Minimising your tax liabilities is always a challenge. Learn how you can effectively reduce it with these tips:
If you work from home, either all or part of the time, then some portion of the home running expenses can be claimed as a tax deduction. The expenses that you can claim include the work-related portion of:
Amongst the many things you can claim are course fees, textbooks, accommodation and meals if studying away from home, costs of computer consumables and internet and the cost of a computer used for studying which usually depreciates over several years. That said, there are certain conditions the above must meet:
It’s important to keep proof of purchase for all work-related purchases, even if whatever it is you bought is only used part-time for your work.
Proof of purchase can include receipts and even bank statements and purchases over the amount of $300 must have a receipt. Even though you may not need a receipt for purchases up to $300 you must have actually spent it in a way that is relevant to your employment you cannot just claim $300.
Paper receipts in bulk can be a headache to deal with, and fading of ink can make tax time particularly difficult. Electronic copies are now accepted by the ATO as legitimate, and may be a more efficient means of filing.
Take photos of receipts, etc and store them on your phone.
You’re entitled to claim a deduction for any expense incurred in earning your income. So, if you have incurred a work-related expense, and you have the paperwork to prove it, don’t hesitate to claim it. Amongst the common deductions many taxpayers claim are:
Don’t inflate deductions in order to get a bigger refund, and only claim for costs you can prove you spent, by producing an invoice, receipt or bank statement for instance. Avoid claiming deductions without supporting documentation, as they are often disallowed in an ATO audit.
Doing this can land you in hot water with the ATO and lead to fines.
These days, with the push of a button, you can pre-fill lots of your income information straight from the ATO’s systems. Some people assume that because the data comes from the ATO, it must be right, but that’s not always the case.
Always use your own information (payment summaries, etc) as the key source data. Many third parties such as banks, pass information about you to the ATO late in July or even into August so early lodgers will often find lots of data missing from their pre-fill.