Now is a great time to discuss tax deductions – especially those deductions often missed by taxpayers like you.
We surveyed our senior accountants and asked them:
What are the top 5 forgotten deductions on individual tax returns? – that is, deductions people can claim, but often forget or don’t know about.
We’ve compiled the survey responses to create the Etax Accountants Top Five Forgotten Tax Deductions. Take a look below – do any of these deductions apply to you? Are you keeping proper records to make sure you get the best possible tax refund?
1. Tax agent fees are also a tax deduction
Surprisingly, our accountants agreed that tax agent fees are the most regularly forgotten tax deductions each year.
Did you use Etax.com.au or another tax agent to prepare and lodge your tax return last year? If you did, then you can claim the amount you paid last year – on this year’s return. On your tax return, simply put the amount you paid last year into the “Cost of Managing Tax Affairs” section. The fees you pay for tax return help are always tax deductible.
2. Union/Membership fees are tax deductible
Many people ask us: “are union fees tax deductible?” The answer is yes. If you pay work-related union or membership fees, you can claim the total cost of these fees.
3. Work-related Car Expenses
If you are required to use your personal car for work-related reasons, apart from driving to and from work, you can usually claim fuel and maintenance costs as a tax deduction. There are two methods for calculating this deduction – you can either keep a 12 week logbook (which generates numbers you can re-use for 5 years!) or the cents per kilometre method.
The ATO defines work-related kilometres as kilometres travelled in your car while you are earning your income. To be eligible, you must be the owner of the car and your travel must be part of your working day – e.g driving between offices, special trips to the post office or bank (not including stop-offs on the way home) or moving from one job site to another. Remember, you cannot claim trips between work and home unless you’re carrying heavy equipment for work, or transporting heavy tools required to do your job.
Don’t let car expenses be one of your forgotten tax deductions. Depending on your personal circumstances, either a logbook or the cents per kilometre may be a better method for you. If you’re unsure which to use, please contact us on [email protected] (or just add a “my messages” note on your etax.com.au tax return) and one of our accountants will help choose which method gets you the biggest tax deduction.
4. Claim home office expenses
Do you ever find yourself working from home? How about checking and responding to your work emails in the evening or on the weekend? If you do, then you may be able to claim the cost of using your personal computer as a tax deduction. The ATO allows employees who have to work from home occasionally to claim part of their home office expenses.
Even better, if you work entirely from home (either self-employed or as a home-based employee) you can typically claim the ”actual cost” of your home office space as a tax deduction. These expenses can include software, equipment, furniture, internet expenses and electricity.
The details on this can get a bit complicated, so it’s a good idea to trust your Etax accountant to help get it right. Just give them honest info and they can take it from there to boost your tax refund.
5. Mobile Phone Tax Deduction
Using your personal phone to take and make work calls? Are you sometimes required to call clients or other staff members on your personal mobile phone?
If you answered yes, then you generally can claim the cost of these calls as a deduction on your tax return.
Remember, you can only claim the cost of your work related calls and data use, not your entire phone bill. It’s a good idea to keep a logbook or record (for at least one month) of when you use your personal phone, to determine the average percentage of your calls that are work-related.
George pays $49 per month for his mobile phone plan. He estimates that 50% of his monthly phone calls are work-related. Therefore:
- 50% of $49 = $24.50 per month
- $24.50 x 11 months (1 month of annual leave) = $269.50 per year
George can claim $269.50 on his tax return as a deduction for mobile phone expenses.
Is it worth the trouble to claim my deductions?
The simple answer is, Yes, it’s absolutely worth it!
Not just these 5 forgotten tax deductions either, it’s definitely worth claiming all your tax deductions every year. Even small costs here and there really do mount up over the course of twelve months. Often to hundreds and sometimes thousands of dollars. We should all pay taxes but not more than our fair share, so when you spend your cash on anything that’s work related, remember to keep the receipt. If you’re not sure if you can claim something, a quick chat with our accountants, while you do your tax will quickly will let you know.