The end of the financial year is coming up next month (30 June), and you may be looking for ways in which you could make tax savings in this year’s tax return. This could be through tax deductions, expenses that you could make now for your work purposes or even with tax offsets introduced by the government. Whatever your tax situation, we’re equipped and ready to help you navigate the tricks and traps of income tax returns.

Upon completing a tax return, individuals are entitled to claim deductions for expenses that are directly related to their income. These can come in a variety of forms, but must usually be work-related to be claimable. 

There are three requirements individuals must meet to be able to claim a work-related deduction:

• the individual must have spent their money and not be reimbursed for it
• the expense must be related to their job and;
• there must be a record, like a receipt, to be able to prove it.

If an expense was for work and private purposes, individuals can claim a deduction for the work-related portion.

Here are some common types of deductible expenses taxpayers like employees and rental property owners can claim this financial year:

Home Office Expenses

The past year may have seen you working more from home or remotely than ever before, and setting up a home office may have incurred a number of additional expenses. Some of the expenses that you may be able to claim as tax deductions include

• Phone and internet expenses
• Computer consumables (such as printer paper and ink) and stationery
• Home office equipment (such as computers, phones, printers, furniture, etc). 

With home office equipment, you may be able to claim either:

• the full cost of the items (if less than $300 in value) or 
• The decline in value (also known as depreciation) for items over $300.

Unless you meet very specific requirements, you probably will not be able to claim for home expenses, such as mortgage interest, rent and rates, or the cost of general household items. 

If you plan to use the temporary ATO approved ‘shortcut method’ (80 cents per hour for all additional running expenses) to claim your deductions, you cannot claim any other expenses for working from home for that period. If you purchased a desk to use when working from home for example, you cannot claim a deduction for that separately as it is covered by the 80 cents per hour work rate. The deadline for this method of calculation is 30 June 2022 (unless it is extended). 

Clothing Expenses

Individuals can make a claim for work-related clothing expenses including compulsory, non-compulsory and registered uniforms, occupation-specific and protective clothing, and expenses associated with work-related clothing, such as dry cleaning, laundry and repair expenses.

Self-education Expenses

Individuals can prepay self-education items before the end of the income year, including:

–        course fees (not HECS-HELP fees), student union fees and tutorial fees

–        stationery and textbook purchases

Other Work-related Expenses

Individuals can prepay the following expenses before 1 July 2022:

–        union fees

–        seminars and conferences

–        subscriptions to trade, professional or business associations

–        subscriptions to magazines and newspapers

If you are looking for assistance in working out potential expenses that you could incur prior to the end of the financial year, have queries about your claims or just want to prepare for 30 June 2022, start a conversation with us now. We are tax planning professionals ready and willing to help. 

 

Tax return season is quickly approaching for individuals. You may need to begin thinking about the process sooner rather than later to ensure that you have everything ready for your accountant. If you’ve never had to complete a tax return before (and it’s your first time) or are still uncertain about what you need to do, this process can feel a bit like a Mount Everest you need to climb.

Putting it simply, if you are earning or will earn more than $20,542 this year, you will need to lodge a tax return. However, if you haven’t made that amount but your employer has taken tax out of your pay, you should lodge a return anyway to receive some (if not most) of that money back.

How much money you receive back from the tax return will be affected by how much income you have earned. Some debts (such as HECS or HELP) will begin to take money out of your return after reaching a certain income threshold level (currently set at $46,620).

A tax return is where you report all of your income earned over the past financial year. It should include ATO-reported income (which you generally won’t have to worry about as we have access to it automatically) such as salary or non-ATO reported income. This income may be income that has not been sent to the ATO and could include tips, any income you’ve earned while working under an ABN or payments from a family trust. You need to work out all of the income that you have earned and report it to remain compliant with the ATO.

In a tax return, you will also be entitled to make tax deductions on certain items if they apply to your situation. This means that you may receive a greater amount in your tax refund.

You will be entitled to tax deductions on items such as:

• Uniforms and protective clothing
• Certain travel expenses between workplaces, e.g. travel between sites (but not travel expenses from home to work)
• If an apprentice or trainee, if you have had to buy any of your tools or equipment out of pocket, you can claim them as a tax deduction (but cannot do so if your employer purchased them for you)
• Union fees
• Any donations that you have made
• Costs that may have been incurred in the process of educating yourself (e.g. course, seminars, training)

If you want to make sure that you understand precisely what you need to do to lodge your tax return, keep this in mind:

• If you earned money, you need to report it.
• If you can’t prove an expense, you can’t claim it.
• If you want to make extra sure that you’ve got it right, see a tax agent

For assistance during the lodgement of your tax return, you can seek advice from us. We’re here to help ensure you meet your tax obligations by reporting your income correctly for this financial year.

Employers who provide staff parking spaces may be affected by the rewrite of the car parking fringe benefits Taxation Ruling. A draft ruling TR 2019/D5 was released on 13 November 2019, a rewrite of TR 96/26.

The draft ruling states that from 1 April 2020, the ATO proposes to treat a car park that offers all-day parking (meaning parking for at least six hours between 7 am and 7 pm) under the same rules as ‘commercial’ parking for fringe benefits tax (FBT) treatment even when the carpark’s fee structure discourages all-day parking with higher fees.

Generally, a carpark will be considered a ‘commercial parking facility’ when it is provided to make a profit. This includes car parks in shopping centres, airports and entertainment venues. A key change that the new draft ruling is that there will no longer be a general exclusion for shopping centre car parks that provide free short-term parking and higher rates for all-day parking. Employers therefore need to be aware of whether their staff parking spaces are considered to be commercial for FBT obligations.

The draft ruling proposes that FBT can generally apply to car parking provided by employers to staff where:

• A commercial parking facility such as a shopping centre car park is within a one-kilometre radius of the workplace.
• The car park charges a higher amount than the car parking threshold for all-day parking to the public. The threshold is currently $8.95 for the 2019/20 FBT year.
• The car park provides parking in the ordinary course of business and the facility is commercial (run to make a profit).

Small businesses where the employer’s turnover is less than $10m will still be eligible for the existing exemption from car parking FBT.