Let's be truthful; nobody really enjoys tax time. You need to search down old receipts, get them organised, and make meetings with your tax accountant, only to remember some items you had forgotten about in the past. Therefore, it is only logical that when the time comes for you to submit your taxes, you will want to receive the greatest return possible so that the entire process will have been beneficial for you. When the time comes, you will have to file your taxes.
You should keep in mind that submitting your taxes in good faith not only results in financial benefits but also complies with all applicable laws; nonetheless, you should avoid being greedy. If you overestimate your expenses on your tax return, the Australian Taxation Office (ATO) may send you a letter seeking repayment, along with a hefty fine added on for good measure. This could happen if you misrepresent your expenses by more than 10 percent. In addition to this, there is a significant possibility that it may cause the revenue officer in charge of collecting taxes to review the returns you have submitted in previous years. As a result, in order to assist you in realising what it is that you may legitimately claim in order to acquire the best return, we have produced this helpful list.
Instead, a tax write-off is an expense you can partially or fully deduct from your taxable income, reducing how much you owe the government. If you're due a tax refund, the government is giving you back the amount of tax you overpaid based on your tax liability.
You are eligible to take a tax deduction for any items or equipment used in connection with your job!
If the cost of the tools or equipment is greater than $300, you will need to determine the amount of loss in value, also known as depreciation, that can be claimed for the year.
It’s likely that you employ a wide range of tools on a daily basis. According to the rule, you are eligible to claim them as a deduction against your taxes provided you have paid for them and you use them as part of your employment or business. If this describes you, then read on. If you use them as a part of your employment or business, you may be able to deduct the cost of those expenses from your taxable income.
Whether you are self-employed or work for another person will have a direct impact on the particulars of the strategy that you apply to achieve your objective.
Suppose you own and operate your own company. In that case, you are eligible to take an immediate deduction for the price of any tools that are less than $30,000 (provided that they were purchased after April 2, 2019; prior to that date, the cost limit was $20,000 up until January 29, 2019, and $25,000 between January 29 and April 2, 2019).
That implies that very much all of your tools may be written off immediately against your taxable income, which is great news for the vast majority of self-employed tradespeople.
When you work for someone else, the regulations are stricter than when you work for yourself. If the cost of the tool is less than $300, you may take the deduction right away; however, if the cost is greater than $300, you will need to write off the expense over the life of the tool, which might be many years. You can take the deduction right away if the instrument costs less than $300. You can’t claim each item individually, so unless the cost of the set is less than $300, you’re looking at spreading the cost of the purchase out over a few years to deduct it from your taxes. Take cautious if you decide to buy a set of tools.
Not only are expenses for tools eligible for deduction, but so are those for office equipment such as computers, phones, and printers, as well as mobile devices and tablets. These many types of expenditures all adhere to the same set of rules and regulations.
You are eligible to submit a claim on your phone bill if you use your phone for work-related purposes such as making work calls, receiving work calls, or having your phone on standby for work.
Make sure you have a method to keep your personal and professional phone costs distinct; even if this means having a second phone to use for work-related calls, this should be a priority for you.
Keep in mind that the only component of the expense that can be deducted is the part that is relevant to either your work or your business. If you utilise the tools or equipment for your own personal use, you will be expected to pay your proportionate share of the total cost.
You are able to make a claim for the cost of a vehicle that you use in your business or for your employment, such as a van or a ute, as long as you were the one who paid for the vehicle (there is no deduction for cars that your employer-supplied).
If you own and operate a business, you can take advantage of the $30,000 quick write-off tax deduction described earlier, provided that the vehicle in question costs less than $30,000. (as many second-hand vehicles do). If it costs more than $30,000, you will have to depreciate the amount throughout the course of the vehicle’s ownership.
If you are an employee, you have the ability to make a claim for depreciation on the car over the entirety of its life; but, in order to do so, you are required to keep a logbook of the work and private usage of the vehicle. Your logbook can also be utilised in the process of calculating a number of additional vehicle-related deductions that are connected to your place of employment. Some examples of these deductions include the cost of gasoline, the cost of service, and so on.
The cost of your motor vehicle or public transportation expenditures are deducted if you pick up equipment or supplies for your job or visit clients as part of your professional responsibilities. However, it is important to keep in mind that the cost of driving or taking public transportation from your house to your place of employment and vice versa is not tax-deductible.
Take note that if you drive your automobile for both work and personal purposes, you will need to determine what percentage of your driving is for business purposes. You may do this by keeping a logbook or using the cents-per-kilometre technique described below.
Using the cents-per-kilometre technique, you can deduct up to 5,000 miles driven for work at a rate of 68 cents per mile on your tax return for 2018-2019. This alternative does not call for the submission of any written proof.
Method of the logbook You can deduct a percentage of practically all of the charges that are associated with your automobile. On the other side, you are going to need an official car logbook that contains the beginning and ending odometer readings for a period of 12 weeks. This will be used to establish the percentage of your motor vehicle expenses that you are eligible to claim, reflecting your travel over the entire year.
You can also claim a flat allowance of 68 cents per business mile travelled if your annual mileage for work is less than 5000 kilometres.
Keep in mind that you are not entitled to reimbursement for the cost of driving your own vehicle from your home to your place of employment unless your employer requires you to transport heavy tools that cannot be stored at work.
Imagine that in order for your company to keep you safe on the job, you are required to wear either an obligatory uniform or protective apparel. Which option would you choose? (or to protect the normal clothing you wear underneath). If this is the case, there is a good chance that you will be able to take a tax deduction not only for the amount that it cost you to purchase the item, but also for the amount that it cost you to regularly have it laundered or dry cleaned. This is because both of these services are considered necessary maintenance for the item in question.
Watch out for the following items that tradesmen frequently claim to have:
One of the things you could assert is:
You are entitled to reimbursement for the cost of eligible work clothes that was washed, dried, and ironed as well as the cost of having it dry cleaned.
If the entire amount of your laundry expenditures does not exceed $150 and the total amount of your work-related expenses does not exceed $300, you are exempt from the need that you submit documented documentation for your laundry expenses. Instead, you can calculate the cost of your laundry claim based on the following numbers, which the ATO will allow you to use if you perform the washing, drying, and ironing yourself:
There is a wide variety of education, upskilling, and training that may be tax deductible if it is:
Check out the helpful guide on self-education expenditures provided by the Australian Taxation Office (ATO) to determine whether or not you are qualified for a deduction and to receive an estimate of how much you would save.
If you want to be eligible for a tax deduction, you should be sure to deduct the cost of any things that are out of date, damaged, or of no use and are still on your premises at the end of the year. This pertains to you if you own a company of your own. Before the end of the year, you should write off the expense.
If you have customers who are unable or unwilling to pay and you have done everything in your power to reclaim the debt without success, you should write it off by the 30th of June to be eligible for a deduction for bad debt. In addition, if you have customers who are unable to pay and you have tried everything in your power to reclaim the debt, you should write it off. Make certain that the write-off is documented in some fashion, such as in a Board Minute or another record of a record that is comparable in form.
It is possible to ensure that you do not miss out on considerable tax benefits that are available to tradespeople by adhering to a handful of simple practises that you keep “year-round.” This suggests that you will be eligible for a tax refund that is greater in amount.
There is a chance that you will be allowed to deduct anything from your taxes if you answer “yes” to ALL of the questions that are given below. These are the questions and their possible answers.
The ATO is very skilled at recognising false or “inflated” tax deductions from a significant distance. They are already exceptional in this regard, and the only way they can get better is with more experience. Powerful new technologies are being used to assist in the monitoring of taxpayers, and these technologies may look at your “private” data, including the transactions that take place on your bank account. As a result, it is imperative that you only claim deductions that are valid, such as expenses for goods that you paid for and that are immediately relevant to your business.
The Australian Taxation Office (ATO) will seek pay-back if it is discovered that you have claimed things for which you did not pay, which were paid for by your company, or which you are unable to prove with a receipt. Additionally, they may investigate your tax returns from previous years.
The Australian Taxation Office has accumulated billions of dollars that can be returned to individual taxpayers as tax refunds. To enhance the amount of your return, all you need to do is exercise a little bit of creative thinking. For example, the Australian Taxation Office (ATO) has the capability to identify undeclared wages, bank interest, share dividends, and other types of revenue. But sadly, it does not have any method of reminding you of a missed deduction for work-related expenses, investment charges, or any other items.
Tax deductions are the single easiest and most common way to get a larger tax refund. You are legally entitled to claim a deduction for any work-related expense that your employer has not already reimbursed you for. If your employer has already reimbursed you for the expense, you cannot claim a deduction for it. These costs include the following items:
When it comes time to file our taxes, we have to spend hours looking for receipts for purchases made during the previous year. This is not just a waste of time but also has the potential to result in the forfeiture of a tax refund worth hundreds or even thousands of dollars. So get some folders, name them, and start saving any receipt that could be pertinent.
Keep track of everything, even if you are unsure if a certain item is tax-deductible or not. But, again, your tax professional should be able to advise you on this matter.
You can reduce the amount of money you owe in taxes while at the same time contributing to a charitable organisation that is doing important work. A donation of $20 to a charity or the purchase of a book for $10 may not seem like much when seen separately; yet, when these relatively modest expenditures are added together over the course of an entire year, they may amount to hundreds of dollars. You are permitted to file a claim for a deduction for any amount that is higher than or equal to $2. Simply make sure that you store the receipt somewhere safe for your records!
Although it is easier to pay your expenses weekly or monthly, it is preferable to make one large payment for some items, such as union dues and professional subscriptions, whenever possible. In addition, because you are claiming a tax deduction this year for costs that will be entirely or partially related to next year, you will not only be able to recoup these expenses sooner, but you will also receive a larger refund for this year due to the fact that you are claiming the deduction.
This is of particular advantage to couples in whom one person does not work or generates an income of less than $40,000, taking into account super contributions and fringe benefits. In such cases, the other spouse in the pair can utilise super contributions to decrease the amount of tax that they pay.
The partner who has the greater income can contribute up to $3,000 to the non-working partner’s super fund and then claim an 18% tax offset, which comes out to $540. This is allowed under Australian law.
Those who work for modest income can also donate extra money to their super, and the government will give fifty cents for every dollar that is contributed to the super fund by the individual. Anyone earning up to $52,000 per year stands to gain by contributing additional funds to their retirement plan.
Rent is deductible if you are renting premises. It may be tempting to claim a portion of your mortgage as rental expenses if you are self-employed and operate from home. If this is your situation, read on. If you do this, however, you run the risk of having to pay capital gains tax (CGT) if you ever decide to sell your home in the future. Because of this, we do not suggest that you do this.
If you have made money through investments or if you have sold shares, you will be responsible for paying taxes on that income. Getting rid of any assets that are already operating at a loss is the most effective strategy to reduce the total amount owed in taxes. The “capital loss” might be deducted from the “capital gain” if certain conditions are met. Caution is advised, however, if you intend to sell shares that are currently trading at a loss and then repurchase them in the following tax year. This is because the ATO has issued a tax ruling that states any tax benefits gained in this manner will be null and void, and appropriate penalties will be imposed instead.
As of the first of April in 2018, health insurance providers will begin implementing price increases as well as modifications to the treatments that are considered to be covered by their respective plans. If you haven’t done so already, it’s time to review your health insurance policy and determine which diseases and treatments are covered for you, whether or not you should maintain coverage, and whether or not you should switch providers. When filing your tax return, if you intend to claim a tax offset for the premium you pay for private health insurance, it only makes sense to ensure that the deduction is legitimate.
Because there are a large number of products that most tradespeople are eligible to claim, there is simply no reason to take chances and end up in trouble. In addition, taxes operate our wonderful country and pay for schools, highways, and hospitals, so everyone should contribute their fair part. Keeping track of your tax receipts and making notes about your expenditures is the most effective strategy to maximise your refund.
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THIS WEBSITE IS ONLY INTENDED TO PROVIDE GENERAL ADVICE; IT DOES NOT PROVIDE PERSONAL FINANCIAL OR INVESTMENT ADVICE IN ANY FORM. ALSO, CHANGES IN LEGISLATION MAY OCCUR FREQUENTLY. BEFORE TAKING ANY ACTIONS DEPENDING ON THE CONTENTS OF THIS INFORMATION, WE STRONGLY RECOMMEND THAT YOU SEEK OUR OFFICIAL ADVICE FIRST. THE INFORMATION CONTAINED IN THIS DOCUMENT HAS BEEN OBTAINED FROM SOURCES THAT EWM ACCOUNTANTS & BUSINESS ADVISORS BELIEVES TO BE RELIABLE; HOWEVER, WE MAKE NO REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY OF SUCH INFORMATION AND ACCEPT NO LIABILITY IN CONNECTION THEREWITH. WE RECOMMEND THAT YOU CONSULT WITH A TAX ADVISOR, a CPA, a FINANCIAL ADVISOR, an ATTORNEY, AN ACCOUNTANT, AND ANY OTHER PROFESSIONAL THAT CAN HELP YOU TO UNDERSTAND AND EVALUATE THE RISKS THAT ARE ASSOCIATED WITH ANY INVESTMENT.
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