Tax deductions: Why you should think about tax now
This information is correct at the time of publication. It is always best to check current tax information on the ATO website.
Tax time is quite a while away, I know! But tax deductions are a big reason you should think about your tax now. Keeping a regular tab on your possible tax deductions is going to make tax-time much easier.
Tax deductions can be claimed for some expenses, most of which must be directly related to earning your income. There are many categories available to be claimed. A full list of work-related expenses and more information can be accessed here. But, as I’m sure you’re thinking, tax can be kind of complicated… so in this article we’ll just address recordkeeping and some of the more common tax deductions!
Pro tip – keep records!
It is best practice to keep records for anything you can claim! For the records you need to keep, and the details required, see here. There are certain thresholds below which you don’t need records. But this depends on what you are trying to claim.
While you might be thinking that you can’t be bothered, keeping records is really important. You might not think your work related expenses could top $300, but by tax-time they very well could have!
To claim over the thresholds on some categories, you need those precious records… if you submit claims without records or something looks fishy, the ATO could be in touch.
Keeping a record also ensures you aren’t underestimating your claims, either because you simply can’t remember very well, or you would get locked out by the requirement for records over a certain dollar amount.
The ATO has an app, in which you can log your deductions as you go along. It includes a feature to take photos of receipts. Check it out here.
When can I claim a tax deduction?
To claim a work-related deduction in any of the allowable categories, three criteria need to be met:
- You need to have spent the money yourself, without reimbursement from your employer,
- It must directly relate to earning your income, and;
- You must have a record to prove it.
What kind of things can I claim?
There are a range of things that can be claimed. What I’ll touch on next is by no means an exhaustive list, it is just a few of the more commonly claimed expenses and some you should know about. For more information, see the ATO website.
Vehicle and travel expenses
If you use your own car to perform work-related duties, you may be able to claim a deduction for car expenses. This does not include travel from your home to your workplace. However it would include situations like being required to travel from one workplace to another, while continuing your workday for the same employer. It may also include costs associated with travelling for work on business trips. You can only claim travel for work purposes that was not already reimbursed for by your employer. For more information on vehicle expenses, see here.
The requirements for record-keeping on vehicle and travel expenses are very specific, which is why you should think about it now! Keep thorough records throughout the year, and tax-time will be a breeze.
Clothing and laundry expenses
You can claim a tax deduction for buying and cleaning occupation-specific clothing, protective clothing and distinctive uniforms. This is an area where a lot of people get confused. What does occupation-specific mean? And when does a uniform become a distinctive uniform?
Occupation-specific is something like chef’s pants. There are a range of industry-specific guides available, to help you determine what’s covered.
Protective clothing includes things like sun-protection clothing, steel-capped boots, gloves, non-slip shoes, etc. This clothing must have protective qualities for it to be included.
Work uniforms can be claimed for purchase or laundry expenses only if they are unique and distinctive to the organisation you work for. This would usually mean it has a logo on it. This is always the case for compulsory uniforms, which can include shoes, socks and stockings where they are also required and are specified in your employer’s uniform policy. Non-compulsory uniforms can only be claimed where the design is registered with AusIndustry.
The cost of washing your compulsory work uniform, protective clothing or distinctive occupational clothing can be claimed too. A reasonable basis for determining costs for washing is $1 per load if it is only work clothing, and 50c per load if other laundry items are included. Written evidence of cleaning costs must be provided over certain limits.
Did you know union fees are deductible?
You might have thought about joining your industry union, but thought it was too expensive. Many unions tailor their fees depending upon your hours and how much you earn. And the fees are tax deductible!
If you are a union member, when things go wrong at work, you can access support and advice. This can range from advice on wages and leave, to legal support if you are injured at work. All the things we think of as standard now – annual and sick leave, safe working conditions and workers compensation – they were all championed by unions in the past.
If you work outdoors for prolonged periods of time, you can claim the cost of sunscreen! There’s no excuse not to slip, slop, slap if you work outdoors when it’s all tax deductible. This includes moisturisers that include SPF and sunscreen with insect repellent. It won’t, however, include cosmetics that have SPF. The ATO accepts any product with an ARTG ID and an AUST L number of the label as sunscreen rather than a cosmetic.
And some myth busting…
You might have heard that you can claim back your study laptop on tax. Unless what you study relates directly to your job, builds on specific skills or knowledge you use at work, and is likely to result in an increase of income, self-education expenses such as laptops are not tax deductible!
The ATO has put together some of the common tax myths here.
Need help with your tax?
When it comes time to lodge your tax return, you might be eligible to get free assistance with the Tax Help Program!
If you earn below $60,000 and have simple tax affairs, you are most likely eligible. See here to check your eligibility and find your nearest Tax Help Centre. Come tax time, Advocacy & Welfare is a registered Tax Help centre. This means you can make an appointment for assistance lodging your tax return, or non-lodgment advice.
If you are having financial troubles, get in touch with us! We provide a range of financial assistance and can discuss with you some options to suit your circumstances.
You’re never alone at UNE.