It's a new financial year, and that means it's tax refund season. But before the refund payment, first, you have to actually lodge your taxes.
Every year, around this time, there are some pervasive myths that circulate about what you can and can't claim on your tax turn. With the Australian Tax Office (ATO) cracking down on personal deductions, it's more important than ever to lodge your return by the book. Below, find some of the most common myths about what you actually write off on your tax return.
And, if you're unsure about any of your deductions, it's always best to speak to a registered account who can help you. Or consult the ATO website for more information.
What you can't claim
Your handbag (in most circumstances)
No, you can't buy a new designer handbag and just decide to write the whole thing off on your tax return.
There is a provision that allows you to claim a work bag, but the rules are very specific.
First of all, the bag has to be fit-for-purpose, meaning it must fit your laptop and other work supplies. It also needs to be used for work and work only. If you use it outside of work, you need to keep a log of its usage and only claim the percentage that is used for work.
If the cost was under $300, and it fits the other criteria, you can claim it in one go. If the cost is over $300, you will need to claim the bag via depreciation over a series of years.
Make sure you have the receipt, and be ready to show proof of use if the ATO decides to query.
Your clothes
Unless its a required uniform, you can't claim clothing.
It doesn't matter if you work at a brand and you are required to wear that brand to work. It doesn't matter if you had a work event and needed a new dress to attend. It doesn't matter if you need special orthopaedic support from your shoes because you stand all day. You can't claim clothing or apparel, and the ATO is very strict about it.
There are some exceptions for specialised protective equipment and for select items that are occupation specific.
Transport and travel to work
You can't claim the cost of commuting to work, even if you're commuting to a meeting outside your office. There can be exceptions if you're a sole trader or if your journey requires special provisions (for example, a truck to transport bulky goods).
Once you're at work, any required travel should be covered by your employer – and your employer can tax deduct these costs. If your employer doesn't cover these, then yes, the ATO could allow you to claim this kind of travel.
What you can claim
Charitable donations
That $50 you donated to your friend doing the Million Paws Walk or the Go Fund Me cash you sent via someones Tik Tok link in bio – those could all be tax deductible. Make sure to keep your receipts if you plan on deducting these.
Work from home expenses
If you've had to buy a monitor, desk, mouse or any other office supplies to allow you to work from home, these can be tax deductible. There is also a 'per hour amount' that you can claim to cover things like wifi, electricity and other costs. But remember, if you are planning on claiming the per hour cost, you do need to have a log of your work from home days and hours. Alternatively, you can manually calculate the actual percentage cost of your utilities that went towards work from home and claim that. But this method is much more difficult.
Education and courses
Enrolled in a photoshop short-course? Bought an SEO guide book? If you've invested in education or education resources to assist with your work, you might be able to claim it on tax.
This content does not take into account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.
