Individuals Tax Tips – What are you eligible for?
Do you know what tax deductions and offsets you may be eligible for? The following tips may help you legitimately reduce your tax liability in your 2016-17 return.
Claim work-related deductions
Claiming all your work-related deduction entitlements may save considerable tax. Typical work-related expenses include;
- Employment related telephone;
- Mobile phone;
- Internet usage;
- Computer repairs;
- Union fees;
- Professional subscriptions;
Note that for the first time ever the ATO is checking these claims in real time. Claim only what you are legally entitled to claim and ensure that you have all necessary receipts or credit card statements to back-up your claims.
Claim home office expenses
When part of your home has been set aside primarily or exclusively for the purpose of doing work a home office deduction may be allowable. Typical home office costs include heating, cooling, lighting costs, and even depreciation of your office equipment.
You can claim the additional running expenses for your home office by apportioning the actual costs incurred or using a fixed rate of 45 cents an hour. You need to keep a record of the time spent in your home office on employment activities. The record should cover a representative period and a reasonable time (generally four weeks). For further information, please contact your local McFillin & Partners advisor
Claim self-education expenses
Self-education expenses can be claimed provided the study is directly related to either maintaining or improving your current occupational skills or it is likely to increase your income from your current employment. If you obtain new qualifications in a different field through study, the expenses incurred are not tax deductible. Typical self-education expenses include, course fees, textbooks, stationery, student union fees and the depreciation of assets such as computers, tablets and printers. However, any Higher Education Loan Program (HELP) repayments are not deductible. You must also disallow $250 of self-education expenses, which can include non-deductible amounts such as child-care costs.
Immediate deductions can be claimed for assets that cost under $300 to the extent the asset is used for an income producing purpose. Such assets may include tools for tradespeople, calculators, briefcases, computer equipment and technical books purchased by an employee, or minor items of plant purchased by a landlord.
Assets costing $300 or more that are used for an income producing purpose can be written off over a period of time as a tax deduction. The amount of the tax deduction is typically determined by the asset’s value, its effective life and the extent to which you use it for income producing purposes.
Maximise motor vehicle deductions
If you use your motor vehicle for work-related travel, there are now only two choices for how you can claim work related travel. If your annual claim for kilometres travelled does not exceed 5,000 kilometres, you can claim a deduction for your vehicle expenses on a cents per kilometre basis. The allowable rate for such claims changes annually so you need to obtain this year’s rate from the ATO or your local McFillin & Partners Advisor. Such claims must be based on reasonable estimates.
Salary sacrifice arrangements – Motor Vehicles & Superannuation
Employees can consider salary sacrifice arrangements under which their gross salary may be foregone to obtain either a packaged car for fringe benefits tax (FBT) purposes, or they can make additional superannuation contributions.
A 20 per cent flat rate applies when calculating a car fringe benefit under the statutory-formula method, regardless of how many kilometres the vehicle travels annually. However, there may still be some tax savings in packaging a car under these rules compared to the cost of funding all your car expenses from your net salary. In addition, under these rules employees who predominantly use a car for work-related travel may be able to obtain tax savings by calculating the FBT paid on the car under the operating-cost method rather than funding their car expenses from their after-tax salary.
Please contact your local McFillin & Partner’s Advisor tax agent as to whether such salary sacrifice arrangements would be tax effective for you.