Tax time, you either love or loathe it. For those who are in for a large tax refund going to see the Accountant is one of the most financially rewarding days of the year. Some however will be writing a cheque made payable to the Australian Taxation Office and those are the people who loathe doing their tax return.

Either way you should ensure that you are maximising your tax deductions to reduce any tax payable or increase the refund. The type of tax deduction claimable on your tax returns differs markedly depending on your employment.

The Australian Taxation Office budgets to refund to the public about $10 billion per year. To ensure that you receive your fair share of this amount you should follow the simple ground rules set out by the Australian Taxation Office.

  • The expense must be incurred between July 1, 2005 and June 30, 2006.
  • The amount must not have been reimbursed by your employer or by any other person.
  • You must have incurred the expense while earning your assessable income.
  • You must be able to substantiate or prove your claims for deductions with written evidence if the total is greater than $300 or be able to show how you worked out your claims if in excess of $300.
  • The $300 limit does not include claims for car, meal allowance, award transport allowances or travel allowance expenses.

Generally proving your deductions to the Australian Taxation Office means having written evidence. Some items such as cars, telephones and homes that are used for partly work and partly private are not fully deductible. An example is driving to or from work is considered private travel, but if you use your vehicle while at work for your employment or you use it to go directly from your first job to your second job then a tax deduction is possible.

Items of a capital nature - that is those which cost more than $300 - may need to be depreciated over time. It is also possible to claim home office costs. This is a percentage of your power, heating and cooling costs for using the home office. A lounge or dining room, which is considered multi-purpose, can not be claimed as home office.

To claim clothing it must be either protective or identified with a logo. Items such as jeans, shirts, suits and ties (without a logo) are not tax deductible as the Australian Taxation Office consider these can be worn outside of work hours.

Self-education can be claimed if the cost relates specifically to the income you currently earn.

Listed below are some of the basic tax deductions, which the Accountant will consider:

  • Union Fees
  • Clothing
  • Books
  • Tools of trade
  • Sun Protection
  • Income Protection
  • Work related travel
  • First Aid Cost (if you are the First Aid representative)
  • Home Office costs
  • Mobile Phone
  • Computer use for work
  • Subscriptions or Memberships
  • Laundry and Cleaning of work related clothing

In addition to claiming expenses incurred while earning assessable income, there are a number of additional expenses which can be considered. These include:

  • Accountant fee
  • Travel to the accountant
  • Donations
  • Child care costs (out of pocket expense for approved child care)
  • Family medical costs (where out of pocket medical expense is in excess of $1,500)

The above information is the sort of income tax advice given at R J Sanderson & Associates Pty Ltd on a regular basis.