Are you up to date and aware of what you can and can’t claim on your tax return this year? Brushing up on the three rules of work-related deductions can make tax time a lot easier.

In order to be able to claim a deduction for a work-related expense on your tax return, you must meet the following golden rules of the Australian Taxation Office (ATO).

1. The money must have been spent by you and you were not reimbursed by your employer for it.
2. The expenses must directly relate to earning your income.
3. There must be a record to prove the expense (such as a receipt)

These need to be claimed in the Work-related expense section of your tax return.

If the expense was for both work and private purposes, you only claim a deduction for what was the work-related use. You cannot claim a deduction if your employer pays for or reimburses you for any of these costs.

These work-related expenses may include:

• Motor vehicle expenses
• Travel expenses
• Clothing, laundry and dry-cleaning expenses
• Self-education expenses

If the ATO believes that your employer may reimburse you for your expenses they may ask your employer directly.

You may be able to claim other work-related deductions for expenses you incur in the course of earning your income. These are claimable in your tax return as an ‘Other work-related expense’.

Common claims in this section of the tax return include:

• Working from home expenses
• COVID-19 test expenses
• Phone, data and internet expenses
• Tools, equipment and other assets
• Union fees, subscriptions to associations and bargaining agents’ fees

When it comes to working from home expenses, you need to be careful of what you claim. To claim your working from home expenses you must:

• be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls
• incur additional expenses as a result of working from home.

You can claim a deduction for the additional running expenses you incur as a result of working from home.

Running expenses are expenses that relate to the use of facilities within your home and include:

• electricity expenses for heating or cooling and lighting
• the decline in value of office furniture and furnishings as well other items used for work – for example, a laptop
• internet expenses
• phone expenses.

You can’t claim a deduction for the following expenses if you’re an employee working at home. These include

• coffee, tea, milk and other general household items, even if your employer may provide these at work
• costs that relate to your children’s education such as equipment you buy – for example, iPads and desks, subscriptions for online learning
• items your employer provides – for example, a laptop or a phone
• any items where your employer pays for or reimburses you for the expense.

If your employer pays you an allowance to cover expenses, you can claim a deduction for the expense. However, you must include the allowance as income in your tax return.

You may also be able to claim a deduction for other expenses you incur that don’t relate to your work or income-producing activities. These are claimable in your tax return at the specific expense category (where available) or as an ‘Other deduction’.

Common claims in this section include expenses, such as

• Cost of managing tax affairs
• Gifts and donations
• Interest, dividend and other investment income deductions
• Income protection insurance

If you require assistance with ensuring that your individual income tax return is correctly lodged, a registered tax agent should be consulted (such as us). We’re equipped with the knowledge and tools to help you through this process.

In Australia, any income earned by a job may be considered taxable income. Those who receive their income via the sharing economy are no exception to the rule.

In fact, further complications can result from incorrect understandings of how the income tax and goods & services tax may apply to those individuals. ‘

The sharing economy is a socio-economic system built around sharing resources, often through a digital platform like a website or an app that others can purchase the right to use for a fee.

Popular sharing economy services and activities that could be subject to income tax include

• Being a Driver for popular ride-sharing/ride-sourcing services and obtaining fares for those services
• Renting out a room, whole house or a unit on a short-term basis
• Sharing assets (such as cars, parking spaces, storage space or personal belongings) through platforms such as Camplify, Car Next Door, Spacer, Toolmates or Quipmo.
• Creative or professional services provided by individuals through online platforms to fill a need of others (also known as the gig economy)

You need to remember some things about the income and goods & services tax for these popular sharing economy services, including:

Ride-Sourcing/Ride-Sharing

If you’ve ever caught an Uber or gotten a Lyft, you’ve been on the passenger side of ride-sourcing. The income received from ride-sourcing is subject to goods and services tax (GST) and income tax is applied to it. All drivers on ride-sourcing platforms in Australia must have an Australian business number and be registered for GST.

GST requires:

• An ABN
• GST is to be registered from the day you start, regardless of how much you earn.
• GST is to be paid on the total fare.
• Business activity statements (BAS) to be lodged monthly or quarterly.
• To know how to issue a tax invoice (any fares over 82.50 must be provided if asked).

Income tax needs to:

• Include the income you earn in your income tax return
• Only claim deductions related to transporting passengers for a fare, including apportioning expenses limited to the time you are providing a ride-sourcing service
• Keep records of all your expenses and income.

Renting out all or part of your home

Renting out all or part of your residential house or unit through a digital platform can be an easy way to supplement your income, especially if you aren’t using the property at that time. If you do this, you:

• Need to keep records of all income earned and declare it in your income tax return
• Need to keep records of expenses you can claim as deductions
• Do not need to pay GST on the amount of residential rent you earn.

Sharing Assets (Excluding Accommodation)

Assets that can be shared through a platform include personal assets (e.g. bikes, caravans), storage or business spaces (e.g. car parking spaces) or personal belongings like tools, equipment and clothes.

When renting out or hiring these (share) assets that you own or lease through a digital platform, you:

• Need to declare all income you receive in your income tax return
• Are entitled to claim certain expenses as income tax deductions
• Need to keep records of the income you earn and of the costs you can claim as deductions

Providing Services

Providing time, labour or skills (services) through a digital platform for a fee requires you to report income in your tax return. Deductions for expenses directly related to earning this income can be claimed, and records must be kept to support these claims.

The following services that can be provided are considered to incur assessable income that needs to be reported in your tax return:

• Delivering goods
• Performing tasks and activities
• Providing professional services

Those who fail to declare their income from their sharing economy side hustle may incur penalties in the form of interest on their tax bills or potential criminal charges.

You must ensure your tax return is correctly lodged and all income is declared if you are a gig economy worker. If navigating your tax return feels daunting, consider contacting us for assistance.

There’s a new normal towards how Australians are approaching their work, with remote working now a more viable option for businesses and their employees, and it’s affecting the way that Australians now make claims for tax.

With many businesses affected by city-wide lockdowns during parts of the 2020-21 financial year, and some whose employees preferring to remain as work-from-home or remote workers after theirs had ended, it’s more important than ever for work tax deductions to be correctly claimed and the process duly followed.

Where once the expenses and claims that needed to be made during tax return season could be more clearly defined in terms of business or pleasure, work-related expenses or personal expenditure, remote working and work-from-home employees need to keep careful records of what they can and cannot claim as “home office expenses”.

To simplify the process of claiming these expenses, the ATO introduced a “shortcut method” applicable to the 2020-21 financial year as a result of the impact COVID-19 has had. This method is only applicable from 1 March 2020 through 30 June 2021. Depending on an individual’s circumstances, it may be a better alternative to employ when claiming home office expenses than the fixed rate method or actual cost method.

Essentially, individuals can claim a fixed rate of $0.80 per hour worked from home, with the aforementioned shortcut method covering expenses such as phone, internet, depreciation on furniture & equipment. No other expenses can be claimed for working from home if this shortcut method is employed.

To use this method to their benefit when claiming home office deductions, individuals must keep a diligent record of the actual hours worked at home. This is a simpler process than claiming on the actual expenses incurred. Claiming on the actual expenses incurred requires individuals to comply with the necessary and more complex record-keeping requirements outlined by the ATO.

It is important that Australians are aware of their entitlements and tax deductions when working from home/remotely. Speak with us to ensure that you are in compliance with your tax return obligations when claiming.

In Australia any income earned by a job may be considered to be taxable income. Those who receive their income via the sharing economy are no exception to the rule. In fact, there can be further complications that result from incorrect understandings of how the income tax and goods & services tax  may apply to those individuals.

The sharing economy is a socio-economic system built around sharing resources, often through a digital platform like a website or an app that others can purchase the right to use for a fee.

Popular sharing economy services and activities that could be subject to income tax include

• Being a Driver for popular ride-sharing/ride-sourcing services and obtaining fares for those services
• Renting out a room, whole house or a unit on a short term basis
• Sharing assets (such as cars, parking spaces, storage space or personal belongings) through platforms such as Camplify, Car Next Door, Spacer, Toolmates or Quipmo.
• Creative or professional services provided by individuals through online platforms to fill a need of others (also known as the gig economy)

Here are some of the things you need to bear in mind about the income and goods & services tax for these popular sharing economy services.

Ride-Sourcing/Ride-Sharing

If you’ve ever caught an Uber or gotten a Lyft, you’ve been on the passenger side of ride-sourcing. The income received from ride-sourcing is subject to goods and services tax (GST) and income tax is applied to it. All drivers on ride-sourcing platforms in Australia must have an Australian business number and be registered for GST.

GST requires:

• An ABN
• GST to be registered from the day that you start, regardless of how much you earn.
• GST to be paid on the full fare.
• Business activity statements (BAS) to be lodged monthly or quarterly.
• To know how to issue a tax invoice (any fares over 82.50 must be provided one if asked).

Income tax needs to:

• Include the income you earn in your income tax return
• Only claim deductions related to transporting passengers for a fare, including apportioning expenses limited to the time you are providing a ride-sourcing service
• Keep records of all your expenses and income.

Renting out all or part of your home

Renting out all or part of your residential house or unit through a digital platform can be an easy way to supplement your income, especially if you aren’t using the property at that particular time. If you do this, you:

• Need to keep records of all income earned and declare it in your income tax return
• Need to keep records of expenses you can claim as deductions
• Do not need to pay GST on amounts of residential rent you earn.

Sharing Assets (Excluding Accommodation)

Assets that can be shared through a platform can include personal assets (e.g. bikes, caravans), storage or business spaces (e.g car parking spaces) or personal belongings like tools, equipment and clothes.

When renting out or hiring these (share) assets that you own or lease through a digital platform, you:

• Need to declare all income you receive in your income tax return
• Are entitled to claim certain expenses as income tax deductions
• Need to keep records of the income you earn and of the expenses you can claim as deductions

Providing Services

Providing time, labour or skills (services) through a digital platform for a fee requires you to report income in your tax return. Deductions for expenses directly related to earning this income can be claimed, and records need to be kept to support these claims.

The following services that can be provided are considered to incur assessable income that needs to be reported in your tax return:

• Delivering goods
• Performing tasks and activities
• Providing professional services

If the thought of trying to navigate your way through your tax return is a little daunting, consider speaking to us for assistance.