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It’s tax time so we’ve sourced some deduction tips for you which may help to increase the amount of money you get back via your tax return this year.
Lots of things can affect your tax return, including sources of income from work, investments and government assistance, including JobSeeker payments you may have received during the financial year.
Other factors that play a part include whether you have work-related expenses, such as from travel, equipment, clothing or what you might’ve forked out if you’ve been working from home.
Here’s a quick rundown of things you could consider when preparing, lodging and hopefully maximising your tax return for the financial year ending 30 June 2021.
Some of the things you may need when lodging your tax return include, but won’t necessarily be limited to:
Note, if you lodge your tax return yourself using myTax, which is available through the myGov website and ATO app, most information from your employers, banks, government agencies, health funds and other third parties will generally be pre-filled for you by late July.
Most tax deductions will be work related. However, a work-related expense will only be deductible if you weren’t reimbursed by your employer, it directly relates to you earning an income, and you have a record of it, such as a receipt (unless the amount you’re claiming is $300 or less, in some instances).
For more information on deductible items related to your specific industry, see the ATO’s occupation and industry specific deduction guides.
Meanwhile, if your expenses are for both work and personal use, you can only claim a deduction for the work-related portion, which could for instance be 50% of your phone and internet bundle.
Another example might be if you go on an interstate study trip or conference, but are taking a holiday at the same time, you wouldn’t be able to claim the entire trip as a work-related expense.
If you’re having trouble keeping track of all your receipts, checkout the myDeductions tool in the ATO app. This allows you to save a record of your deductions throughout the financial year, which you can then upload at lodgement time.
The ATO has announced that a ‘shortcut’ method will again apply as an option for calculating relevant tax deductions for anyone who has worked from home during the financial year (1 July 2020 to 30 June 2021)1.
What this means is you can claim 80 cents for each hour you worked from home to cover any eligible tax deductions (noting, you may need proof such as a timesheet), rather than doing calculations for specific items.
As the shortcut is ‘all-inclusive’, you can’t claim the shortcut and then claim for individual expenses, such as phone and internet bundles. However, if you wish to, you can still claim under the existing arrangements.
Aside from the short-cut method, a fixed rate method (52 cents per each hour you work from home) may allow you to claim other deductions, or the actual cost method can be used. For details, check out the ATO’s home office expenses page, as further research may be required if you’re considering an existing method.
You can lodge your tax return yourself free of charge via MyTax, accessible through the myGov website and ATO app, or you can complete a paper tax return, or engage a registered tax agent to do it for you, which will incur a fee that’s typically tax deductible.
If your finances are relatively simple, you might consider lodging your own tax return (which you’ll need to do by 31 October). As mentioned above, a lot of information will also be pre-filled for you by late July.
If you do want to use a registered tax agent to prepare and lodge your tax return, it’s important to note you will pay a fee for their service, but it’ll typically be deductible next financial year.
Note, you should make sure your tax agent is registered with the Tax Practitioners Board (TPB).You can find a registered tax agent or check whether a person is registered, by visiting the TPB website.
If your finances are more complex, using a tax agent may provide you with peace of mind, as it could save you time, highlight deductions you didn’t know about, while making sure all your claims are legitimate.
On top of that, most registered tax agents have a special lodgement program, which means they can often lodge returns for their clients after the usual 31 October deadline, but you’ll need to contact them beforehand.
To make sure you have all the relevant information you need ahead of lodging your tax return, check out the ATO’s tax time checklist.