With tax time just over the mid-year horizon, it’s once again the season to reset your long-forgotten MyGov password so you can log into the ATO website and lodge your return.
But whether you’re doing it yourself or you’re using a tax agent, it’s good to know how you could squeeze a little extra cash back from tax deductions to line your pockets with for the second half of the year.
There are actually a few surprising ones, which most people don’t realise they are allowed to claim as a deduction. Read on to find out which deductions you could use to secure a bigger bag come tax time.
In Australia, tax deductions allow you to lower the total amount of your taxable income by offsetting it with any necessary out-of-pocket expenses you have made during the financial year. The idea is that you may be able to claim enough deductions to reduce your taxable income, hence securing a bigger tax refund.
However, this doesn’t work for any old expenses, like a ham and cheese sandwich.
The criteria for tax deductions are as follows:
- The expense must be directly related to your work or income-generating activity
- You can not have had the expense already reimbursed by your employer
- You will need the correct receipt or bank statement as evidence.
But for expenses which fall into a grey-area category, like home internet which is used for both personal and work-from-home purposes, you’ll need to work out how much of that expense relates to your income-generating activity.
Some of the following deductions won’t apply to everyone, as they may be industry-specific or have criteria that need to be met. It’s also vital that you have the applicable receipts to back these deductions up.
In fact, the ATO actually lists a whole range of industry-specific deductions on their website. It’s worth reading this information for more detail relating to deductions for your occupation or industry.
If you use your bag for work purposes, such as to carry phones, stationery, or a laptop which you use at the office, you may be able to deduct the cost from your taxable income. This applies whether it’s a handbag, satchel or backpack.
Note that it has to be fit for work purposes – so a luxury handbag may raise eyebrows at the tax office.
COVID-19 test expenses
You may be able to claim deductions on a range of Covid-related expenses this tax time. You can claim deductions on Rapid Antigen Tests (RATs), face masks, and even hand sanitiser, if you needed to purchase these during the course of your work and you weren’t reimbursed by your employer.
This applies to people who require a negative RAT to attend their workplace, medical practitioners, cleaners, retail and hospitality workers, hairdressers, beauticians, and office workers.
You will of course need to show proof of purchase for these items, but so long as you have that you may be able to claim back some of the money you spent protecting yourself and your workplace at the pharmacy.
Income protection insurance
You might be surprised to know that if you pay for income protection insurance, your premiums may be deductible at tax time. This doesn’t include life insurance, critical care insurance, or trauma insurance however, …….