finance

7 things you can claim on tax that most people have no idea about.

Tax time is almost here and whether you plan to use an agent to complete your return or do it yourself, it’s vital that you claim deductions for everything that you’re entitled to. Here’s a hit list of some of the tax deductions you might not have known you could claim.

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Professional memberships and subscriptions.

If you’re a member of a professional or trade association as part of your work, you can claim a deduction for the amount you pay in subscriptions. This also covers union fees if you’re a member of a trade union, as well as subscriptions to trade or professional magazines.

Don’t forget, if you prepay your fees or subscriptions for next year before 30 June, you can claim a deduction this year, which can be a useful timing benefit.

Rental property expenses.

Most people with a rental property know that you can claim a deduction for the interest element of the mortgage but there are plenty of other deductions you can claim on a rental property, many of which are often overlooked. So, if you’ve paid out for any of these costs this year, make sure you claim a deduction:

  • Gardening and lawn mowing
  • Bank fees
  • Pest Control
  • Security Patrol fees
  • Bookkeeping/Secretarial Fees
  • Maintenance and repairs
  • End of lease cleaning costs
  • Letting agent fees, including marketing

A handbag.

If you use a bag for work purposes – e.g. To carry iPads, phones, calculators, stationary or anything else you need for work, you can claim a deduction for the cost of the bag. Be careful though; the handbag needs to be fit for work purposes and actually used for work purposes. You might struggle to claim that new Gucci bag but a more modest bag – genuinely used only for work purposes – should be claimable. For men, a work briefcase, satchel or backpack should also be claimable.

Income Protection Insurance.

If you pay for insurance premiums against loss of income, those amounts are tax deductible. But be careful; that doesn’t include life insurance, critical care insurance or trauma insurance. It also excludes policies paid for out of your superannuation contributions.

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Mobile phone expenses.

If you use your personal mobile phone for work – either to make or receive calls – you can claim the cost of these calls as a deduction. You can only claim business related calls so in order to work out the split between business and personal use, keep a diary for at least four weeks in order to work out the business use proportion. For example, if you have a $100 monthly mobile phone plan and you determine – based on your diary – that 25% of your calls are work related, you can claim a deduction for $25 per month, or $300 per year.

Similarly, if you use your home internet service to deal with work related matters, such as responding to work emails, you can also claim a proportion of those costs. Remember, keep a diary!

Social functions.

As a general rule, the ATO won’t let you claim tax deductions for a night out. The exception is where attending the function is actually part of your work. An example would be where a journalist attends a function that they will later report on through their media outlet; in that case, a deduction can be claimed.

Gym memberships.

The ATO takes quite a hard line around deductions relating to personal health and fitness but there are a few people who are entitled to claim gym memberships, typically those who require a level of fitness well above the norm. Examples might include professional sportspeople and those defence force personnel who perform duties designed to keep them in tip-top shape, such as members of the special forces.

An apartment in another city.

Of course, if you own an investment property, you can claim deductions against the rental income but did you know that in some cases you can claim deductions against a place you live in yourself? Under new guidelines issues by the ATO, if you’re required to work away from home by your employer, your assignment in the other place is only temporary (so you haven’t actually relocated) and you choose to rent or buy an apartment in the other work location rather than relying on hotels or motels, you can claim a deduction for the work-related costs relating to the apartment, including either rent or interest on the mortgage, depending on whether you rent or buy.

This article is courtesy of H&R Block’s Director of Tax Communications, Mark Chapman. 

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