Personal Tax Preparation 2016
Tax time is coming again. We hope this article will be helpful to you when preparing your tax return process! Please do not hesitate to contact us if you need any assistance.
In general, you are able to claim work-related expenses against your assessable income as follow:
Log book method: Do you have a valid vehicle log-book in the current financial year?
If you use your car for work a lot, the log book method may give you the most deductions. However surprisingly I noticed that many people using their car for more than 80% but did not keep a valid vehicle logbook at the tax time. It is better to plan ahead as a valid logbook requires a continuous 12 week period to complete.
If you have a valid log-book, you are able to claim a percentage of parking, tolls, rego, CTP, insurance, interests, repairs, tolls, car wash. To claim for car costs it is usually best to keep a diary record of the number of kilometres you travel during the year for work purposes and then we can calculate the amount of your tax deduction at the end of the year)
- Car repayment interest: it will save you a lot of hassle if you ask for an annual loan repayment statement from your car finance company. The statement will show the interest component and principal component. You will be getting a deduction from the interest components.
- If you purchased a new car this financial year, remember to show your tax agent the paperwork which include various set up costs and dealer’s charges. The maximum kilometers allowed is 5,000km (@ 66 cents/per km from 1/7/2015 regardless of the engine sizes). You must record the odometers at the beginning of the financial year and the end of the financial year. Depreciation (deductions for decline in value):
- Cents / per km method: Remember that the car starts to decline in value from the day you first use it, even if you don’t begin using it for work until a later time.If you used the ‘logbook’ method and owned your car for only part of the year, you will need to apportion your deduction accordingly.
- You can claim a deduction only for a year in which you used the car for work.
- You can claim a deduction for the decline in value of the car only if you owned it or hired it under a hire-purchase agreement and you must use either the ‘one-third of actual expenses’ or the ‘logbook’ method.
- The cost of buying compulsory uniforms (including shirts, pants, skirts, jackets, jumpers, ties and scarves – your uniform should have the business’s logo on it to ensure it is tax deductible)
- The cost of buying protective clothing and footwear
- The cost of laundry or dry cleaning of your uniforms
- The cost of buying any sun protection items required if you work outdoors at least part of the day (including sun glasses, hats and sunscreen)
- The cost of work-related short training courses or conferences, for example first aid, OH&S, bookkeeping, sales techniques, customer service, computer skills or management, which are not run by a University or TAFE (you can also claim for the cost of travelling to and from the course and any accommodation and meal expenses if you are required to stay away overnight)
- The cost of attending compulsory CPD training courses
- The cost of self-education courses run by a University (not including HECS/HELP fees) or TAFE that you have paid the fees upfront (not using Fee-Help or HECS).
- If you are studying, you can also claim for the cost of books, stationery, equipment and travel required for your course
- The bus/train fares, kms travelled from your work place to the campus or vice versa. You will need to record the expenses and kms travelled.
Work Tools & Equipment
- The cost of buying and repairing equipment you use at work, including electronic organisers, laptop computers and mobile phones.
- The cost of any materials or supplies that you buy for use at work, for example stationery, diary, work bag or briefcase and presentation costs for properties
- If the computer, laptop or software cost more than $300, you must depreciate the asset via the decline in value process.
Other Work Expenses
- The cost of renewing your annual Certificate of Registration
- The cost of work-related magazines, journals or books (these could include sales, customer service, computer, management or property investment books)
- The cost of advertising and self-promotion expenses through newspapers, letterbox drops and signage (where you are paid on a commission basis)
- The cost of work-related mobile or home telephone calls and rental (you should keep a diary record of the number of phone calls you make for work for one month and then we can use that to estimate your usage for the whole year)
- The cost of work-related internet connection fees (you can only claim the proportion of your monthly fees that relate to work use, which could include emailing or research relating to your job)
- The cost of maintaining a home office if you are required to complete work at home (you should keep a diary to record how many hours per week you spend working from your home office).
- a deduction for your actual expenses.
- a deduction you work out at a rate of 45 cents per hour.
Other General Expenses
- To claim a deduction for the electricity and gas you use and the decline in value of your office furniture, you can claim either of the following:
- The amount of any donations to registered charities (as long as you haven’t received anything in return for your donation, such as raffle tickets or novelty items)
- The cost of bank fees charged on any investment accounts
- The cost of income protection or sickness and accident insurance premiums (this type of insurance covers you if you hurt yourself (including when you are not at work) or become sick and you are unable to work. It will pay you your normal wage until you are fit to return to work – if you don’t have this insurance you should see a financial adviser or ask us and we will refer you to someone who can organise it for you. It is definitely worthwhile)
- Immediate deduction for certain non-business depreciating assets costing $300 or less. The immediate deduction is available if all of the following tests are met in relation to the asset: you used it mainly for the purpose of producing assessable income, it was not one of a number of identical, or substantially identical, assets that you started to hold in the income year that together cost more than $300. it was not part of a set of assets costing more than $300 that you started to hold in the income year, and it cost $300 or less.
- Your tax agent fees (the amount you pay to your accountant to prepare your tax return each year)
- The cost of travelling to see your tax agent (you can claim the cost of travelling to see your accountant to have your tax return prepared. You should keep a record of the number of kilometres you travel and any other incidental costs such as parking, meals, accommodation etc.
Gift & Promotions
- You may consider to purchase gifts, wines or pay for your advertising or promotions before 30th June and receive immediate deductions.
- If you are an individual incurring deductible non-business expenditure, you can claim an immediate deduction if the payment is incurred for an eligible service period not exceeding 12 months and the eligible service period ends in the next income year, for example prepayment of your professional membership, subscriptions, education expenses or insurance premiums as long as the starting date falls in the current financial year and the whole period is not for longer than 12 months.Many expenses stemming from owning a rental property are claimable, so it can be helpful to bring forward any expenses before June 30 and claim them in the present financial year.
- Prepay investment loan interest In a similar vein, see if you can negotiate with your finance provider to make upfront interest repayments for certain investments, such as a margin loan on shares.
We suggest that you keep receipts for all purchases that are work related, even if they are not listed above. That way, when we prepare your tax return, we can decide whether you are allowed to claim a tax deduction for them or not. Please feel free to contact us by email: email@example.com or phone 02 – 9498 2655 or to obtain other checklists: individual income tax, Business income tax, company income tax, rental properties guide, capital gain tax, depreciation guide, etc.
|Kasker Associates “Tax Tips Series” are distributed by professional tax practitioners to provide information of general interest to their clients. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.|