7 Tax Tips for Individuals

Most people dread tax time—trying to figure out what you can claim and finding all of your receipts can be time-consuming and frustrating. Based on common misconceptions that we see, here are a few tips for individuals to make the tax time process smoother and less stressful.

1. Do you claim home office expenses? The ATO has recently tightened up rules for claiming home office expenses such as the phone or internet. If you want to claim that a portion of your internet usage is for work, you will need to keep a detailed diary of when you used the internet for work vs personal purposes for a month. You will need to keep track of internet usage on either a time spent basis or a data usage basis, and you will need to be prepared to justify your choice to the ATO. Similar rules apply for claiming phone expenses.
2. Do you claim motor vehicle expenses? The ATO is also cracking down on claims on motor vehicle expenses. Very briefly, there are two methods for keeping track of vehicle use for business purposes. One is the logbook method, where you need to keep detailed records of kms you’ve traveled for work and personal purposes. The other is the cents per kilometre method, where your records of kms traveled do not need to be as detailed, but there is an upper limit on how much you can claim. If you’re unsure about which one applies to you, talk to your accountant.
3. Did you have an investment loss this year? If so, be sure to report it to your accountant. Depending on your circumstances, you might be able to use the loss against a capital gain to get a bit of a tax break, or you might be able to carry it forward to another year.
4. Do you claim work uniform expenses? Beware that there are strict rules around what you can and can’t claim as part of a work uniform. One rule that is commonly missed is that if a work uniform is non-compulsory, you cannot claim shoes, socks, and stockings. We recommend that you check out the ATO website for details, or check with your accountant.
5. Do you receive Centrelink family benefit payments? If so, you must lodge your tax return before June 30^th of the following year in order to keep your payments. For example, in order to keep your 2016/2017 Centrelink payments, your 2016/2017 tax return must have been lodged by June 30^th, 2018. Otherwise, you may have to pay back the money you received. Similarly, if you claim a lump sum payment annually, you may not be eligible if you did not file your tax return by June 30^th.
6. Do you own an investment property? The new federal budget proposes that investment property owners will not be able to claim travel expenses for property inspections. Please be aware of this before carrying out any inspections this year.
7. Do you have automatic donations to charities coming out of your bank account or pay? Make sure to report these to your accountant so they know to claim it! Note that you can also claim up to $10 of donations without receipts if you put spare change into donation boxes for natural disaster victims or other charities.

In general, keep in mind that you can claim work-related deductions as long as (1) you paid the money yourself and weren’t reimbursed, (2) the expense is directly related to earning your income, and (3) you have good records.

And remember: if you do owe some tax at the end of the day, don’t let it get you down! If you are paying tax that means you are making money, and isn’t that something to be happy about?

Contact TDG for even more tax tips!