Individual tax returns and deductions
I know this isn’t the most exciting subject, but it’s something we all need to do; our personal tax return..
In today’s episode of Catalyst Plus TV, we’ll discover:
1. What information you’ll need in order to prepare your tax return
2. 6 Common Tax Deductions
Watch the video below!
What information you’ll need to prepare your tax return
Whether or not you’re going to prepare your tax return yourself or use the services of a Professional Tax Agent. There’s some information you’ll need to get started.
Firstly, you’ll need to have ready (especially if you’re using a new Tax Agent) is:
- Your Tax File Number (TFN)
- A previous tax return The main reason why you’ll need to bring a previous tax return is so you can claim deductions that you roll over the next financial year such as depreciation.
Then there’s a few other items you’ll need that are specific to this year’s return. Make sure you have got (if relevant):
- Any payment summaries
- Dividend statements
- Health Insurance Statements
- Receipts for the following deductions
6 Common Deductions for individuals
The following is general advice and for specific advice relevant to your personal circumstances, we strongly suggest you seek help from a Tax Professional.
We are often asked what are the common deductions that help reduce the tax you’ve paid over the years.
If you’re a salary and wage earner, you’re usually quite limited in what you can deduct, however, there are a few deductions you may be able to make;
1. Donations to charities:
If you’ve donated money to a registered charity, you’ll get a receipt for any amount over $2, which you can deduct.
2. Uniforms & Protective clothing:
If you have to wear a uniform or protective clothing, you can either claim a laundry allowance or claim your laundry receipts. But be careful; it doesn’t mean you can claim dry-cleaning for the suits you choose to wear, the deduction only applies to uniforms. A uniform is defined as clothing designated by your employer that also carries the logo of your work place. Generally, laundry of uniforms such as protective clothing if you work in a trade or in the mines, or chef’s clothing is claimable; either as an allowance if you do the laundry yourself, or deduction if the laundry is done by a third party.
3. Phone Bill:
If you use your mobile phone for work purposes, bring along your phone bill for the past twelve months to your tax agent.
Be sure to do a little homework first. You’ll need to take one bill (i.e. one month or four weeks) and highlight the usage that applies to business. From this bill, calculate the percentage usage for business (total minutes for business divided by total minutes for phone bill).
This can then be applied as an average for the remainder of your 12 months bills for the financial year in question – especially if you’ve had the same job for the full financial year.
Note: It’s imperative to keep a copy of your records.
4. Work-related assets you’ve purchased:
If you are a tradie, for instance, this could include your tools. If you work in an office and you are also studying, you may be able to claim some of your computer related purchases. Again, you need to figure out the percentage that applies between business and personal use.
5. Motor vehicle use:
If you get an allowance from your employer for using your motor vehicle you might also be able to claim a portion of use on a cents-per-kilometre basis. You must ensure you’ve kept a log-book (for 3 months during the financial year in question) and that you know the percentage of personal/work use. You are never able to claim, for instance, the travel from home to the first point of business. If you are travelling sales person, for instance, you wouldn’t be able to claim the travel from your home to the first customer of the day. From the second customer onwards, deductions can be made. It is best if you already have an allowance from your employer, and that you’ve kept a log-book.
6. Home office expenses:
If you own your home, it may not be advantageous for you to claim any home office expenses. This is because any portion you are claiming for your home office (e.g. 10%) will be taxable if you sell your home.
If you are renting a property, however, it could be more advantageous for you to claim Home Office Expenses so it is worth your while discussing this with your tax advisor.
Home office expenses generally need a dedicated roomthat is used solely for office use. You might be able to can claim a portion of internet, electricity and rent.
Handy Hint – Keep copies of receipts!
Remember that every time you claim more than $300 of deductions in your personal tax return you must keep the receipts for five years. We therefore recommend you take a scanned copy of those so that you have an electronic copy just in case something happens to the physical receipt.
Remember that the above is general advice and for specific advice relevant to your personal circumstances, we strongly recommend you seek help from a Tax Professional.
There you have it, there’s a couple of potential deduction ideas for you. We’ve also created a check-list for you that can be downloaded below which outlines:
- what you should take to your tax advisor,
- what deductions may be available to you, and
- how you can get the best result from your tax return!
I hope this has been helpful for you and if you think it could be helpful to others, please share this on social media as we love to help as many people as we can!
In the meantime, have yourself a great week and we look forward to seeing you again for next week’s episode of Catalyst Plus TV!