What Can I Claim On Tax?
Many people find the subject of taxes to be difficult to understand. Because there are so many tax breaks and credits to choose from, it can be challenging to determine which ones are available to you. In this article, we will discuss some of the most frequent tax deductions and credits in an effort to make the process a bit less intimidating for our readers.
Are you interested in finding out what deductions you can take on your tax return? Within the scope of this article’s discussion, we will go over the numerous exemptions, deductions, and credits that can be claimed by taxpayers. In addition to that, we will offer some advice on how you might maximize the amount of your tax refund.
Taxes are something that nobody enjoys doing, but it’s something that everyone has to do. On the other hand, were you aware that the government makes a variety of tax breaks and credits available to help lower the amount of money a person owes in taxes? In this article, we will discuss some of the most popular tax deductions and credits that individuals are eligible to claim on their tax returns. Continue reading this article if you wish to lower the amount of income that is subject to taxation.
When it comes to matters pertaining to taxes, there are a wide variety of questions that arise. What sort of claims may you make? When does the deadline roll around? How do you file? When it comes to their taxes, a lot of people are unsure about what kinds of deductions they can make. In this blog article, we will discuss some of the most frequent tax deductions and credits that individuals can claim on their tax returns.
Bear in mind that this is not an entire list, and you should always contact with a tax professional to determine whether or not you are qualified for any particular deductions or credits. Therefore, without further ado, let’s have a look at some of the most frequent tax deductions and credits that are available!
You might be wondering, “What Can I Claim On Taxes?”
You might be asking yourself, “how much tax do I pay?” as the conclusion of the fiscal year draws closer. especially if this is your first time doing taxes, you may be thinking “how much can you claim for working from home?” Our good friends at the Davidson Institute, who are experts in financial education at Westpac, have supplied useful tax time ideas for you to contemplate. They want to ensure that you comprehend what you are eligible to claim and that you traverse this time of year with self-assurance.
How exactly do tax deductions function?
When filing your tax return, you have the legal right to make deduction claims for costs that you incurred while working. These are referred to as “work-related deductions.” In order to be eligible to submit a claim for a deduction relating to your place of employment, you must satisfy all of the following requirements:
- You need to have a record to back up your claims;
- You are the only one who could have spent the money;
- It appears that you did not receive any compensation for the expense;
- The expenditure ought to have some bearing on your work.
Only the portion of the cost that was attributable to your employment can be deducted from your income tax return, even if the price was incurred for both personal and professional reasons.
How Can You Ensure That You Receive The Largest Possible Tax Refund?
The simple fact that many Australians fail to keep track of their work-related deductions or the receipts for products for which they are eligible to receive reimbursement causes them to lose hundreds of dollars each year.
Do you look at your tax refund and compare it to that of your friends and family, and then ask yourself, “How can I receive a higher tax refund?”
The good news is that the majority of Australians have a number of options available to them to maximize their tax return. However, however, millions of dollars are wasted each year by taxpayers who simply did not make the most of their tax return and are therefore left in the hands of the Australian Taxation Office (ATO).
The most important step in maximizing your tax return is to meticulously keep track of and claim all of your eligible tax deductions. Along the way, you should avoid adding any claims that are fictitious or exaggerated to your tax return. This is a very serious matter. The Australian Taxation Office (ATO) has access to cutting-edge technology that may detect errors in your tax return, and they are significantly more adept at doing so than you could ever anticipate. But that’s good; in Australia, we should all pay our fair amount of taxes, and if we play our cards well, we may still walk away with a beautiful, fat tax return.
Take Advantage Of The Tax-Free Limit
Residents of Australia are eligible to make a claim for the tax-free threshold, which allows them to lower the amount of tax that is taken from their wages throughout the course of the year.
What is the tax-free threshold?
There is a possibility that you will not be required to file an income tax return if your taxable income for the year that ends on June 30, 2020 is less than the exemption amount of $18,200. This $18,200 level for income that is exempt from taxation is comparable to $700 every two weeks or $1,517 per month.
However, if you have had tax taken from your income throughout the year and you are below the level at which you are required to pay tax, you are required to file a tax return in order to have the tax that was withheld from your income refunded to you.
Pay-as-you-go (PAYG) withholding amounts from your salary are two common examples of scenarios in which tax may be withheld. Another case in which tax may be deducted from bank interest income is when you have not supplied your tax file number (TFN) to your bank.
Identify All Your Sources Of Assessable Income
Determine all of the sources of income that you received throughout the year that can be taxed as part of your income and include all of this information on your tax return.
These sums can include the following:
- Earnings from your employment, whether as an employee or as a contractor, along with any tips you may have gotten.
- Earnings from investments, such as interest from a bank account or dividends on shares of stock received.
- Some government funds that were received, such as the Youth Allowance, the ABSTUDY living allowance, and the Austudy payment.
- a selection of honors, grants, and scholarships offered by private organizations.
- Payments made by a trust to beneficiaries.
Learn Which Work-Related Expenses You Can Deduct From Your Taxes
There are certain costs that can potentially be deducted from your income tax return because they are directly connected to the money that you have earned. For instance, you are eligible to make a claim for deductions connected to work if:
- You are the one who is responsible for the expense;
- The expenditure is inextricably linked to the generation of your revenue;
- If your employer has not previously paid to have it refunded, it has not been;
- You are able to substantiate that because you have kept the necessary records.
The majority of work-related costs that qualify for tax deductions include the following:
Vehicle and travel expenses:
If you use your car for work-related purposes, you have the right to claim the costs associated with doing so; however, this right only applies if you personally own the car that you use for work-related purposes. You are not eligible for any compensation if, for instance, your employer owns the car you drive or includes it as part of your compensation package. In addition, you are not allowed to deduct the cost of your daily commute to and from work because this is deemed to be private travel. Nevertheless, you are eligible to submit an expense claim for any travel expenses incurred while going straight between two different workplaces. Visit the website of the ATO to learn more about the deductions available for travel and vehicle expenses.
Work-related clothing expenses:
- This includes apparel that immediately identifies your employment, such as an apron and hat for a chef, as well as distinctive work uniforms, protective gear and shoes, and even protection like eyewear. It is also feasible to submit a claim for the money spent on laundering, drying, ironing, and dry cleaning work clothing that qualifies for the deduction. You can get more information about clothes, laundry, and dry-cleaning expense deductions by going to the website of ATO.
Expenses for a home office:
If you work from home during the tax year, whether full-time or part-time, you may be eligible to claim a tax deduction for a portion of the expenditures associated with maintaining a home office. If, on the other hand, you choose to establish your home office in a room that is used for more than one thing (like a living room), you will only be able to deduct the costs associated with that office for the time period during which you had sole use of the space. Among the costs associated with a home office that you might be eligible to deduct are the following:
- Heating, ventilation, and lighting were provided.
- Equipment for use in a home office, such as personal computers, printers, and telephones.
- calls made for business purposes (including those made on mobile phones), as well as phone rental fees. You are eligible to make a claim for a percentage according to the fraction of time spent using the line for work-related purposes.
- The decreasing value of the furniture and fixtures in the home office. If you outfit your home office with furniture like desks, storage, and cupboards, you may be eligible to take a deduction for the value loss of that furniture to the extent that it is related to the activities that you perform for your employer.
- The value of computers and other office equipment has decreased with time. If you buy equipment to use in your home office, you can depreciate those items over the course of their useful lives and claim a deduction each year for the portion of the expense that is linked to your employment. A cell phone, a tablet computer, a desktop computer, a laptop, and/or a printer are examples of possible technological devices.
- Other expenses, such as the cost of printer ink, stationery, internet fees, cleaning fees, and repairs to your home office’s furniture and fittings are also included in this category.
- Visit the website of the ATO to learn more about the deductions available for expenses incurred while working from home.
Learn more about how to make a claim for working from home by reading the information provided here.
If the course you take results in a formal qualification and satisfies the following conditions, then you will be able to take it:
- The training ought to have a significant relationship to the work that you are doing now;
- Keep up with or enhance the precise abilities or information that your current job requires of you;
- cause, or is expected to cause, an increase in the amount of money you make from your existing job;
- lodging and meals (if you are going to be away from home overnight);
- computer consumables;
- course or tuition expenses;
- drop in value for deteriorating assets (cost exceeds $300);
- acquisition of hardware or technical instruments with a price tag of no more than $300;
- equipment repairs;
- expenses incurred in operating a home office
- usage of the internet, excluding costs associated with a connection;
- parking fees (only for claims linked to employment); parking costs;
- calls on the phone;
- student union fees;
- costs associated with student services and privileges;
- trade, professional, or academic journals;
- transportation to and from the educational facility (only for work-related claims).
Please visit the website of the ATO for further information regarding the deduction of costs associated with self-education.
Hardware, software, and various other resources:
- If you are a tradesperson, you probably use a variety of tools on a daily basis. According to the law, if you have paid for those items specifically to use in the course of your work, you are eligible to deduct those costs. You can also deduct the cost of a vehicle that you use in your business or for your jobs, such as a van or a truck, as long as you paid for the vehicle.
- Calculators, computers, software, desks, home-office chairs, desk lamps, cabinets and bookshelves, and books related to your career are some other examples of tools, equipment, and other assets.
- You can get additional information regarding deductions for tools, equipment, or other assets by visiting the website of ATO.
Dues to professional organizations, payments for periodical subscriptions, and payments to trade unions:
The good news is that in some cases, you might be able to deduct the cost of your subscription fees if your job requires you to be a member of a professional organization. If you are a member of a trade union, your dues and fees may also be deducted. On the website of the ATO, you will find more information about the work-related expense deductions that you are eligible to claim.
Profits from investments
If you have received any of the following, you may be eligible to claim certain tax deductions related to investment income:
- Payments of interest based on your savings;
- Your investments in shares should generate dividends;
- Rental income from a property held for investment purposes;
- Another form of earnings from investments.
If you have received any of these types of income, you may be eligible to file a claim for the expenses that are associated with this type of income. Some examples of these expenses include the interest that is charged on money that was borrowed to purchase stocks or rental properties.
You may also be eligible to receive a refund for fees associated with receiving investment advice.
On the website of the ATO, you will discover more information about deductions that can be claimed against your income.
After you have submitted your tax return, it is imperative that you maintain all of your cost records for future reference. If you make any claims to the ATO, they may ask you to provide documentation to support your claims.
Membership Dues to Professional Organizations, Publication Subscriptions, and Union Dues
You might be a member of an association because it’s required for your job, and if so, the good news is that you can get reimbursement for your membership dues. If you are a member of a labor union, the dues you pay are also tax-deductible.
Your return can take a hit if you invest in magazines or pay for subscriptions to publications that are relevant to your industry. If you are an investor, you are eligible to make a claim for financial publications and research services. Consider the future and prepay the costs for the following year before the June 30th deadline in order to get your deduction.
Donations & Gifts of All Kinds
You are only eligible to receive a tax deduction for your gifts or donations if the organization to which you gave them is qualified as a deductible gift recipient (DGRs). To be eligible for a tax deduction for a gift, the recipient must satisfy all four of the following requirements:
- It is required that the donation be given to a DGRs;
- It must be clear that the item you are giving away is intended to be a gift.
- It can be either money or property, and it also includes financial assets;
- Any and all conditions that are pertinent to the gift must be met. It is usually in your best interest to check, as various DGRs may have different requirements.
The maximum allowable amount to be claimed is different for each kind of gift. For the money, it needs to be at least two dollars. When it comes to real estate, the guidelines can change based on the kind and price of the asset.
How Much Can I Demand?
You are eligible to take a tax deduction for monetary donations as long as the total value of the present is greater than two dollars. When it comes to gifts of property, the regulations vary greatly based on the nature of the property, as well as its value.
You are eligible to claim the deduction on your tax return for the income year that coincides with the year in which the gift was given. Your receipt, which you will need to provide as evidence to support your deduction, should indicate whether or not you are eligible to make a deduction claim.
Your web receipt or credit card statement can be used to justify the deduction for any donations made over the phone or via the internet that are greater than two dollars. If you made your contribution through a third party, such as a bank or a retail establishment, the receipt that they provided you with is also adequate. Your payment summary will indicate the total amount of your contribution if it was made through the “workplace-giving” program.
Mobile Phone Use
If you use your personal phone for work-related reasons, you may be eligible for a deduction provided that you paid for the use of the phone and have records to back up your claims. If you use your phone for both work and personal reasons, you will need to calculate the proportion of time that may be attributed to your professional activities. You are not allowed to submit a claim for reimbursement of phone costs after they have already been paid for by your employer.
In order to calculate your deduction, you will need to select a typical period of four weeks that falls within the tax year at some time.
If you have a phone plan that provides you with an itemized bill, you need to calculate the proportion of time you spent on work-related calls during the previous four weeks. After then, you can use that information for the entire year.
It is vital that you compute the proportion utilizing a rational basis.
Learn about any other deductions you might be eligible to take.
When it comes time to fill out your tax return, here is a rundown of some of the additional tax deductions that you should take into consideration.
- Expenses related to the management of tax matters: If you used the services of a qualified tax agent to prepare your tax return for the previous year, you may be eligible to take a deduction for the amount that you paid for that service in the current year’s return. It is possible for you to deduct the cost of any tax advice that you paid for during the current tax year. In addition, you have the option of deducting any expenses related to travel that you incurred going to and from your agent.
- If you pay for insurance premiums against loss of income, the amounts that you pay are tax-deductible. Income protection insurance is an example of this. It is important to note that this does not include insurance for critical care, trauma, or life. Neither does it cover life insurance. It also does not cover insurance policies that are bought with money from your retirement savings.
- Donations and gifts can only be claimed as a tax deduction if the organization to which they were given is recognized as being eligible to receive tax-deductible gifts (DGRs). Many charitable organizations in Australia qualify as DGRs, but not all of them do. You are eligible to take a tax deduction for monetary donations as long as the total value of the present is greater than two dollars.
- Interest and investments: Expenses you incurred in order to earn interest, dividends, or other types of investment income can be deducted from your taxable income. You are able to deduct account holding fees for investment purposes from the costs of interest income if those fees are related to the investment of funds. Keep in mind that if you and your partner have a joint account, you will only be able to collect the portion of the costs that corresponds to your share of the account. You are able to take a tax deduction for interest paid on money borrowed to purchase shares of stock, which can be applied to both shares