Five Most Overlooked Tax Deductions You Should be Claiming from the ATO

The financial year has just closed and this is perhaps the right time to look back to the past financial year and check if you might have left ATO some cash. There are some obvious tax deduction claims that you can go for straightaway but there are others that are often overlooked and which can amount to quite a tidy sum. Get your hard earned money back into your pocket with these five most commonly overlooked tax deductions.

Cost of managing your tax affairs

People go after all kinds of tax deductions but forget to file for the most obvious expense of all: the cost of managing your tax affairs. It is tax deductible. You are allowed to claim a tax deduction for the cost that you have incurred in filing your tax returns and managing the various facets of your tax affairs. These include the costs associated with preparing and lodging your tax returns and the business activity statements (BAS), cost of attending the tax preparation courses and the cost of purchasing the tax reference materials.

If you bought software for preparing and lodging your tax returns, you can also claim a deduction for this expense but remember to apportion the expenses if you are also putting the software to other non-tax-related uses.

Internet, home phone and mobile phone expenses

If you are using your home phone or mobile phone to make work-related calls, you can also claim tax deductions for these expenses. You have to apportion the segment of use that is work-related. You can’t claim a tax deduction for the entire use. Only the portion that is used on work-related calls is claimable.

When going for these deductions, you need to work out the percentage of calls that are actually work-related. For claims of more than $50, substantiation is necessary and you therefore need to keep at least four weeks of records for the income year. The records can be in various forms such as phone bills, electronic records or even the diary entries.

Follow the same approach when it comes to claiming your home internet costs. If you normally carry some work home and use an internet connection that is in your name, you can claim the portion of work-related internet expenses as a tax deduction.

Home office expenses

Do you work from home either on a full time or part time basis? You can claim the expenses incurred as deductions. These can cover everything from the recurring bills such as phone, internet and electricity as well as fixed costs such as the cost of furniture, computers, or home office equipment.

If you are an employee and do some of your work from home, you cannot claim costs such as rent, mortgage, the home insurance premiums and council rates. However, if you work full time from home, you can go after these deductions.

Travel and vehicle expenses

Are you using your personal car for work-related travel such as shuttling between various work stations? You can claim the travel expenses incurred along with any other travel-related expenses. However, there is a huge caveat here: you cannot claim deductions on expenses incurred for your daily commute or emergency commute between your home and workplace. Keep good records as you may also be required to substantiate some of your travel-related deduction claims.

Laundry, clothing and dry-cleaning expenses

According to the ATO, you can claim tax deductions for the expenses incurred in buying or cleaning work clothing. This means that this deduction is not applicable on the normal clothing that you wear to the workplace. For the expenses to be eligible for a tax deduction, the clothing must fall under any of the following categories:-

  • The clothing must be occupation-specific
  • Work forms; must be distinctive
  • Protective clothing; must be unique
  • Cost of cleaning the work clothing

If your employer provided you with an allowance for the purchase, cleaning or dry cleaning of your work clothing, make sure you indicate this in your tax returns. When claiming your deductions, you will also need to provide written evidence for all the work clothing costs incurred.

Need help with making the most of the tax deductions that you may be eligible for? Contact an accountant Melbourne today to help you scrap it all. Don’t leave your hard-earned money on the table.

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