Tax Deductions | Blog Archives - Advice on Australian Tax Returns & Online Tax Advice on Australian Tax Returns & Online Tax

Category: Tax Deductions | Blog

We are entitled to claim certain expenses on our tax return and these expenses are called tax deductions. In order to claim a tax deduction, you must meet specific ATO requirements and making sure that the expenses are helping  you to earn income. If an expense is used by you for both work and personal purposes then you can only deduct the work portion of it. Always keep receipts for work-related expenses to prove the purchases to the ATO if an audit should occur. Common tax deductions include expenses related to vehicle, travel, clothing, and laundry/dry-cleaning. Gifts, donations, home office, interest, dividend, self-education, tools, equipment, and investments are also typical. Check back here periodically for tax deduction updates straight from the ATO.

Have questions? Leave a comment on our blog and we’ll give you the answers you need!

Archive for the Tax Deductions | Blog category

Airport Lounge Membership Tax Deduction

A businessman walks into a (airport lounge) bar…can he deduct that?

No, this isn’t a riddle and the answer is yes. Generally speaking, an airport lounge club membership can be claimed as a tax deduction.


What does the ATO have to say about this?

Funny you should ask. According to the ATO, “The primary function of Airport Lounge Clubs is to provide business facilities and prompt and efficient services relating to the travel of their members.

Now, you may be thinking the initial thought that also popped into my mind…what about the complimentary hors d’oeuvres and bottomless mimosas served to loungers? Don’t worry. It’s no huge secret and the ATO does in fact know what occurs. However, they simply state that this hospitality is ‘merely incidental to the primary function’ of the clubs’ business.  


Can the entire membership be deducted?

Taking a flight is not exclusive to business travelers however, it is essential to certain businesses. That being said, you can most certainly use your Qantas or Virgin memberships when you’re vacationing with friends or family too. With that in mind, you should be separating business use from personal, and only deducting the business percentage on your tax return. Read the rest of this entry »

ATO’s Dodgy Tax Deduction Crackdown

If it sounds too good to be true, it usually is.” –Graham Whyte

Tax agents will promise to maximise your refund if you choose to lodge your tax return with them. What you may not realize is that some will encourage you to claim too big of a refund – more than the ATO would deem you entitled to if they were aware of your actual tax situation. This definitely does not mean that they’re all out to get you. Just be wary, and don’t be too shy to ask the questions that you feel you need answers to.

Beginning this tax season, the ATO is really cracking down on certain tax deductions being claimed. If your tax return is “red flagged” by the tax office, the best that could happen is that your processing time is delayed because an ATO representative will need to review it further. The worst that could happen, in circumstances where a taxpayer has deliberately claimed an incorrect amount, is that an investigation could begin and you could be liable for multiple penalties.


Three Golden Rules to remember when claiming tax deductions.

Whether it’s a manual, e-book, or by word of mouth, there are a set of rules for almost everything. This even includes something that seems as simple as reporting tax deductions. When doing so, be sure to take into account these three rules of thumb:

  1. Make sure the expenses you claim have actually been incurred.
  2. Ensure that your expenses are 100% work-related.
  3. Keep the receipts to prove the claims are for valid expenses.


Let’s discuss some of the dodgy ones…

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How to Claim the Capital Works Deduction

The ATO rewards you for making houses into homes for your renters.

Being a property owner comes with risks, but also reaps rewards. I’m not just talking holiday gift certificates and bottles of wine from your tenants. You can actually claim a tax deduction for the maintenance and care you put into your property that you work so hard on.

The Australian Tax Office offers property investors the capital works tax deduction to claim. Think of this as a reward for all the blood, sweat and tears you put into your investment. Now, let’s see how much it’s worth, how to claim it, and what it applies to.


What is a capital works deduction?

The capital works deduction, aka the “building allowance”, are one and the same. Whatever you’d prefer to call it, it’s applied to your tax return as a deduction, as well as a reduction of the cost basis on the property or building in question. It will offset the cost of any construction you’ve done that assists with bringing in rental income.

Updates to your property that could apply to this tax deduction include, but aren’t limited to:

  • Building expansions
  • Building alterations
  • Concrete and brickwork
  • Property items (excluding equipment and plant, meaning certain utility items)
  • Sealed driveways
  • Excavation
  • Fences
  • Retaining walls
  • Other structural improvements

Read the rest of this entry »

Travel Expenses as Tax Deductions on a Rental Property

Do you live across the country from your rental property or just around the corner?

If you bought a rental property as a money maker and manage it yourself, there will be times when you will need to pay your income earner a visit. It could only be once a year for an annual inspection, or you could be taking weekly trips to tend to the landscaping. You may use your car to get there or hail a cab but, either way, you will tab up some travel expenses. The good news is that these expenses are deductible against any income, rental or otherwise, you received during the financial year.


When can I claim travel expenses?

Let’s take a closer look at the times when you can (and can’t) claim travel expenses as tax deductions.

You can claim a deduction for travel to and from your rental property if the main purpose of the trip was to inspect and maintain the property. In other words, work on the property has to be the primary reason for the trip; any thought of combining expenses specific to your rental property with others not so related should be set aside.

However, you can also claim the cost of overnight accommodation and meals if:

  • the property you own happens to be far away from your home (like an apartment in Mermaid Beach while living in Melbourne), OR
  • it would be unreasonable to expect you not to stay near the rental property overnight when conducting an inspection



So, can I claim a deduction if I travel for property maintenance AND vacation?

Let’s say you are planning on vacationing at a resort in Bondi Beach for 5 days. You live in Melbourne and own a rental property close to the resort that you’re staying at. You figure to conduct your annual inspection on the one day you could spare from your busy sun tanning schedule. On that day, you take a taxi from the resort to your property. Here’s how it works tax-wise:

  • You cannot claim your expenses for traveling from Melbourne to Bondi and back but you can deduct your taxicab fare for getting from the resort to your property and the one day of accommodation (20% of your resort cost) that you spent at your property.

Read the rest of this entry »

Legal Fees as Tax Deductions on a Rental Property

Watch out for those legal fees!

A rental property can be a great source of income, but it does come with some risks. What if your tenants decide to leave mid-lease, for instance? Maybe they stop paying their rent outright? You may have to hire an attorney and take your ex-tenants to court for your loss of rental income.

Here’s some relief: most of these attorney fees can be claimed on your tax return as deductions. These deductions can help you get more tax back.


What legal fees are tax deductible?

You can generally justify claiming any legal expenses that directly relate to a dispute between yourself and your tenant(s). Legal costs you can claim are as follows:

  • expenses incurred in the eviction of a non-paying tenant
  • expenses incurred in taking court action for loss of rental income
  • expenses incurred when defending a damages claim in respect of injuries suffered by a third party on your rental property


Let’s take a look at an example:

Read the rest of this entry »

Claiming Rental Expenses as Tax Deductions

Are you thinking of investing in a rental property?

What do you have in mind? Do you plan to move in and live in it for a bit? Or do you want to rent it outright and start earning income from it? Before you dream of an ever-growing pile of cash, there are several things you should keep in mind from a tax perspective.

First, you should know that any income you earn from renting your property is taxable income. Second, upkeeping your property is bound to accumulate costs and fees. Third (and this is the good news), most of these necessary expenses are in fact tax deductible.

There are two instances when these rental expenses can be claimed as tax deductions:

  1. the expenses incur while your property is on the market to be rented, or
  2. the expenses incur while your property is being rented out

These can tremendously reduce your tax bill. You don’t want to miss out on any of them.


Flexible vs fixed rental expenses

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Top Tax Deductions for Landscape Gardeners

As a landscape gardener, working with your hands comes naturally while tax, well… not so much.


The tradie industry calls for long hours and imposes physical demands that may cause you to prepare and lodge your tax return without realising the tax deductions you could be reporting. Read on before lodging your 2015 tax return. We’ll let you know how you could be claiming a bigger refund this year and doing it quicker than you can unlatch that toolbox.


Tools & Equipment

It shouldn’t be at all shocking to you that your line of work requires an extensive amount of tools and equipment as well as repairs and upkeep. What may be a bit surprising is that most of these out-of-pocket expenses can be claimed as deductions on your tax return. Depending on your specific duties, below is a list of common expenses that could be used to earn you a higher refund back this year.

  • lawn mowers*
  • edgers*
  • garden hoses
  • fertiliser
  • leaf blowers*
  • shovels and rakes
  • fuel for power equipment


* Keep in mind that items costing over $300 must be depreciated and cannot be 100% deducted for the year they were purchased. Read the rest of this entry »

Can I Claim Prior Year Deductions on My Current Year Tax Return?

No, you can’t. You will need to lodge an amended tax return.

Contrary to popular belief, you cannot just carry over prior year deductions from last year to your current year tax return. Whether you forgot to add up those weekly laundry costs for your uniforms or you just found the receipts for your work phone line, you’ll need to lodge an amended return to report these expenses.


How long do I have to lodge an amended tax return?

As an individual taxpayer or a small business, you can typically lodge an amended return within two years from the date of assessment or the date that your original return was lodged. Larger businesses typically have four years to lodge an amended tax return.


Is lodging an amended return worth the trouble?

Prior to lodging an amended return, you want to be sure of a few things:

  • The reported expense should be worth the tax preparation fees. You will most likely need to pay an additional fee to amend a tax return. The deduction you forgot to originally claim should at least exceed the price you will be charged for tax prep.
  • The expense cannot be claimed twice. You want to be 100% positive that you have not already claimed the expense otherwise the ATO will confirm that it wasn’t. If it was, your amended return will be rejected.
  • Have receipts to back up all expenses. Whether you are lodging an amended return or not, keep receipts and records of all expenses. You are not required to keep receipts for expenses under $300 but you still need to be able to account for them.


How do I lodge an amended tax return?

Read the rest of this entry »

Hairdresser’s Tax Deductions

As a hairdresser, you have to build your clientele and keep them happy so they come back for their next number 3. With big responsibility comes hefty out-of-pocket expenses. Read on to see which expenses you can deduct on your 2015 tax return.


Do you use your shears at home and in your salon downtown?

A home office doesn’t only mean a desk and fax machine, right?. If you bring clients to your home, there are certainly costs associated. These costs may dig into your bank account now but you’ll be able to claim most of these expenses as deductions come tax time. Such  deductible expenses include (but are not limited to):

  • portion of electricity used for work purposes
  • portion of internet used for work purposes
  • portion of heating and cooling used for work purposes
  • furniture used for work purposes (just in case you neeeeeed that 360 degree swivel chair!)


Keep your skills well honed!

It’s not just your shears that you should keep sharp. If you find that you haven’t quite mastered the asymmetrical sweep, you may want to head back for some schooling. The best part of it: the cost of the course or seminar that you attend could be deductible if the following applies:
  • The work related training course you’re attending is not run by a university or TAFE. Travel to and from is deductible too!
  • The self-education course you’re attending is run by a university or TAFE. The costs of books, stationery, travel and equipment required by the school is deductible also.

Read the rest of this entry »

Top Tax Deductions for Teachers

Since teaching isn’t the typical office gig, you may want to pay close attention to those extra expenses you’ve acquired. With the proper receipts and documentation, they could be deductible.


Travel expenses

You’re a teacher. Chances are you’re not racking up airfare and room service costs. However, there are specific travel expenses that teachers should keep track of and deduct on their tax return. Teachers who drive can typically use the kilometre method to track their travel costs. Receipts or a logbook are not required unless you are a regular commuter. Some examples of what you could claim as a deduction include:

#1. You travel from work and home. Your school does not provide a safe place for storage so you carry bulky or heavy equipment in your car for work purposes. ie: an art easel or a musical instrument

#2. Are you an itinerant teacher who travels between a different number of schools daily? Maybe you are a language teacher who helps specific students in three different schools each day. Travelling expenses incurred from school to school can be claimed on your tax return. Since you are travelling regularly, you will need to  keep a full logbook and/or receipts.

#3. You travel after you have started work for the day. Let’s say you’re employed at the high school and are required to attend a district-wide meeting mid-school day across town at the elementary school. Travelling to and from is deductible.

#4. If you are required to travel to a work-related event after your typical school day has ended, you can deduct the costs incurred using the kilometre method. For example, there is a district-wide teachers conference that you are expected to attend on Tuesday night across town and you’ll be driving there from your school. This is deductible.

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