After the financial year on 30 June, every tax payer is busy for their annual tax claim.
Some of you are already submitted your tax claim to the Australian Tax Office (ATO) and some of you are not.
However, are you fully aware about the eligible and non-eligible tax deductions?
This article will elaborate what are the eligible and non-eligible tax deductions in your annual tax claim.
What is a Tax Deduction?
According to Mr. Richard De Silva, who is a Senior Tax Accountant and Financial Advisor in Melbourne, tax deduction is an expense which you can reduce your taxable income.
But those expenses should be related to your income (work) and also you must have spent those expenses by yourself and not have been reimbursed from your Employer or other party.
When fulfil above two requirements, those expenses can be deduct from your annual taxable income.
What are the eligible tax deductions according to the Australian Tax Law?
There are several main expenses which you can declare as tax deductions in your tax return.
1. Vehicle and transport expenses.
If you are using your own vehicle for your work duties, you are entitled to claim that vehicle expenses.
Using vehicle for work does not mean that you are going to office and coming home by your car in daily basis, Mr Silva said.
After you reached your workplace, if you have to use your vehicle for office purposes then you can declare those expenses.
For an example, when a Civil Engineer goes to his office and he has to visit his construction sites by his own car. In this case, he is using his own car for working purpose and he can claim that.
Apart from that, when a Plumber has to load their tools and machineries in to their trucks and leave to their duties from home. In this case, he uses his own vehicle for his work duties and able to claim the expenses.
But you have to keep your records properly, Mr Silva stated.
2. Clothing, Laundry and Dry Cleaning expenses.
You are able to claim your work related clothing, laundry and dry cleaning expenses in your tax claim.
According to the Mr Silva, there are two sides.
Some employers supply the company uniforms to their employees and you have to pay for it. If it is so, you are entitled to declare those expenses under the work related clothing.
On the other hand, if you are buying any industrial recognised clothing such as Chef’s pant, Doctor’s Coat which related to your work, you are entitled to declare it.
And also when you are using any laundry or dry cleaning facility for your work clothing you can show those expenses as well. But ATO presented guidance for that and you have to follow it.
3. Protective Clothing.
If you have to use any of protective clothing such as Working Boots, Goggles, Sunglasses, Gloves, Sunscreen you can declare those expenses in your tax claim, Mr Richard De Silva said.
Source: Shutterstock
4. Work Related Self Education
You may be able to claim a deduction for self-education expenses if your study is work related but the first $250 has to pay by yourself.
And also ATO said that the course which you follow has to be meeting following criteria.
- Maintain or enhance the particular skills or knowledge you require in your current employment.
- Result in, or is probably going to bring about, an increase in your income from your current employment.
There is no way to declare Work Related Self Education except above two cases, Mr. Silva described.
“Some international students find employments which are related to their courses during their studies or after their graduation in Australia. At these kinds of situations, those students are unable to claim their course fee because the main intention that you came to Australia was to do your higher studies. But if you came to Australia through the Skill Migrant program and you think that you have to improve your skills and do a course which is related to your field. In this case, you are able to declare those expenses under Work Related Self Education. For an example, you are coming through the Skill Migrant program as an Accountant, then you think you have to do CPA. In this case, you are able to declare those expenses, because he came as Accountant to Australia and want to enhance his accounting skills.” Mr. Richard De Silva stated.
Source: Flickr
Apart from above things, you can declare the expenses of your stationaries, computers, laptops, phones or any equipment that you are using for your work.
But if the item is more than $300, you have to depreciate that expense and divide in to particular years.
Make sure you can only claim a deduction for the work-related portion.
5. Work from Home
Some people do not go to office on every day and they are working in their home on some days.
In these kinds of situations, you can declare your work-portion of the electricity, gas, water, telephone and internet bills in your annual tax claim.
But you cannot declare your rent or mortgage in any case, Mr Silva stated.
Moreover, when you are lodging your annual tax claim through a Tax Agent or Tax Accountant, you have to pay his/her fee. You are entitled to declare those fees in your tax claim.
“Tax deduction is not your annual tax claim and annual tax claim is depend on your tax rate against your taxable income.” Mr. Silva thoroughly expressed.
