Tax Tips For Retail Industry Workers
The retail industry is one of the most competitive industries on the market. This means that it’s hard for employees to stand out and make a living wage, especially if they are not in management or upper-level positions. As a result, retail workers typically work long hours with little pay, but there are some ways to save money on taxes as an employee in the retail industry.
The retail industry is one of the fastest-growing industries in Australia. With so many people choosing to work as a retail employee, you must know what taxes and deductions that apply to your income.
Below we’ve outlined some common tax tips for Australian Retail Industry Workers. -If you’re claiming expenses on things like clothes or uniforms, they must be used exclusively for your job and not just worn at work. If they’re not exclusive, then only the cost of such items can be claimed as an expense.
Retail Industry Workers Tax Return and Deduction Checklist
No-one looks forward to taxing time, but the good news is that it’s actually an opportunity for you to secure a great return from the ATO potentially. But how do you do this? First, make sure you claim every legitimate deduction and work with a really experienced and knowledgeable tax professional who knows how to maximise your income and expenses.
To get you started, this checklist is designed to help you tick off every possible work-related expense and get the best return.
Thousands of people around Australia work in retail, and it’s these hard-working employees who keep shops and retail outlets open and running across the country 365 days a year. If you’re a retail industry worker, your income statement will be available from the ATO employer and will outline your salary and wages, bonuses and allowances for the year. You can access this yourself through your myGov account, or your accountant can access it directly for your.
Can I Claim Any Deductions?
You can claim tax deductions on any money spent during the financial year on products or services that are directly related to earning your income. You need to have spent the money yourself (it can’t have been reimbursed by your employer), and you need to keep a record of the expense, such as a receipt or invoice.
What Tax Deductions Can I Claim?
There is a wide range of deductions you can claim as a retail worker, such as:
- The purchase and cleaning of a compulsory uniform or any clothing featuring a design that your employer has registered with AusIndustry
- Overtime meal expenses if you receive an overtime meal allowance and it’s included in your assessable income
- Technical and professional publications relating to your work (such as a health food magazine for someone working in a health food shop)
What Can’t I Claim For Tax Deduction?
There are several key expenses you can’t claim, including:
- Clothing that is a specific colour or brand but doesn’t feature a company logo and is otherwise fine to wear outside of the workplace
- The cost of any food, drinks or snacks consumed during the workday
- Grooming costs such as getting a haircut or buying cosmetics, even if being well-groomed is a requirement of your job
What Records Do I Need To Keep?
Record keeping is important, and it’s a good idea to create an easy and reliable system to help you keep on top of this throughout the year. You don’t need to keep physical receipts, and it’s acceptable to keep a digital copy (such as a photo of a receipt or an email receipt) provided it is possible to read:
- The name of the supplier
- Amount of the expense
- Nature of the goods or services
- Date the expense was paid
- Date of the document
You also don’t need to keep receipts for expenses under $10 (as long as these don’t cumulatively come to more than $200), and for any hard to get receipts, it’s sufficient to make a note of the purchase in your diary of all the above details.
What Happens If I Make A Mistake In My Tax Return?
You must take great care in putting together the information and supporting documentation when filing your tax return and only claim deductions that are genuine to avoid penalties and possibly even prosecution from the ATO.
But we all make innocent mistakes sometimes, and if you realise you’ve submitted any incorrect or unsubstantiated claims, then you should contact your accountant immediately, and they will assist you in making the necessary tax return amendments.
Retail Tax Deductions
There are a number of retail tax deductions available for shop assistants.
The trick is to know what items you can and cannot claim on your next online tax return. Luckily, with more than 20 years of industry experience, Online Tax Australia has in-depth knowledge of all the types of expenses retail sector employees can claim on their tax returns.
So, we’ve put together the comprehensive guide to retail deductions below to help you prepare your next online tax return.
As you’ll see, the majority of tax benefits come in the form of tax deductions for out-of-pocket expenses that you have incurred throughout the course of the year that your employer is not mandated to reimburse.
Retail Tax Deductions: Meals and Travel
You may claim the cost of meals when working overtime provided you have received a meal allowance from your employer, which is based on an Industrial Award. AND that allowance is shown separately on your PAYG certificate.
You can claim the actual cost of the meal or up to the Australian Taxation Office allowable limit without retaining receipts. However, amounts claimed over that amount will need to be supported with receipts.
You may claim the cost of travel (including any parking, tolls, taxis and public transport) if you are travelling to or from meetings, seminars, conferences, or training that is not being held at your usual place of work.
If you are required to stay away from home overnight for the purposes listed above, you may be eligible for a tax claim for the cost of accommodation and any meals consumed.
You may claim the cost of your personal car if it is used for work purposes, including travel to meetings, conferences or training, to undertake banking, to pick up or drop off stock or to travel between two different stores.
However, if you plan to claim the cost of using your personal vehicle, you will need to keep a diary of the number of kilometres travelled.
Retail Tax Deductions: Uniforms and Protective Clothing
If you work in the retail sector, you can claim the cost of a uniform, provided that it has your employer’s logo permanently affixed. There are a number of protective clothing items that you may be able to claim as a tax deduction, including:
- Safety items such as glasses, gloves, protective coats, high visibility clothing and aprons
- Sun protection items including sunscreen, sunglasses and hats
- You cannot claim the cost of conventional clothing, even if your employer requires that you wear specific items (such as business suits, specific coloured clothing, certain brands or items that your employer sells).
- You can claim the cost of renting, repairing and cleaning any of the eligible work-related or protective clothing mentioned above, with the following provisions:
- If your tax deduction claim for laundry is under $150, no written documentation is required. The Australian Taxation Office calculates the cost of laundry at $1 per load of work-related clothing, or 50 cents per load if other laundry items are included.
- If you are claiming dry-cleaning or clothing repairs, you are required to keep receipts.
Retail Tax Deductions: Equipment and Tools
- You can claim a tax deduction for work-related equipment and tools that cost less than $300 each.
- Items worth more than $300 each must be depreciated over the useful life. Entering the item in our depreciation calculator will calculate the correct claim for the current year and carry the balance forward to claim in future years.
- If an item is used partly for business and partly for private purposes, then you are entitled to claim the only the business-related portion.
- Typical equipment and tools eligible for a tax deduction for retail industry employees include Electronic equipment such as computers, Ipads and mobile phones.
Retail Tax Deductions: General Expenses
There is also a range of general tax deductions, available to all Australians regardless of profession or occupation, including:
- Conference and seminar fees
- Reference books
- Telephone and internet fees (for the work-related portion only)
- Home office costs
- Tax agent fees
- Donations to registered charities
- Income Protection Insurance
Tax Tips for Retailers
Running a business is hard enough without getting caught up in the complexities of the tax system. So, to make things simpler, H&R Block has produced a beginners’ guide to the tax deductions all retail businesses should be looking to claim.
Purchases Of Stock
Everything that you purchase to sell in your store is tax-deductible as a cost-of-sale. In addition, you can also claim for associated costs of getting stock delivered from suppliers as well as other costs of sale such as delivery charges to customers (if you pay them rather than the customer), packing, etc. If you travel to trade fairs to examine new products, those costs are also deductible.
Write-off any lost, damaged or obsolete stock before the year-end in order to claim a tax deduction.
Immediate Write-off Of Capital Purchases
Until 30 June 2018, your business can claim an immediate tax deduction for all capital purchases that cost less than $20,000, rather than writing off the cost over several years. That could be a great way to refresh your store and generate some extra cash flow. To qualify, your business must be a small business (i.e., with an aggregate turnover or less than $10 million. Amongst the items, you could look at claiming are the following:
- Cash registers and other POS devices
- Delivery vans
- Store fittings and fixtures
- Computers, laptops and tablets
- In-store security systems
- Accounting software
- Advertising and marketing costs
Advertising and marketing to sell stock, gain publicity and hire employees is all tax-deductible. Costs incurred in entertaining clients and suppliers, sadly, are not deductible.
Rent, mortgage interest, rates, and land tax for your business premises are all tax-deductible.
Salary And Superannuation Expenses
You have to pay staff wages, and you also need to contribute compulsory superannuation payments for everyone on the payroll. All those costs are tax-deductible. If you can get your June quarterly super payment in before 30 June, you might be able to accelerate that deduction into the current tax year (the actual deadline is in July, after the next tax year has started).
All tax and accounting related expenses should be tax-deductible, including the cost of hiring a bookkeeper to prepare your business records, having tax returns or BAS prepared, tax-deductible and costs associated with attending to an ATO audit or objecting to a tax assessment that you think is incorrect.
Employers can generally claim an income tax deduction for the cost of providing fringe benefits and for the Fringe Benefits Tax (FBT), they pay on those benefits. A fringe benefit is a benefit provided to an employee (or their associate) because that person is an employee (or a former or future employee) and can include items such as cars and car parking spaces.
Premiums you pay for business insurance are generally tax-deductible, provided they are connected to your business’s capacity to earn an income or to protect its assets.
This means that premiums for workers compensation insurance, professional indemnity insurance, fire damage, theft cover, public liability insurance, loss of profits and commercial motor vehicle insurance are all tax-deductible.
Premiums for key person or key man insurance, a type of policy which offers a benefit payment when an important company employee is incapacitated and no longer able to work, can also generally be claimed as a tax deduction provided the key person cover is was taken out to protect your business’ revenue.
Having Your Business Tax-free tax-deductible
Not a tax deduction as such, but a tax relief that applies to small businesses, the government has recently introduced new measures which allow businesses to reorganise themselves without incurring unexpected income tax consequences, such as capital gains on asset transfers.
This is particularly valuable for new and expanding businesses looking to change their legal form to allow greater asset protection for the owners or greater freedom to expand by changing from a sole trader to a trust or company.
The above guide is a brief overview of what your retail business should be claiming. As a general rule-of-thumb, any cost incurred in generating income for your business is deductible, either straight away or over time.
What can Retail Workers Claim Tax For?
Here’s our “essentials” list of retail worker tax deductions. Keep in mind, most people cannot claim every item on this list and the ATO may ask you for proof of the deductions you claim.
General work-related costs
- Mobile phones – if you a make or take work-related calls on your personal mobile phone
- Tablets and laptops – if you send emails, manage rosters or do stock orders on your personal tablet or laptop computer
- Internet costs – if you use your home internet for work related purposes
- Car Expenses – if you ever use your car to travel between shop locations. (Remember, travel from home to work is not claimable though).
- Union or Membership fees
- Stationery – diary, logbooks, pens and pencils
- Books, catalogues or magazines that relate to your position
- Work bag
Clothing and protective equipment
- Purchase and repair of uniforms (only for items that have a company logo)
- Laundry or dry cleaning costs of uniforms with logos
- Protective equipment including:
- Head/hair protection
- Sunscreen and sunglasses (if your work requires outdoor work)
- Boots or protective shoes
Important Note: If you claim uniform costs, the item must be a required item for your job and have the employer’s logo, or be a protective or safety item. If the item of clothing is, for example, a plain black skirt or pants with no logo, then the ATO does not allow it as a claim on your tax return.
Meals, travel and accommodation
- Meal costs when working overtime
- Meal costs when you are working away from your home city (overnight trips etc.)
- Accommodation costs and incidental costs when working or training away from home
- Work related travel and/or car expenses for traveling to meetings, training, to pick up stock or between stores. (Unless you are carrying heavy equipment that cannot be left at work, travel costs between home and work are not deductible).
- The fees for short courses or university courses directly related to your work
- Related expenses including:
- Phone calls
- Travel cost
- Accommodation and meals (if the course requires an overnight stay)
- Tools and equipment required to undertake the course
- Books and training manuals