As a wage earner whether that be full time, part-time or casual if you pay for items or bills that help you to earn your income, they may be tax deductible and to claim these you must KEEP YOUR RECEIPTS I cannot stress this enough. Gone are the days where you can look at your bank statement to estimate your expenses, how do you know that purchase from Kmart was for work clothes and stationery without a receipt. You don’t know. With all the technology available it's not hard to take a snap of your receipt with the ATO app or other apps available so you have a record of it at tax time. You do not want to be that person that gets audited and cannot supply proof of purchase. You will need to keep these for receipts for 5 years.
When it comes to claiming deductions think of it logically. What did you buy or use for the work that you paid for with your own money?
Work Clothes
Do you need to pay for your own uniforms, protective clothing (hi-vis tops, jackets, drill cotton work pants/shorts, sunnies, hats) and protective shoes you can claim this and laundry expenses too? You CANNOT claim ‘everyday’ or office clothes, like black pants, jackets, shirts, skirts, t-shirts even if you have been told you have to wear them.
Car Expenses
Is your boss making you use your own car to drive to various work sites, if so, keep a diary and claim the km, this is a great deduction as you can claim up to 5000km @ 72c = $3600 but you must have proof of your km’s. Sales people & Managers often use their own car and should get an allowance, this can add up to huge deductions, like depreciation on the car, fuel, rego, repairs & insurance. A LOG BOOK MUST BE KEPT (this is not negotiable as the ATO may ask to see it, trust me this happens) for three months, this is valid for 5 years, or until your work situation changes or you buy a new car. Keep all your receipts and log them in a spreadsheet ready for EOFY.
Study and Education
Are you studying to increase your knowledge in your current job or to advance in your position in the workplace? This is the tax a deductible expense, as are your books, stationery, studying from home, and travel to the place of study. (Keep track of km’s)
Travel expenses and meals
This is always a debatable subject. If you have legitimately travelled for work to attend conferences or to work you can claim your accommodation, food, drink and travel costs. (Airfares, uber, taxis, km’s if using own car) if your employer has not paid for all your expenses. keep your receipts for your out-of-pocket expenses, please be aware you can only claim daily travel rates if you have been paid a travel allowance and kept a diary of your travel. Your travel must be for your current job and not secure a new one. If your travel is also for leisure and you have extended your stay you will need to apportion your costs.
Working from home
You must actually be working from home and not just reading emails or resource books etc. The current shortcut rate during COVID is 80 cents per hour of work time until 30 June 2021. This includes all your expenses like phone, internet, depreciation on furniture etc. Keep a track of your work hours.
If you would like to claim actual costs, like internet, electricity, home office equipment etc. you must keep a record of this that only relates to your actual workspace/office in your home for eg... 20m2 compared to 200m2 and the hours of use. You will need to keep a record of these costs.
Superannuation Deductions
You don’t have to salary sacrifice superannuation anymore out of your wages, you can choose to make a deductible contribution at any time of the year but make sure you don’t go over the $25,000 annual cap as you will be penalised by the ATO. The annual cap includes your employee super of 9.5%. Contact your super fund to check your contribution balance for the year to work out how much extra you can contribute, make sure any payment is done by 20 June just to be sure it is processed in time by the superfund or you will miss out.
If you have not made any extra contributions since 2018/2019 FY now is the time. You can add this to your 2021 super contributions, for e.g., if your total contributions for 2019 was $10,000 (incl. SGC 9.5%) you have an extra $15,000 you can contribute in the 2021 tax year, the same applies to any unused contributions in the 2020 FY you can use this to pay more in the 2021 year. For more information contact your financial planner or your super fund, the information on super contributions is also available in your MyGov account.
There is also the First Home Super Saver Scheme (FHSS) available for first home buyers. These contributions are tax-deductible. You will need to speak to a financial planner or your super fund for more information.
Donations
Think of those less fortunate than you and give back to the community. Many not-for-profit organisation and charities are registered gift recipients, meaning it is tax-deductible. You can check this on the ATO website under their ABN.
Raffle tickets, buying an item like a pin, badge or stationery are not a donation, GoFundMe is not a charity & overseas donation - unless it is going through an Australian fund first. Make sure you check before you donate if you would like your contributions to be deductible.
These are just a few of the deductions above you can claim that is a little more complicated and require more evidence than a receipt.
There are many other deductions that may relate to your line of work, check out our list below.
List of Deductions
o Car expenses - there are 2 methods. Cents per km @ 72 cents or logbook method...
o Uniforms – protective clothing, work-specific uniforms, registered TM uniforms.
o Travel – for work includes, working away for a short period or travelling for conferences, seminars, training.
o Study and Education – must be related to the current job and not a new vocation.
o Professional Development – these are the ongoing skills you need to do your job
o Home Office Exp – this also includes studying from home
o Subscriptions, Memberships, License Fees – to an associated group or monthly subscription for e.g. TRBWA, AHPRA, NTAA, TPB, EL, ET, Microsoft, Google, Adobe, the list goes on but must be work-related.
o Tools of the trade – Tools for tradies, mechanics tools, draft person tools, artists equipment, medical tools, chef or butcher's knives & tools, salon scissors, hairdryers, straightener, bakers' tools etc...
Equipment & Tools $300 and over must be depreciated and cannot be written off in that same year.
o Union Fees
o Resources – teachers in particular purchase a lot of these, books, craft items and learning materials for their students. Books & manuals to assist you in your job e.g., accountants, engineers, builders etc…
o Stationery & Printing - if you work from home & print documents for work or need to buy your own supplies.
o Income protection – This is deductible if paid outside of your super fund.
o Mobile phone – must apportion your private use, these are little computers now and used for emails, rosters, on-call, messaging, research etc.
o Electronic Equipment – Laptops, tablets, PC, printers, keyboards etc... You will need to apportion your private use and if the cost is over $300 this must be depreciated over its lifespan.
o Computer consumables - cables, USB, mouse etc...
o Donations – to Charities, they must be a registered gift recipient.
o Interest expenses – for purchase of shares or managed funds.
o Accounting Fees – for tax preparation & management of tax affairs.
o ATO interest – charges for late payments
o Superannuation deductions – personal super contributions, this does not include employer contributions as they are not deductible to the employee.
o Other deductions – these are available when they very work specific
the ATO also has more detailed explanations on their website below
https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim
This is where a good, qualified accountant should be able to help you and advise you correctly of what is tax-deductible and a typical expense within your industry.
You can also get advice on your budget, how to save money, savings on your mortgage, average car loan interest rates, average insurance fees, paying off your credit card, debt consolidation, planning for your future, starting a business and much more.