As we approach the end of the financial year, Australians begin to direct their attention to their tax returns and what they might be able to save in tax or boost their refunds. In a large number of cases, Australians are still having difficulty in getting it right.
According to Scott Bailey of ITP, a couple of studies completed over the past 12 18 months comparing people who have done their own tax return & then had it checked by an accountant, 60% had contained errors.
The most common misunderstandings are as follows;
1. Travelling to and from work
This type of travel is generally non deductible but there may be circumstances where this may not be the case. Eg. tradesmen carrying tools of trade may make such travel deductible.
2. Work clothing
The general rule is that for such purchases to be deductible, the company logo should be on the uniform.
Should an employer require a particular style of clothing to be worn but there are no logo’s e.g. black & whites for bar persons, then such clothing costs are not deductible.
The same applies to laundry & dry cleaning claims.
Just like clothing, shoes must be specifically mandated by an employer or occupation to be deductible. Covered footwear would not generally be allowable unless it is part of a specific policy i.e. steel capped boots for a labourer.
4. Self Education
The general rule is that courses that are directly related to your current employment and will lead to higher skills as well as an increase in income will be deductible.
Continuing professional education will likewise be deductible.
5. Travel expenses
There must be a genuine nexus between the costs incurred and the gaining of income. The ATO generally consider that expenses such as car, accommodation, meals etc. will be deductible if the business travel is for a period in excess of 24 hours.
6. Working from home
You may be able to claim home office costs should you genuinely work from home however you would need to furnish proof to substantiate your claim e.g. teachers who mark homework and prepare reports. Generally a four week diary which is representative of the work throughout the year will be sufficient evidence.
7. Charity donations
Donations made to registered charities are generally deductible however the most common misconceptions relate to raffle donations. These are not treated as charitable donations as there is a prospect of receiving something in return.
As noted at the beginning, 60% of survey respondents are getting their tax deductions wrong. We here at the Garis Group have more than 45 years experience in completing income tax returns, ensuring our clients obtain the maximum tax benefit.
Call us today on 02 4969 4699 to book an appointment to MAX your REFUND.
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