In 2022 Tax Tips

How To Claim Big Tax Deduction

Did you know that you can claim a big tax deduction on your income taxes? Unfortunately, many people are unaware of this tax break, and as a result, they miss out on hundreds or even thousands of dollars in potential savings. This blog post will explain what the tax deduction is and how you can claim it. We will also provide some tips for making the most of this deduction. So if you’re looking to save money on your taxes, read on!

Are you tired of forking over so much of your hard-earned cash to the ATO each year? If you’re like most people, the answer is likely yes. But did you know that there are a number of tax deductions available to you that can reduce your taxable income? In this blog post, we’ll tell you all about how to claim a big tax deduction. 

Did you know that many tax deductions are available to people who file their taxes? If you’re not sure how to claim a big deduction, don’t worry – this blog post will explain everything. Keep reading to learn more about how to take advantage of tax deductions and save money on your taxes. 

How To Claim Big Tax Deduction

Australians are being urged not to be seduced into accepting the increased flat rate on offer this tax season.

The Australian Taxation Office has simplified the claims process for the masses forced to work from home during the coronavirus lockdown by boosting the standard hourly rate this financial year from 52 cents per working hour to 80 cents.

But National Tax and Accountants’ Association spokesperson Andrew Gardiner says this will result in hundreds of dollars being trimmed from what the taxpayer is owed.

“The concession covers off heating, cooling, electricity and then payments to do with your computer, printer, cartridges, and paper,” the senior tax manager told news.com.au.

“People need to be very careful with that concession because it is only 80 cents per hour, and when you factor that in over a standard 40-hour week, we’re only talking $32.

“And if you factor that in over the period of COVID-19, it’s not a massive claim. So people need to be careful they’re not simplifying their affairs by adopting this approach at the detriment of a much bigger claim.”

Opting for the flat rate means the taxpayer will forgo their right to claim the new desk, chair or computer they splashed the cash on when the pandemic forced the majority of the workforce to abandon their office.

Record Keeping

woman working calculator with tax coins

Coco Hou, CPA and managing director of Platinum Accounting and Platinum Professional Training, said people wanting to claim deductions for expenses associated with services they may be using while working from home would need to undertake careful record keeping.

“Keeping a timesheet is essential for claiming utility deductions,” she said.

This enables the person preparing the tax return to understand what portion of the individual’s home running costs can be attributed to their work from home time. Utilities may include electricity, gas, phone, internet, and water.

“Other expenses may include rates, insurances.”

Documentation

“Many people may also have to go out and buy technology, office equipment, furniture, consumables such as paper, and other items to set up work at home. These expenses may also be claimed,” Ms Hou said.

She encouraged people to be diligent with record-keeping and to keep invoices and receipts for tax purposes

“Invoices and receipts are important for work-related purchases.  The more claims you make, the more evidence you need.”

Use Apps

“I always encourage my clients to download and use simple apps that help you to capture and manage expenses,” Ms Hou said.

“In the old days, people used to keep these in shoe boxes. Thankfully apps make record keeping a lot easier. You can simply take a photo of the documents and upload them to the cloud.

“Most good apps will integrate with cloud-based accounting solutions such as Xero. This means your accountant can access the information easily when preparing your tax return.   Ideally, ask your accountant which apps they use and download one of these.”

Travel

While most people are confined to their homes, travel can be necessary for some.

“If you need to leave the home to travel somewhere to purchase items essential to your work, you may incur costs doing this,” Ms Hou said.

“If you travel by car or public transport costs are incurred. For example, you may need to put petrol in your car.  Keep a log book for your vehicle and keep track of the kilometres travelled.”

Easily Overlooked Items

Don’t forget to include expenses associated with car insurance or subscriptions for services you may need to access in your work, such as media accesses.

Purchasing Assets

For workers purchasing items to set up workspaces at homes such as desks, chairs and other items, it is important for wage and salary earners to know that the threshold for instant assets write off is $300.

However, for business owners, including sole traders, the threshold is $150,000, up from $30,000. So for those with available funds, it is a good time to shop if you have the cash.

The ATO is assisting people where it can.   “Higher running costs claims are now allowed,” Ms Hou said. “The ATO has increased this from 52 cents per hour to 80 cents per hour for running expenses while working from home.

“The ATO has also loosened requirements around workspaces. No dedicated working area is required. Each family member can make a claim through their own return, even though they might be sharing the working space. “This was not allowed in the past. It is now much easier to claim.

“You only need to keep a timesheet, no other substantiation is required. Importantly the ATO wants to avoid ‘double dipping’. Therefore, expenses must be out of pocket expenses. If your employer reimburses the expenses, then the claim is not allowed.”

“Once you go down the path of adopting the ATO’s 80 cents per hour claim, you then forfeit your right to separately claim for home office expenses like electricity which extends to the internet and home phone.

“It also then removes the right to claim depreciation on your desk, computer and consumables like print cartridges and paper.”

How Do I Get The Biggest Tax Refund?

Tax refunds can feel like Christmas in springtime. With a sudden boost to your bank account, you can look forward to going on a shopping spree, paying down your debt or squirrelling the refund away in savings.

Many Australians lose hundreds of dollars each year simply because they forget work-related deductions or receipts for items they can claim back.

Do you compare your tax refund to your friends and family and wonder, “How can I get a better tax refund”?

Fortunately, there are lots of ways most Australians can improve their tax refund. But, unfortunately, millions of dollars are left in the hands of the ATO every year, lost by taxpayers who simply didn’t make the most of their tax return.

Proper tracking and claiming of tax deductions is the biggest strategy for getting the best tax refund. Along the way—and this is serious—you should not add fictional or inflated claims to your tax return. The ATO has new technology that can find inaccuracies in your tax return, and they are better at this than you could even imagine. But that’s okay—we should all pay our share in Australia, and we can still get nice, fat tax refunds by doing it right.

Doing taxes is agreeably a “taxing” chore. But a little time spent now to look over your finances can go a long way in helping save money and reap the benefits of deductions sooner.

The Australian Taxation Office has billions of dollars in their kitty to hand back to taxpayers. All you need to do to improve your refund is to think a little creatively. The ATO is equipped to detect an undeclare wage, bank interest, share dividend or any other income. But, unfortunately, it has no way of informing you about a forgotten deduction for work-related expenses, investment costs or other items.

Does your preparation for tax day start with a trip to the liquor store, or perhaps a one-way ticket to Costa Rica? 

Taxes are unpleasant, but drinking or fleeing the country is not the answer. Instead, tackle your taxes head-on with solid preparation, and the experience may turn out to be more pleasant than you thought it would be. Here are a few tips to help you with your tax preparation and increase your chances of getting the biggest refund you deserve.

One of the easiest ways to boost your tax return is by taking advantage of the deductions you’re able to claim.

Claim As Many Work-Related Expenses As You Can

Many expenses that you accumulate through your chosen career path can be claimed in your tax return. However, many cannot, and incorrectly claiming these may result in a penalty from the ATO. Some are more obvious than others, like an apprentice’s tools or travel expenses (as explained above). 

However, did you know that journalists may be eligible to claim their pay-TV costs? So long as these are incurred in performing their work (for example, a sports journalist who needs to have access to the sports channels), they can be claimed as deductions. There are thousands of things you may be eligible to claim as work-related expenses.

Here’s a few examples that you might be eligible for:

  • Tools and work-specific clothing. The item is needed to perform your job, e.g. tools that merchants use, equipment that hairdressers use, special shoes such as steel cap boots.
  • Safety items. Item’s needed for self-protection or safety when doing your job, e.g. sunscreen and sunglasses if you are required to work outside
  • Laptops and mobile phones. If these are used for work purposes, you’re able to claim it on tax (if you have a laptop that you use for work and personal use, you’re only entitled to claim the portion that you use for work).
  • Courses and conferences. Self-education expenses, such as courses and certificates, need to be directly related to your profession and will help you get a promotion or a pay rise.

Claim Tax Deductions For Working At Home

If you work from home full time, part-time or only on the odd occasion, you’re eligible to claim this as a tax deduction. For example, if you’re running a business from home (full-time or part-time) that requires you to use computers, phones and other electronic devices, you could be eligible to claim deductions on certain costs. This even included the cost of your home internet and electricity bills!

Working from home tax deductions can include the following:

  • Cleaning costs. The expenses incurred by cleaning office space at home.
  • Office furniture. Purchase and repair costs for office furniture and fittings required to do your job.
  • Your phone bill. Landline and mobile phone calls related to work matters (you should get an itemised phone bill and highlight the work-related calls)
  • Your home internet bill. You can claim a portion of your monthly internet bill, in line with how often you use it for work purposes.
  • Electricity bills. You can also claim a portion of your home electricity bills, in line with how often you work from home.
  • Amazingly, you can also claim a portion of your occupancy expenses, like rent, mortgage, and home insurance, so long as you operate your business solely from your home and have a dedicated space for business activities. You must claim to work from home expenses correctly to avoid a penalty from the ATO. You’ll need to show evidence and your calculations to justify how much you’re claiming. A tax agent can do this for you to ensure you’re claiming correctly.

Easy Ways to Get a Bigger Tax Refund

business analysis

Do you get the full tax refund you’re entitled to when you do your tax return each year? Are you looking for a bigger tax refund but don’t know where to start and don’t want to get in trouble with the ATO?

In Australia, millions of people miss legitimate tax deductions. Unfortunately, that means people don’t get the tax refund they deserve. Is that you?

Australia’s complicated taxation system includes lots of rules about what you can and can’t claim. So getting tax deductions right isn’t simple, but there are ways to get help and get it right.

Ask Your Tax Agent Questions

Do you know every deduction and work-related expense you’re legally entitled to claim on your tax return?

For most of us, the answer to this question is “no”. But, according to ATO figures, that’s why most Aussies use a tax agent – more than 70% use an agent like Etax.com.au.

Just ask your tax agent about tax-deductible expenses and what you can claim because they can often suggest an additional deduction you didn’t know about.

For example, did you know that, unless they’re paid through your superannuation, you can claim your income protection insurance premiums?

You may also be able to claim work-related home office expenses, mobile phone costs, car expenses, union fees… the list goes on!

Claiming just one extra deduction could mean hundreds of dollars more at tax time, helping you to get a much bigger tax refund. So be sure to ask your tax agent!

Save Your Receipts With An Online Tool Like Etax

For every work-related purchase you make, it’s important to save your receipts so you can claim the expenses on your tax return. (In fact, not only is it important – it’s the law!)

Saving your receipts helps you to claim more expenses, which is why it’s a great way to get a better tax refund.

The easiest way to save your receipts is by using the Etax website.

  • Login to your Etax account.
  • On the welcome screen, scroll to the bottom section labelled “Add deductions or receipts you have for 2022 now”.
  • Click the “Add deductions” button to attach receipts and files.

Claim Work-Related Mobile Phone Expenses

If you use your mobile phone for work-related calls, then you can also claim a proportion of your yearly mobile phone bill on your tax return.

To work out the proportion of the mobile phone bill you can claim, you’ll need a monthly account statement from a “typical” month and a calculator. First, work out the percentage of work-related calls you made, and then claim that percentage of your yearly bill.

Claiming your mobile phone expenses can give your tax return a great boost. For example, if 40% of your calls are work-related, and you spend $660 a year on your phone bill, you can claim $264 of work-related mobile phone expenses on your tax return. For someone earning $60,000, that could mean more than $70 more in your refund!

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