With tax time in full swing, millions of Australians are currently in the process of preparing their tax return. But the question is, are you claiming everything you’re entitled to?
The general rule is that if you incur an expense as part of your job, aren’t reimbursed by your employer and can prove you spent the money (with a receipt or invoice, for instance), you can make a claim.
One of the biggest groups in the Australian workforce can be broadly categorised as professional workers – lawyers, accountants, estate agents, marketers, and many more.
Also read: 5 ways to supersize your tax refund
If you fall into that category, take a look at our comprehensive list of the things you may be able to claim (plus a few things you can’t claim):
The cost of a handbag or briefcase is claimable if you need it for work purposes, such as carrying paperwork or a laptop. Be careful though; the ATO may query whether a Gucci handbag is really required as part of your job!
You can’t claim the cost of ‘conventional’ clothing worn at work. That rules out suits, business shirts and other businesswear, unfortunately. Clothing specific to the legal profession, such as the robes and wigs worn in court by barristers, are however deductible.
Annual practicing certificates for professionals such as lawyers can be claimed.
Spotlight on: Work from home claims
Working from home expenses are the big deductible item this year, with about 35% of all Australians working full-time from home over the past few months.
To simplify claims, the ATO has introduced a temporary ‘shortcut method’ of calculating additional running expenses allowing those working from home to claim a rate of 80 cents per work hour during the coronavirus crisis. This applies from 1 March 2020 until at least 30 September 2020.
Unfortunately, if you use the 80 cents per hour method, you can make no other claims in relation to working from home. So, items like mobile phone, internet usage and the cost of office furniture and technology are all included in the 80 cent rate. For most taxpayers, that makes the 80 cent rate very disadvantageous to use.
A far better option is to use the existing 52 cent flat rate for working from home claims. This rate doesn’t include mobile phone costs, home internet or depreciation of electronic devices, all of which can be claimed separately.
With many professionals making substantial use of their mobiles and home internet during this time, this method usually produces a substantially bigger deduction.
Better still, you can claim the work-related portion of your actual working from home expenses. Amongst the items you can claim are:
Heating, cooling and lighting bills
Costs of cleaning your home working area (including cleaning products or payment for a domestic cleaner if required)
Depreciation of home office furniture and fittings
Depreciation of office equipment and computers
Costs of repairing home office equipment, furniture and furnishings
Small capital items such as furniture and computer equipment costing less than $300 can be written off in full immediately (they don’t need to be depreciated)
Computer consumables (like printer ink) and stationery
Phone (mobile and/or landline) and internet expenses
Typical claims can be up to 4 times larger if you claim ‘actual’ costs versus the 80 cent rate and 2 times larger if you use the 52 cent rate rather than the 80 cent rate method, so it pays to spend time working out the best method for you.
If you travel as part of your work, you can claim the costs of your work-related journeys such as the cost of visiting clients or suppliers. If you use your own car, either claim 68 cents per kilometre up to a maximum 5,000 kms (72 cents per kilometre from 1 July 2020 onwards) or keep a logbook and claim your actual expenses. You can also claim for parking, tolls and public transport if you don’t use your car.
The cost of entertaining clients unfortunately isn’t tax deductible, so business lunches and rounds of golf, for instance, are excluded.
Sadly, you can’t claim the cost of club fees (such as the local golf or tennis club) even if you use your membership as a means of networking and meeting clients.
Your professional indemnity insurance costs are claimable.
If you’re a member of a professional or trade association as part of your work, you can claim a deduction for the amount you pay in subscriptions.
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