F A Q s
My job requires me to keep my knowledge up to date and I buy books and journals. Can I claim them all?
If technical books, trade books or journals are necessary to fulfill your job function efficiently then the cost of their acquisition is tax deductible.
Can I claim a deduction for sun protection items?
A deduction is available for outdoor workers who buy sunscreen lotion, sunglasses and hats for use at work. The claim must be substantiated and apportioned for private use.
I have incurred travel expenses this year. What can I claim?
Your travel must be relevant to your job function for you to be eligible to claim a deduction for those expenses. Where this is the case and you have the necessary documentation, you can claim the cost of transport and incidentals. If your travel involved an overnight stay you would be able to claim for meals.
I am paid an allowance for travel. Can I claim a deduction for that on my tax return?
A deduction will only be allowed if you have actually incurred a work related expense and have the necessary documentation. Travel to and from your job is generally not claimable unless you are carrying heavy equipment. Some awards allow for a payment of an allowance even though an expense is not necessarily incurred by the employee. If a deduction can be claimed it cannot be for more than the expense that you incurred even if the allowance that you have received was higher.
I need to have a telephone for making and receiving business calls and would like to know what I can claim.
Installation costs are not deductible. However, part of the rental costs are deductible where a taxpayer is required to make calls from home. Call costs would be deductible and a log of calls must be kept. Mobile phones are claimed in the same way.
This year I bought a laptop and new mobile phone which I need for my work. Can I claim the cost of these on my tax return?
Items like this that you buy for use in your job can be claimed on your return. However, since the cost of these items is most likely to be more than $300 each you will not be able to claim the full cost in one year. It will be necessary to spread your claim over the useful life of the items (depreciation) and only the work related proportion is claimable. You should keep a log of work related use for a period of at least four weeks for each item to determine the proportion that you can claim.
I have had to pay for child care during the year. Is this claimable on my tax return?
These expenses are not claimable as a tax deduction. Eligible taxpayers may be able to claim the Child Care Tax Rebate (CCTR) through the Family Assistance Office.
My employer expects me to wear specific clothing for work? What would I be able to claim?
Compulsory uniforms are generally deductible provided they identify you as an employee of that organisation or in a specific occupation. A requirement to simply wear particular colours is not enough to make the clothing deductible. Corporate wardrobes are also deductible if certain conditions are met. The uniform design must be registered with AusIndustry. Provided that the clothing is deductible then you may also claim maintenance costs (laundry, dry cleaning and repairs).
Can I claim fees paid to my tax agent?
Fees paid to a registered tax agent for preparation of your return, amendments and generally handling your tax matters are all deductible. You can also claim travel to your registered tax agent. Registered tax agents are the only people legally able to receive payment for the preparation of tax returns.
Am I entitled to claim $300 for work related expenses as this does not have to be substantiated?
You cannot just claim $300. You must actually incur any expense before it is claimable. Whilst you may not need receipts for expenditure up to $300 you must have spent the money and it must be relevant to your employment.
Is there a limit on how much I can claim as a tax deduction each year?
There is no limit on the amount claimed each year. The expenditure must be work related and you may need receipts to substantiate the expenditure. Keeping incomplete, incorrect or no records at all may be limiting your ability to claim deductions. Advice can be obtained from us. We are happy to advise our clients on appropriate record keeping enabling them to maximise their allowable deductions.
How long do I need to keep my receipts?
Documentary evidence should be keep for five years from the date of lodgement of the tax return in which the claims are made.
I have inherited some money. Is it taxable?
No, the inheritance is not taxable unless advised by the executor that part is taxable. However, if you invest the income from the estate then any earnings will be taxable.
Can all the interest from our joint accounts be declared in my wifeís tax return because her income is much lower than mine?
No, all income must be apportioned to each recipient on the same basis as the accounts are held.
My bank interest is only $10. Does this amount have to be declared?
Yes, you must declare all interest from all sources no matter how small the amount is.
What is a Living Away From Home Allowance?
A living Away From Home allowance is paid by employers when they require an employee to work in an area that is different to their normal workplace and the employer pays the costs to the employee for living away from home.
For example, I work and live in Melbourne and after a few months the Company requires me to go to Regional NSW for a few months to do some work there. They pay me an allowance for the costs of living in regional NSW because they have requested me to work there for a time. I do not need to declare it in a tax return. It is an allowance paid by an employer to an employee and is not subject to tax by the employee. No expenses can be claimed against this allowance.
Do I have to declare income from Centrelink (Newstart, Austudy) on my tax return?
Yes, it must be declared. This is because the tax office needs to determine what tax rate applies to your other earnings for the year. At the end of the financial year you will receive a Payment Summary from Centrelink indicating how much must be included in your tax return (taxable amount). You may be entitled to a rebate to ensure that no tax is payable on your benefit.
I have just moved permanently to Australia. Do I have to pay tax on the money that I have brought with me?
No, you will only have to pay tax on any earnings that you make from the time that you moved to Australia. If the money that you brought with you earns interest in a bank account you will have to pay tax on the interest.
I have started my own business and wonder if I need to register for GST.
Businesses with an annual turnover of $75,000 or more are required to register for GST. If your business has a lower turnover you are not required to register but you may if you wish to. You will only be required to charge your customers GST if you are registered.
I run my own business and am wondering how I can minimise my annual tax bill.
If your turnover is less than two million dollars, you would be classed as a Small Business Entity (SBE). As such you would be able to access a number of small business concessions. A SBE is able to use simplified depreciation rules which allow for a full deduction of the whole cost of depreciating assets costing less than $1,000. Most other assets are pooled and depreciated at a higher (accelerated) rate than that otherwise available. An Entrepreneursí Tax Offset may also be available if your turnover is less than $75,000. Businesses that are SBEís or whose net asset value is less than $6 million can also benefit from certain capital gains tax concessions.
I am self employed and have paid personal superannuation contributions all year. What can I claim?
Provided you satisfy the eligibility criteria you will be able to claim a deduction for the contributions you have made to a complying superannuation fund or retirement savings account. The eligibility criteria requires that you are fully self employed or that no more than 10% of your assessable income (including Reportable Fringe Benefits) is from an employer who is required to provide superannuation support.
I have heard that self employed people can claim the superannuation co-contribution from the government. Am I eligible because I paid money into my super this year and I run my own business?
You may be eligible for the government co-contribution if more than 10% of your total assessable income is from running that business, eligible employment or a combination of the two. Investment income is not eligible income. Any of your superannuation contributions that you claim as a tax deduction will not be eligible for the co-contribution.
RESIDENT - NON RESIDENT
What is the difference between resident and non-resident tax rates?
Non-residents pay tax on most Australian source income. They pay tax on every dollar of taxable income as declared on their tax return but do not pay Medicare. Residents have to declare all income earned in and out of Australia. A tax free threshold of $6000 is available to them and a resident may be entitled to claim some tax offsets (rebates) that are not available to non-residents. Depending on their income, a resident may also have to pay the Medicare levy and Medicare levy surcharge.
I have started a second job. Is there anything that I need to do so that I donít end up with a tax bill at the end of the year?
You cannot claim the tax free threshold of $6,000 from more than one employer at a time. It is better to claim it from your main employer. You will pay a little higher rate of tax on the second job but this should ensure that you have paid enough tax on all of your wages for the year.
Can you complete my tax return if I am missing a PAYG Payment Summary (group certificate)?
Your return can be completed using the details from a copy of the PAYG Payment Summary (your employer can provide this), a letter from your employer detailing the information on the PAYG Payment Summary or by reviewing your pay slips for that period. If you are unable to obtain the payment summary details from an employer a Statutory Declaration would need to be completed.
I received an additional PAYG Payment Summary (group certificate) after I completed last year's tax return. Can I put it in this year's return?
No. A PAYG Payment Summary from a past year cannot be included with the current year tax return. It can only be included in the return for the year to which it relates. You will need to submit an amendment to last year's tax return.
My father has died. Do I need to complete a tax return for him?
It is necessary to complete a tax return to date of death if a return has been lodged in past years. This return, marked final, must show all income received to the date of death.
How can I reduce my tax bill?
One of the ways you can reduce the tax you pay is by salary sacrificing in return for employment related benefits. The advantage of salary sacrificing is that your benefit is purchased with pre-tax dollars. There are many things that you can salary sacrifice. All are subject to fringe benefits tax (FBT), except minor benefits such as a mobile phone or laptop computer that are used primarily for work. Motor Vehicles are subject to Fringe Benefits tax but the amount is reduced if the car is used for work. The fringe benefit tax is paid by the employer and is paid at the top marginal rate of tax, including Medicare (46.5%) on the benefit provided. Some employers require their employees to reimburse the FBT amount from their salary package.
I am having some dental work done and wondered if I can claim anything on my tax return?
A net medical expenses offset is available where you and your dependants have incurred out-of-pocket medical expenses in excess of $1500. Eligible expenses include doctorsí fees, hospital accommodation and related charges, dental work, medicines, etc. Where procedures are of a cosmetic nature only, they will not be eligible expenses that can be included in a calculation of this offset. If the dental work you are having is for the correction of a problem then the cost incurred will be counted towards the out-of-pocket expenses for this offset.
Accounting & Taxation Services
Copyright © 2010 by
PROFICIENT Accounting & Taxation Services
All Rights reserved