Tax time. Not the most exciting time for many people but it’s something we can’t avoid. Having said that, if you know how to do it right, you could be in line for a juicy tax return. Lifehacker Australia spoke with an accountant from H&R Block for some useful tax time tips.
This new financial year, plan & create with Microsoft Office, including Excel, PowerPoint, Word and more. Buy today & get $20 cash back. T&Cs apply.
Tax money image from Shutterstock
What you can claim on your tax return is dependent on what industry you’re in. While the Australian Tax Office website does provide a lot of written material about what you can and cannot claim deductions on, it can be difficult to navigate through the plethora of information. There are also deductions that can be made that are not immediately apparent.
We recently spokes with Officeworks EOFY Expert and H&R Block director of tax communications Mark Chapman for some valuable advice on filing your tax return. One of the most surprising tips he mentioned is relevant to people who work from home, be it full-time or on the odd occasion:
“There are various deductions people often don’t take advantage of. For example, if you work from home, even if it’s on weekends, you can claim deductions for things like heating, lighting, depreciation of office furniture, home internet, mobile phone bills and so on.
“It doesn’t matter if there’s no formal agreement with your employer. So long as you can demonstrate that you do work from home, you can claim.”
Busting Tax Myths
Back in my early days of employment, I was stressing over doing my tax return when a co-worker wheeled his chair over and told me: “Just claim 30 per cent of everything that is remotely work-related. That’s my rule of thumb.”
Since then, I’ve heard people mentioned varying figures as their “rule of thumb” percentage to claim. Chapman provided some clarify around this issue:
“The whole 30 per cent thing is a myth. For anything you claim, you need to be able to justify it and it requires a more scientific method. Ideally, you’ll document work-related expenses. For things like phone or internet bills, you would itemise your usage and split them up as private or personal use. This should be done over a four week period.”
Most people are probably not this organised but the point is there is no set figure you can go on that applies to everything you want to claim. If you’re going to apply for a deduction, just be prepared to show proof to the tax office.
As for work-related equipment, if it’s under $300, you can make an immediate deduction, according to Chapman.
Sole Trader Benefits
Small businesses can claim an immediate deduction for each asset that costs less than $20,000. This isn’t available to individuals but if you’re a sole trader, that’s a different story.
“Sole traders can claim that [less than] $20,000 asset deduction,” Chapman said.
Bear in mind the deduction doesn’t mean you’ll get $20,000 back on your tax return but It can reduce the tax payable if you end up owing money to the tax office.
Taxpayer.com.au provides a good example of this:
“For example, say a purchase is made for $10,000 by a sole trader who is on an effective tax rate of 30%. In this case, that person should be able to reduce their tax liability by $3,000 from purchasing the asset. Of course, this assumes that the taxpayer had a tax liability to start off with.”
If you really can’t stand the hassle of doing your own taxes, you can always recruit the help of an accountant. I’ve done my tax return myself and through and accountant and have found that using a good tax agent does make life easier. If you do find an accountant that specialise in doing tax in your field of work, they’ll be able to tell you about some of the things you can claim that you may not be aware of.
Besides, you can claim a deduction for expenses you incur when you do your taxes, including lodging a tax return through a registered tax agent, so you won’t be left severely out of pocket if you employ the help of a professional.
We’ll be bringing out more tax tips before end of financial year so stay tuned!
Comments
7 responses to “We Got An Accountant To Share His Top Tax Return Tips”
I always use an accountant. Sometimes it’s worth paying for something you can do yourself. I also get a deduction on the fee and he knows everything you can legally claim so it ends up being pretty cheap in the end.
I also (probably mistakenly) believe that the tax office is less likely to audit tax returns submitted by accountants as they are more likely to be correct and semi-audited already.
Chapman …. Hes Wrong This article is misleading. So many readers are going to me majorly disappointed when they have over the desk audit with Mr ATO. ” Accountant from H&R Block”….. Shooting for the really technical guys here. Think I would rather have advice from check out chick at Coles… Either the comments have been taken out of context or made WAY WAY to casually…
“There are various deductions people often don’t take advantage of. For example, if you work from home, even if it’s on weekends, you can claim deductions for things like eating, writing, depreciation of office furniture, home internet, mobile phone bills and so on.
– What a LOAD OF …… No you cant – Food at home Show me the ruling on this…. Doesnt exist. I can just see it now….. My Spag Bog I made last night and spilled all over my keyboard is deductible as I was thinking about work….
“Sole traders can claim that $20,000 asset deduction,” Chapman said. – The loosest statement ever made – NO they cant Its for items Less than $20 000 there is a BIG difference. Its just like saying CGT discount is for assets held for a year… No its not.. Its MORE THAN BIG difference..
Hi skinhead,
Thank you for your comment.
Understand you had some concerns about the article. The content is based on an interview with Mr Chapman, who is a certified accountant and the director of tax communications H&R block. Given his qualification, we would class him as a tax expert. The point is to provide some tips that people may not be aware of and, as I had mentioned in the article, the details about what you can claim when you work from home was surprising but it was based on comments from a tax expert, so I included it in the piece. Taking your concern on board, I have reached out to Chapman again for clarification. I will update the post accordingly when I do get a response.
As for the sole trader issue, following on from Mr Chapman’s comments, I had already offered a clarification that “the deduction doesn’t mean you’ll get $20,000 back on your tax return but It can reduce the tax payable if you end up owing money to the tax office” and provided an example from Taxpayer.com.au, a non-profit organisation that provides guidance on tax issues.
Hope this helps.
Kind Regards,
Spandas
That was enough for a giggle.
I think what should be highlighted regarding tax deductions is the misconception that you can claim the whole amount for a deduction.
Your tax deductions are subject to the highest marginal tax rate you are paying. And you don’t get it as a tax return, it’s only used to reduce your assessable income.
And people always say “claim that laptop as a tax deduction” when legally they have to depreciate it, and proportion it based on what is used for actual work purposes.
Just my two cents though.
Hi skinhead,
I just got off the phone with Mr Chapman and he did clarify that there may have been a miscommunication there. The article mentioned before that “eating, writing” were claimable but he had meant “heating, lighting”. I have amended this in the article.
As mentioned already, we had already addressed that the deduction was for assets less than $20,000 and that was what Mr Chapman meant. I have made edits to his quote to make this clearer.
Thank you again for your comment.
Cheers,
Spandas