Do you know the tax deductions and offsets for which you might be eligible?
The following tips may help you to legitimately reduce your tax liability in your 2016-17 return.
Claim work-related deductions
Typical work-related expenses include employment-related telephone, mobile phone, internet usage, computer repairs, union fees and professional subscriptions.
Note that the Australian Taxation Office (ATO) will again check claims made in real time. Claim only what you are legally entitled to and be sure to have all necessary receipts or credit card statements to support them.
Claim home office expenses
When part of your home has been set aside primarily or exclusively for the purpose of work, a home office deduction may be allowable. Typical home office costs include heating, cooling, lighting and even office equipment depreciation.
To claim the deduction, you must have kept a diary of the hours you worked at home for at least four weeks.
Claim self-education expenses
Self-education expenses can be claimed provided the study is directly related to either maintaining or improving current occupational skills or is likely to increase income from your current employment. If you obtain new qualifications in a different field through study, the expenses incurred are not tax deductible.
Typical self-education expenses include course fees, textbooks, stationery, student union fees and the depreciation of assets such as computers, tablets and printers.
Higher Education Loan Program (HELP) repayments are not deductible. You must also disallow $250 of self-education expenses, which can include non-deductible amounts such as childcare costs.
Claim depreciation
Immediate deductions can be claimed for assets that cost under $300 to the extent the asset is used to generate income. Including tools for tradespeople, calculators, briefcases, computer equipment.
Assets costing $300 or more that are used for an income producing purpose can be written off over its effective life as a tax deduction. The amount of the deduction is generally determined by the asset’s value, its effective life and the extent to which you use it for income-producing purposes.
Maximise motor vehicle deductions
If you use your motor vehicle for work-related travel, there are only two choices for how you can claim.
If the annual travel claim does not exceed 5000 kilometres, you can claim a deduction for your vehicle expenses on the cents-per-kilometre basis.
If your business travel exceeds 5000 kilometres, however, the log book method is required to claim a deduction for total car-running expenses.
Rental property deductions
Owners of rental properties that are rented or are ready and available for rent can claim immediate deductions for a range of expenses, such as:
- interest on investment loans
- land tax
- council and water rates
- body corporate charges
- insurance
- repairs and maintenance
- agents’ commission
- gardening
- pest control
- leases (preparation, registration and stamp duty)
- advertising for tenants
- reasonable travel to inspect properties.
Landlords may also be entitled to annual deductions for the declining value of depreciable assets (such as stoves, carpets and hot water systems), and capital works deductions spread over a number of years for structural improvements like remodelling a bathroom.
It’s worth noting that the government has proposed that it will change the law to no longer allow travel deductions relating to inspecting, maintaining, or collecting rent for a rental property from 1 July 2017. This is an integrity measure to address concerns that such deductions are being abused.
Further, the government announced that from 1 July 2017 plant and equipment depreciation deductions will be limited to outlays actually incurred by investors in residential real estate properties.
The ATO is cracking down on dodgy deductions at tax time 2017. Find out more