EOFY Essentials

No one wants to pay more tax than they need to or face unnecessary risks. We’ve compiled a list of things you should consider at tax time.

Donate

If you are going to donate to a tax deductible charity, now is the time.

 

Work-related deductions

You can claim a deduction for work expenses you have incurred that have not been paid by your employer.

NB: It needs is a legitimate work expense to able to be claimed. Eg, you cannot claim the cost of dry cleaning the clothes you wear to work unless it is:

  • protective clothing,
  • a uniform required by the business, or
  • occupation specific clothing (like the checked pants some chefs wear).

Items like laptop bags have been in the news lately because some handbags can be used to carry laptops. This does not mean that your Gucci bag is suddenly deductible. See our ‘Deductions‘ post for more information.

Home Office Expenses

If you work from home, you may be able to claim a proportion of items such as phone expenses, running costs for your home, and equipment.

Beware: If your home is a place of business and you are entitled to claim a deduction for interest expenses or rent, then this will generally impact on your ability to claim the full main residence exemption from CGT when you sell the home.

Earning extra cash from AirBNB style services

You must declare any income you receive through AirBNB and similar services, the same as you would any other residential rental property arrangement.

NB: You can also claim proportional tax deductions for expenses associated to the rental such as:

  • Home loan interest
  • Professional cleaning
  • Council rates
  • Insurance.

Beware: This type of activity can restrict your ability to claim the CGT main residence exemption when you sell the property if it is or has been your home.

Uber

If you drive for Uber or a similar service, then:

  • The income you earn needs to be declared on your income tax return, and
  • You need to be registered for GST.

You can claim expenses for your car that relate to transporting passengers (relative to the kilometres travelled with passengers).

Danger Zones

Expense claims that are high on the Australian Taxation Office (ATO) hit list include:

  • Travel expenses: You must have incurred the expense in order to claim for it.  Problems arise when you receive an allowance for travel but don’t not spend it (eg stay with family or friends instead). While the ATO publishes some reasonable rates each year for food and accommodation expenses, these only provide limited relief from the full record keeping rules. You cannot claim a deduction for the ATO reasonable rate amount if you spent less than this on food and accommodation.
  • Self-education expenses. Any study you claim as self-education must be connected to the income you are currently earning (either to maintain or improve your specific skills or knowledge) or is likely to result in increased income from existing income earning activities. Merely doing a course while working does not make the course deductible. Be careful of excessive claims for travel overseas and luxury courses.

You can no longer claim

 If you are a property investor, you can generally no longer claim the cost of travelling to and from your residential investment property.