiming works of art could be possible and you might even be able to claim an instant deduction if you’re a small business (aggregate turnover less than $10 million) and the artwork costs less than $20,000. That can help you to tax effectively decorate public facing areas like office receptions, as well as meeting rooms, boardrooms and staff social rooms. Just don’t think you can claim a deduction if that work of art finds its way into your living room!
- Education (if you’re studying subjects related to your employment)
Self-education expenses can be a real tax minefield. The general rule is that if a course enhances your income earning capability within your current job, or enhances your skills and knowledge within your current job, you can claim a tax deduction – both for the course and associated costs like textbooks, travel, etc. But if the course is designed to progress your career into a new field of endeavour, it isn’t claimable. The dividing line between the two types of course can be quite vague so it pays to speak to your tax consultant for guidance.
- Performance utensils (e.g. Actors, musicians, dancers, magicians, circus performers, who need classes, instruments, etc)
People in the performing arts can claim all sorts of unusual deductions that most of wouldn’t be able to claim. So, you can’t normally claim the cost of a musical instrument against your tax but you can if you’re a professional musician. Similarly, things like dance and acting classes can be claimable if you’re a professional dancer or actor. So, if you want to claim a tax deduction for a ceremonial sword, you’d better join the circus and become a professional sword swallower!
- Electricity (if working from home)
If you work from home as part of your job and maintain a home office, you can claim the appropriate proportion of some of your household bills as a work-related deduction. That could include electricity and other utility bills, as well as depreciation on office equipment and furniture and costs incurred in keeping your home office clean. You can either claim actual costs based on a diary kept for a representative four week period or claim a flat rate deduction of 45 cents per hour.
- Shoes (such as work boots)
Although general footwear can’t be claimed, if you wear footwear which is specific to your occupation, or which provides an extra degree of protection from the elements or from dangerous materials, you can claim a deduction. Work boots worn by tradies or construction workers would be a classic example.
- Pool tables, ping pong tables, Xbox consoles and Tvs (for the office)
Many offices have recreation areas for staff to frequent during breaks and lunch hours. So, although it might seem off that small businesses can claim for items like pool tables, ping pong tables, Xboxes and TV’s, you can typically make a claim if they are provided for staff use. You might even be able to claim an immediate deduction using the $20,000 instant asset write-off if you are a small business. TV’s can also be claimed if they reside in reception areas (for waiting customers to watch perhaps) or in meeting rooms, where they might be combined with video conferencing systems.
- Subscriptions (to magazines, subscription TV and journals – hello ladies who work in media and PR!)
If you subscribe to publications which are relevant to your trade or profession, you can claim a tax deduction for the costs. You can also claim subscriptions to professional associations and trade unions.
- Dogs (security and agriculture work)
There aren’t many circumstances where a dog is deductible but there are some. If you require a security dog to patrol your premises or if you use a dog in farming (rounding up sheep for instance), you’ll be able to claim a deduction for depreciation on the animal plus an immediate deduction for maintenance costs like food and vet bills. The animal needs to be appropriate for the purposes; if you try to argue that your pet poodle is deductible as a guard dog, the taxman might push back.
- Donations (to charity)
Any donation over $2 is claimable as a tax deduction provided you have supporting documentation (such as a receipt) and it’s paid to a Deductible Gift Recipient (DGR). Most well-known charities are DGR’s.
- Mobile phones (for work-related expenses)
Many people use their private phone to make and receive work-related calls, send and receive work texts and emails, and to surf the internet for work purposes. If so, you can claim the work-related proportion of your mobile phone bills (plus a proportion of the cost of the handset) against your tax.
- Laundry (to wash your work uniform)
If you work uniform is claimable, then typically the cost of cleaning (either by laundry or dry-cleaner) is also claimable.
- Car expenses (when used for work)
If you use your car for work purposes, you can claim a deduction, either by claiming actual running costs incurred on work-related journeys (provable by keeping a log book) or by claiming a flat rate deduction of 66 cents per kilometre where you travel no more than 5000 km’s per vehicle per year. Take car though; work-related journeys don’t include the journey to and from work, which is regarded as a private journey and not usually claimable.
In the weeks leading up to tax time, consider doing some of the following things:
- Charitable donations – Make a last minute charitable donation
There’s no limit on the amount of tax deductions you can make for charitable donations. Any donation over $2 can be claimed provided you have substantiation (such as a receipt) and the donation is to a Deductible Gift Recipient (DGR). Most major charities are DGR’s but if you’re no sure you can check at this websitehttp://www.abn.business.gov.au/DgrListing.aspx
You can’t claim for donations that give you some form of benefit, such as raffle tickets or tickets to charitable dinners or other events.
- Prepay some expenses
You can claim a tax deduction this year for expenses which wholly or partly relate to next year. So, if you have some spare cash, consider paying things like professional subscriptions in advance in order to accelerate the deduction.
- Gather written evidence
Make sure you have written evidence, such as receipts, invoices and bank or credit card statements, for everything you intend to claim. The general rule is that if you don’t have paperwork to support your deduction claims, you can’t claim the deduction.
If you are a student, you probably have HECS debt too, so this is everything you need to know about it.