Save
The 7 tax deductions you’re getting wrong
With a few months until the end of the financial year, now is the perfect time to begin thinking about your return and where you might be able to save.
The 7 tax deductions you’re getting wrong
With a few months until the end of the financial year, now is the perfect time to begin thinking about your return and where you might be able to save.
While most Australians complete a tax return every financial year, they’re still finding it difficult to get right, according to Income Tax Professionals (ITP) regional director Scott Bailey.
“There’s been a couple of studies done over the last 12 to 18 months comparing people who have done their own tax return and then had them checked by an accountant and about 60 per cent contained errors,” Mr Bailey told Nestegg.
Mr Bailey said there are several common misunderstandings about what you can and can’t claim at tax time.
1. Travelling to and from work
Travelling to work every day is generally non-deductible, but there is an exemption in certain cases.
“If you have to carry bulky items to and from work, then that might make their travel claimable,” Mr Bailey said.
“However, some people might just be carrying sensitive documents which aren’t necessarily classified as bulky. In the case of a labourer, if an employer has a place on-site for them to keep their tools, the ATO can disallow their car travel for carrying tools.”
2. Work clothing
Many people are confused about what the tax office considers work attire.
“Generally, you need to have the logo of the company on the uniform that you have and you generally can’t claim any type of conventional clothing,” Mr Bailey said.
“If you work for a clothing retailer for instance and the employer requires you wear the clothes that are in display in the shop, that does not constitute a uniform if doesn’t have the logo or name of the company on it, and if it’s not a specific uniform.”
3. Shoes
Likewise, types of shoes must be specifically mandated by an employer or occupation to be tax-deductible, according to Mr Bailey.
“In order to claim shoes, they must be part of a full uniform that the employer has a specific policy on, like steel-capped boots for labourers for example.”
4. Self-education
While many employees might believe an educational course will help their career opportunities, it must fit certain criteria to be acceptable to the tax office.
“Any self-education claim must have started after you got into related employment or you won’t be able to claim that course because it started too early to say it was related to the job,” Mr Bailey said.
5. Travel expenses
It may be tempting to claim a day’s expenses incurred outside of the office, but it must be able to be legitimately classified as travel.
“When you want to claim travel expenses such as meals, that’s generally interstate travel or travel to country areas only,” Mr Bailey said.
“People can claim work trip travel expenses such as airfares and trains, but not if your employer has reimbursed you.”
6. Charitable donations
Donations to charitable causes may be one of the most commonly advertised tax deduction, but there is a trap to be wary of.
“Whenever you give to charity, and it might be a raffle, or receive something in return, generally none of those are treated as charitable donations,” Mr Bailey said.
“That being said, sometimes charities will break down the donation. For example, a bandaged bear purchase [must specify] the dollar figure for the bear and how much constitutes an actual donation and that will be recorded on the receipt,” he added.
7. Working from home
If your workload follows you home from the office, you may be eligible to claim it, but you will probably have to provide proof.
“We’ve got a lot of school teachers who mark reports and homework at home, for example, [and they] can generally claim a few cents per hour if they keep a four-week diary every year,” Mr Bailey said.
If you are still confused around specific deductions or have any tax queries in general, you should seek professional tax advice.
RELATED ARTICLES
Tax saving
Navigating tax laws for capital gains in 2023
The landscape of Australian tax laws surrounding capital gains is ever-changing, with 2023 being no exception. Read more
Tax saving
What you need to know about the tax implications of crypto
One million Aussies are now invested in crypto, but many have not thought about how these investments will affect them at tax time. Read more
Tax saving
Welfare overhaul could give recipients a leg-up
Australia’s Centrelink recipients who’ve been doing it tough are in for a potentially easier time if the federal government pursues ambitious reforms that could provide sturdier safety nets. Read more
Tax saving
Students should think twice before tapping into their super
Former students might want to think carefully before they look to take advantage of the federal government’s biggest first home buyer incentive. Read more
Tax saving
Advocates call for an end to tax cuts
Social services sector advocates have warned that further tax cuts may make solving Australia’s biggest challenges much harder. Read more
Tax saving
ATO and AUSTRAC may gain new phone-tapping powers
A proposed update to electronic surveillance legislation could see the ATO armed with new powers that would allow the agency to bug phones and intercept online communications. Read more
Tax saving
Over 2m Aussies asked the TPB for help during the last year
As the economy recovers, Australia’s tax regulator says it’s planning to put unregistered practitioners under the microscope. Read more
Tax saving
Will you pay higher taxes due to bracket creep?
Bracket creep will see Australians paying more tax on average, unless further cuts are introduced in the future. Read more
Tax saving
Navigating tax laws for capital gains in 2023
The landscape of Australian tax laws surrounding capital gains is ever-changing, with 2023 being no exception. Read more
Tax saving
What you need to know about the tax implications of crypto
One million Aussies are now invested in crypto, but many have not thought about how these investments will affect them at tax time. Read more
Tax saving
Welfare overhaul could give recipients a leg-up
Australia’s Centrelink recipients who’ve been doing it tough are in for a potentially easier time if the federal government pursues ambitious reforms that could provide sturdier safety nets. Read more
Tax saving
Students should think twice before tapping into their super
Former students might want to think carefully before they look to take advantage of the federal government’s biggest first home buyer incentive. Read more
Tax saving
Advocates call for an end to tax cuts
Social services sector advocates have warned that further tax cuts may make solving Australia’s biggest challenges much harder. Read more
Tax saving
ATO and AUSTRAC may gain new phone-tapping powers
A proposed update to electronic surveillance legislation could see the ATO armed with new powers that would allow the agency to bug phones and intercept online communications. Read more
Tax saving
Over 2m Aussies asked the TPB for help during the last year
As the economy recovers, Australia’s tax regulator says it’s planning to put unregistered practitioners under the microscope. Read more
Tax saving
Will you pay higher taxes due to bracket creep?
Bracket creep will see Australians paying more tax on average, unless further cuts are introduced in the future. Read more
More articles
OUR PLATFORMS AND BRANDS
- Accountants Daily
- Accounting Times
- Adviser Innovation
- Australian Aviation
- Broker Daily
- Cyber Daily
- Defence Connect
- Fintech Business
- HR Leader
- Independent Financial Adviser
- Investment Centre
- Investor Daily
- Lawyers Weekly
- Money Management
- Nestegg
- Property Buzz
- Real Estate Business
- Smart Property Investment
- SMSF Adviser
- Space Connect
- Super Review
- The Adviser
- Wellness Daily
- World of Aviation
EVENTS AND SUMMITS
- Accountants Daily 30 Under 30 Awards
- ACE25
- Adviser Innovation Summit
- Australian Accounting Awards
- Australian Aviation Awards
- Australian Broking Awards
- Australian Defence Industry Awards
- Australian Law Awards
- Australian Space Awards
- Australian Space Summit
- Better Business Summit & Awards
- Broker Daily Business Awards
- Corporate Counsel Summit & Awards
- Cyber Security Summit & Awards
- Defence Connect Budget Lunch
- Defence Connect DSR Summit
- Fund Manager of the Year Awards
- ifa Excellence Awards
- ifa Future Forum
- Investor Daily ESG Summit
- Lawyers Weekly 30 Under 30 Awards
- Lawyers Weekly Women in Law Forum
- New Broker Academy
- Partner of the Year Awards
- REB Awards
- Reinnovate
- SME Broker Bootcamp
- SMSF Adviser Technical Day
- Super Fund of the Year Awards
- Women in Finance Awards
- Women in Law Awards
- Accountants Daily Podcast Network
- Australian Aviation Podcast Network
- Broker Daily Podcast Network
- Defence Connect Podcast Network
- HR Leader Podcast Network
- REB Podcast Network
- Relative Return
- Space Connect Podcast
- The Adviser Podcast Network
- The ifa Show
- The Lawyers Weekly Show
- The Smart Property Investment Show
PODCASTS
LEARNING AND EDUCATION
MOMENTUM MARKETS NETWORK
LINKS
STAY CONNECTED
Make your nest egg grow. Register now for nestegg updates.