The following outlines common types of deductible expenses claimed by individual taxpayers, such as employees and rental property owners, plus some strategies that can be adopted to increase deductions for the 2012/2013 income year.
Individual Tax Return Checklist
A handy checklist of information pertinent to you return
Common Work Related Claims Made by Individuals
Self Education Expenses
Consider pre-paying the following self education items before the end of the year:
Also bring forward purchases of stationery and text books (i.e. those that are not required to be depreciated)
Other work-related expenses
We will need you to bring some information to assist us in preparing you income tax return. Please check the following and bring along payment summaries, statements, accounts, receipts, etc. To help us prepare the return.
Payment summaries for salary and wages
Lump sum and termination payments;
Government pensions and allowances
Other pensions and or annuities
Allowances (e.g. entertainment, car, tools)
Interest, rent and dividends
Distributions from partnerships, trusts
Details of any assets sold that were either used for income earning purposes or which may be caught by capital gains tax.
Deductions in addition to those mentioned above
Award transport claims
Bridge/road tolls (travelling on business)
Conventions, conferences and seminars
Depreciation of library, tools, business equipment, incl. portion of home computer
Gifts or donations
Home office running expenses
A log of hours spent working from home for work purposes
Interest and dividends deductions
Ongoing management fees
Interest on borrowings to acquire shares
Advice relating to changing investments (but not setting them up)
Interest on loans to purchase equipment or income earning investments;
Motor vehicle expenses (business) log book method required plus proof of ownership of the vehicle.
Overtime meal allowances
Rental property expenses – including:
PAYG summary or Centrelink certificate for you and/or your partner
Private health fund tax statement, whether you have claimed the rebate or not. Important: we cannot lodge your return without the statement
Log books for your motor vehicle, telephones and home office hours
Bank interest and dividend advice forms. Managed fund tax statements.
Receipts for work related deductions including income protection insurance
Rental property information (i.e. Receipts and mortgage statements)
Rental property management statement or your own records
The Taxation Office will be conducting more work related audits this year and the following information will give you some idea of where that focus may be.
Once again they are putting added effort into reviewing claims for work related expenses made in returns that are lodged late.(more reason for you to be on time with your work)
They will also focus on the following :
Every worker in the building trade will be under scrutiny this year so please make sure you have receipts for all of your claims.
The other areas that will be closely reviewed will be home internet, mobile phones, motor vehicle expenses (don’t forget to keep log books) More scrutiny on self education expenses especially where students commence work whilst doing their course.
Log Book Method
Log books are required for at least a 13 week period in the first year, and then every five years or every new car.
Log books are required for additional cars acquired for which the log book method is used.
Odometer records are required for the start and end of the period you owned or leased the car.
Written evidence of all other expenses is required. E.g. Receipts
Remember that you must provide your car log book and documents proving your ownership of the vehicle with your 2012-2013 tax return if you use the log book method for calculating work related car expenses this year.
You are unable to claim for a vehicle you do not own
Cents per Kilometre Method
(if business use is 5,000km or less your claim is limited to 5,000km)
The claim is based on a set rate for each business kilometre.
Substantiation records are required.
The number of business kilometres is based on reasonable estimate, but a log book is preferred.
12% of original value method
(Where business use exceeds 5,000km)
The claim for car expenses is based on 12% of the original value.
The value of the car is subject to luxury car limits.
Substantiation records are not required.
The number of business kilometres based on reasonable estimation, but a log book is preferred.
One- third of actual car expenses method
(Where business use exceeds 5,000km)
The claim for car expenses is based on one third of each car expense.
Logbook records are not required.
Fuel and oil expenses must be substantiated by written evidence or receipts as well as all other expenses.
Before you claim car expenses, you need to ensure that the travel you are claim is work-related travel and is deductible.
You cannot claim the cost of normal trips between home and work as it is private and not deductible even if:
You do small tasks while travelling to and from work such as collecting mail.
You travel outside normal employment hour such as shift work.
You are required to be on call.
You live a long distance from your work place, or there is no public transport.
You need to ensure that there is a sufficient connection between these expenses and your work activities at the time the expenses were incurred.
You cannot claim a deduction for self-education expenses if the study is:
Other Work Related Expenses
Decline in Value
You can only claim a deduction for the decline in value of any assets costing more than $300 that you use in your work-related activities, however you can claim a 100% deduction for the cost of purchasing an item(s) which you acquire to use for your work-related activities, if the cost is $300 or less
You must apportion the amount of your claim where an asset has been used in part for private purposes or was not available for use during all of the financial year.
You must apportion expenses, such as mobile phone calls, home telephone calls and internet use between business and private use.
You need to keep either itemised accounts and/or a diary to support the basis of apportionment, you need to keep a record for representative period and a reasonable duration (generally four weeks) of the calls made and or time spent on the activity.
Home Office Expenses
You can only claim occupancy expenses (such as interest on mortgage or rent paid) where your home office is considered a place of business. Refer to Taxation Ruling TR93/30-Deductions for home office expenses for further information about the limited circumstances in which you may claim for occupancy expenses and how to calculate you claim – more information at www.ato.gov.au
Remember if your property was purchased after September 1985, it may become subject to Capital Gains Tax when you sell it
If you are claiming minor use for your home office, you can calculate your claim by using a fixed rate of 34 cents per hour. You need to keep a record for a representative period and reasonable duration (generally four weeks) of the time spent in your home office on employment activities
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