It can be easy to fall into old habits at tax time, but just doing what you’ve always done will not help you maximise your tax deductions. Be smarter and sharper every year so you can be sure that you’re claiming absolutely everything you’re entitled to and minimise your tax this EOFY.
Tax deductions reduce the taxable income that you have to pay tax on. When claiming a tax deduction, you need to ensure that you keep records that show you incurred the expense.
Store your records throughout the year with the ATO’s myDeductions tool or an application like Dext.
For individuals who work from home, you can claim tax deductions on a variety of home office expenses. These include phone and internet costs, computer consumables (like printer paper and ink), and home office equipment (like computers, phones, and printers).
General household items or home expenses, such as rent or mortgage interest, aren’t claimable.
Read our article on how to calculate work from home expenses.
While you generally can’t claim expenses for getting to and from your regular workplace, you may be eligible to claim tax deductions for vehicle and travel expenses if:
Find out more about the vehicle and travel expenses you can claim.
Occupation-specific clothing, protective clothing, and work uniforms specific to your job are tax-deductible. This includes any related cleaning costs. Note, conventional clothing or non-compulsory work uniforms generally aren’t deductible.
Learn more about the clothing, laundry, and dry-cleaning expenses you can claim.
If you’re engaged in work-related studies and have enrolled in an eligible course, you could claim a tax deduction. Self-education expenses, such as textbooks, stationery, computer expenses, and even accommodation and meals (if you’re required to stay away from home for the course) can also be deducted.
Find out how you can claim self-education expenses.
Specific occupations and industries may have work-related expenses that you can claim as tax deductions.
The ATO has prepared a list of occupations and industries as well as a summary of the deductions available for each.
Magazine subscriptions, safety goggles, protective sunglasses, overtime meals, union fees, and subscriptions to associations may all be potentially deductible expenses if incurred for work.
Note, your ability to claim these expenses is highly dependent on your work and individual circumstances. See the ATO’s deductibility test.
Donations to a ‘deductible gift recipient’ organisation can be claimed as tax deductions. However, note that not all donations are deductible; for example, most private donations such as Go Fund Me causes typically are not. Check the rules surrounding gifts and donations before claiming.
Craft ACT’s Craft + Design Canberra EOFY Fundraising Campaign 2023 is currently ongoing. These donations will be 100% tax deductible!
If you’ve received any form of investment income such as interest payments on your savings, dividends from your investments in shares, or rental payments from an investment property, you may be entitled to claim related expenses.
This may include interest charged on money borrowed to buy stocks or rental properties, and fees paid for investment advice. Remember, all relevant documents and receipts should be kept as proof for the Australian Tax Office (ATO) if asked.
Want some more information? The ATO has an article on interest, dividends and other investment income deductions.
Several rental property expenses often go unclaimed, i,e. bank fees, gardening and lawn mowing expenses, pest control fees, security patrol costs, secretarial and bookkeeping fees, and travel and car expenses related to rent collection etc.
However, with the ATO’s recent pledge to crack down on landlords, be sure to keep an accurate record of these claims and only claim what you can lawfully.
Fees paid to a tax agent for preparing and lodging your tax return are always deductible. You can also declare your travel costs in getting to and from these consultations.
Claim these deductions under section ‘D10 – Cost of Managing Tax Affairs.’
In case of a financial loss, consult with your financial advisor to discuss minimising the impact and offsetting the loss against other incomes. You’ll also need to document bad debts that have arisen to prove you’ve made a genuine attempt to recover them.
Learn more about deductions available for unrecoverable income.
Want to make some personal contributions? If the work test or the work test exemption criteria applies to you, it may be tax deductible.
Note, if you intend to claim a tax deduction for personal contributions, remember to submit a valid ‘Notice of intent’ within the prescribed time limits.
Find out more about the eligibility criteria and process for claiming deductions for personal super contributions.
This may be your final chance to take advantage of temporary full expensing (TFE) with the program ending 30 June 2023. TFE allows businesses to deduct the full cost of eligible depreciable assets in the year they are first used or installed ready for use.
Learn more about temporary full expensing.
Prepaying expenses like subscriptions, business travel expenses, leases, rent, and others can allow businesses to bring forward tax deductions, effectively increasing allowable deductions for the financial year in which they are paid.
Remember that if you claim them this year, you won’t be able to claim them next year, which may increase your tax bill in the following year.
Work out what you can claim with this.
Be sure to review your stock, writing off any damaged or obsolete items. This practice impacts the value of trading stock and can lead to tax deductions when opening stock exceeds closing stock.
Review the ATO’s trading stock rules.
Subject to their passage through parliament small businesses with less than $50 million aggregated annual turnover may be able to deduct $1.20 for every dollar spent on depreciating assets to support their digital adoption strategies and external training courses for employees, either in Australia or online by Registered Training Organisations (RTOs).
Learn more about these boosts and how you could benefit from them in your 2022/23 tax return.
Make sure that all the pre-filled data in your tax return is finalised before lodging to avoid the need for amendments or paying additional tax. This is usually completed by the end of July but can take until mid-August.
And above all, ensure your tax returns are lodged on time. For those lodging their own tax returns, your deadline will be 31 October 2022 while those using a registered tax agent will usually be afforded an extended due date.
Navigating through tax deductions may seem daunting, but it’s essential for small business owners and individuals to maximise their claimable expenses. Don’t hesitate to seek professional advice if needed, and remember that proper record-keeping is critical in substantiating your claims.
Source: Tailored Tax
Stay informed about crucial updates from the Fair Work Commission.
From wage increases to changes in parental leave and superannuation, understand how these upcoming changes will impact you before 1 July 2023.
As more employers transition to Single Touch Payroll (STP) Phase 2 reporting, the ATO has identified some common mistakes to be aware of.
From Employee Details to Pay Codes and more, get these sorted before EOFY.
The Australian Taxation Office (ATO) has announced its focus areas for this Tax Time.
Landlords, those working from home, and investors have moved to the top of the ATO hitlist with rental property deductions, work-related expenses, and CGT all being subject to extra scrutiny this financial year.
