Before claiming a tax deduction for work-related expenses, ensure
- that you actually spent the money and were not reimbursed,
- the expense directly relates to earning your income and
- you have the records (such as invoices) to prove it.
If the expense is for both work & private use, only claim the work-related portion.
Car Log Books
Because of recent scrutiny by the Tax Office, we request that you please send us a copy of the relevant extract from your car log book with your next tax checklist and take this opportunity to remind you that the log book must contain the following information:
- when the log book period begins and ends;
- the car’s odometer readings at the start and end of the log book period;
- the total number of kilometres travelled by the car during the log book period;
- business or work-use travel and the percentage so obtained for the log book period.
We also remind you that the log book must be kept for at least 12 continuous weeks and is valid for 5 years; but you may start a new log book at any time.
From 1 July 2017, all individuals under age 75 can claim an income tax deduction for personal superannuation contributions subject to the limit of $25,000 per annum; however, individuals who are members of certain prescribed funds (such as Commonwealth defined benefit schemes) are excluded. The individual must notify his/her superannuation fund of the intention to claim a tax deduction and receive acknowledgment of this intention in writing from the fund.
Truck Drivers’ Expenses
The reasonable amounts for daily domestic travel expenses (excluding accommodation) of employee truck drivers, who have received a travel allowance and are required to sleep (i.e. take their major rest break) away from home, are currently as follows:
- Breakfast $24.25
- Lunch $27.65
- Dinner $47.70
A driver’s work diary can be used to demonstrate when meal breaks were taken. All accommodation & incidental expenses incurred as part of work-related travel must be substantiated with written evidence (e.g. an invoice).
Renting Out Part or All of Your Home
If you rent out part or all of your home, you must declare the rental income in your income tax return and you can claim deductions for the associated expenses, such as part or all of the interest on your home loan; however, you may then no longer be entitled to the full main residence exemption from capital gains tax (CGT), which means you’ll be liable to pay CGT on part of any capital gain made when you sell your home.
To calculate the taxable capital gain, you need to take into account a number of factors, including:
- proportion of the floor area set aside to produce income;
- period you used it for income-producing purposes;
- whether you’re eligible for the “absence” rule (treating a dwelling as your main residence after you move out and rent it – for up to 6 years in this situation).
Capital Gains Tax Tip
The ultimate way to reduce capital gains tax (CGT) on a property is to live in it because you are then potentially exempt from CGT altogether under the main residence rule. Generally, a dwelling is considered to be your main residence if
- you & your family live in it (with your personal belongings there also),
- it’s the address to which your mail is delivered,
- it’s your address on the electoral roll and
- services such as power & water are connected thereto.
However, note that the main residence exemption is not based on one factor alone and you should be eligible for a full main residence exemption if the dwelling
- has been the home of you & your family for the whole ownership period,
- has not been used to produce assessable income and
- is on land of 2 hectares or less.
Rented Property Travel
From 1 July 2017, travel expenses relating to residential rental properties are no longer tax deductible, even if for the purpose of arranging or effecting repairs & maintenance.
Home Office Expenses
If you work from home, you can legitimately claim part of your electricity bill as a tax deduction. This falls under the category of a home office expense. The Tax Office allows a fixed rate of 45 cents per hour multiplied by the number of hours worked from home.
Lodge on Time!
Remember, if you have a late tax return, get it lodged as soon as possible, even if you expect to pay tax. The longer you wait, the more chance of fines & interest being imposed by the Tax Office. Ideally, always lodge on time, regardless of the anticipated result. A payment arrangement can usually be organised if you need time to pay the tax. We can assist both with lodging late tax returns and organising payment arrangements if required.
Businesses & SMSFs
In addition to preparing tax returns for individuals, we also specialise in providing accounting & taxation services to small businesses (including companies) and self-managed superannuation funds. If you could be interested in such services, please do not hesitate to contact us for an initial free, no-obligation consultation or chat.
We are happy to quote up front – in fact, that’s how we prefer to operate. At our firm, you will always deal direct with an accountant who will take the time to explain issues as well as suggest practical solutions to any identified problems. Our years of experience and knowledge equate to expert advice.
The Pursuit of Happiness
Some wise words for which we cannot take credit but do endorse:
Today, our lives seem to have become an endlessly competitive consumption binge where we are conned into believing that we will be happier if we have the latest products or gadgets.
The things which make us happy generally depend on more time rather than more money.
The number one factor in being happy is strong relationships with a partner, family & friends plus having time to spend with them.
Your Personal Tax Specialists team
Personal Tax Specialists Pty Ltd
Your time and tree friendly tax accountants
Phone 1300 335 675
Liability limited by a scheme approved under Professional Standards