TAX TIME – What you can Claim0
There are millions of salary and wage earners in Australia and most of them who do their own tax returns each year probably get it wrong.
They are an easy target for the tax office to audit and with artificial intelligence and data-matching becoming more sophisticated, most of the time tax office computers can catch all the mistakes made. Penalties can then be levied for these simple mistakes.
With the millions of tax returns lodged, the tax office gets an idea of the average amount of deductions being claimed per occupation. If you’re outside of an acceptable range, you’ll get a “please explain letter”. Many tax-payers have already been targeted by the ATO for the up-coming 2018 tax year and warnings are appearing on Accountant’s ATO client listings who might need to watch the amount of their deductions.
So, what are some of the more common claims and misconceptions for the 2018 tax year?
Laundry – you can automatically claim $150. Incorrect. You can only claim for the cost of buying and cleaning occupation-specific clothing, protective clothing and unique, distinctive uniforms. The claim is based on the number of items purchased or washed, multiplied by a specified dollar amount. You don’t have to keep receipts, but may have to prove how you calculated the amount being claimed (usually with a diary). You also can’t claim for buying work clothes if your employer reimburses you and they intend to claim for them.
Cars – you can automatically claim up-to 5,000 km/year at a fixed rate. Incorrect. Only if you use your car for work related duties and travel up-to or in-excess of those work km’s. You don’t need receipts, but you may be asked by the tax office how you calculated your claim. It is often a good idea to check your employment agreement to see if using your car is a requirement of your job.
Travelling expenses for work – you can claim the reasonable amounts outlined by the tax office without receipts. Partly correct – you will still need to substantiate the expenses with a travel diary and credit card or bank statement proving you spent the money.
Donations – $2 or more is deductible with receipts. Correct however, beware because the cost of raffle tickets to your local soccer club etc. won’t be tax deductible. The donation must be made where no direct benefit can be or is likely to be received by you.
Superannuation contributions – anyone can now claim up-to $25K for a super contribution. Correct. If you’re less than 75, from 1 July 2017 every employed and self-employed person can claim for superannuation contributions up-to a maximum of $25K (includes any employer superannuation support). If you’re between 65 – 75, you’ll still need to pass the work test. Check first with your planner or other superannuation qualified adviser to see if this is good for you.
There are also plenty of opportunities for businesses from purchasing equipment, prepaying expenses and deferring income.
Tax law is extremely complicated so it’s always best to consult an Accountant or Tax Agent to ensure you’re not only getting everything you’re entitled to but that you’re not overclaiming as the penalties can be harsh.
Northern Business Consultants – (NBC Mango Hill Pty Ltd) are Big Local sponsors and are Accountants, Tax and Business Advisers located at the upper level of the Mango Hill Market Place and Aspley. Any advice given in this article is general in nature and cannot be acted upon without specific advice from NBC Mango Hill Pty Ltd. Please visit us at: nbc.com.au