Introduction
With the end of the financial year less than a month away, you may be wondering what deductions you can claim by the time June 30th rolls around. Knowing what deductions are eligible to claim at the end of the financial year is important in ensuring nothing you claim is illegal or prohibited, as it can lead to legal detriments and financial penalties imposed on you. This article will explore everything you can claim at the end of the financial year when applying for your tax return.
What Does ‘Claiming’ A Deduction Mean?
To “claim a deduction” at the end of the financial year, means to claim certain expenses or losses as a tax deduction on your income tax return. In response, this reduces your taxable income and lowers the amount of tax you owe. The Australian government allows individuals to claim specific deductions at the end of the financial year as a means to compensate for certain payments. These are provided on the basis of sociopolitical incentives, such as to promote individuals to engage in charitable activities. Claiming a deduction on your tax return will require proof of that expense meaning that any potential deductions you want to claim should be kept track of through gathering receipts.
What Can I Claim as a Deduction in my Tax Return?
Work Related Expenses
Expenses you have incurred over the financial year in response to work are tax deductible. There is a large variety of work related expenses you can claim as a deduction on your tax return. Some of these costs include:
- Cars, transport and travel expenses.
The costs associated with travel such as petrol and vehicle maintenance are eligible deductions you can claim when filling out your tax return. You cannot claim deductions for the cost of transport when traveling from home to work. These travel costs must arise from engaging in your work and cannot be personal payments you have made associated with traveling.
- Clothes and Tools
The costs you have incurred from the clothes such as work uniform and protective gear, alongside the tools such as stationery and books, are eligible deductions you can claim on your tax return.
In response to the rise of companies granting employees the opportunity to work from home, working from home expenses also count as deductions such as the cost of energy and office supplies.
Education & Training Expenses
The expenses arising from education and training are taxable deductions you can claim on your tax return this end of the financial year. Self-education activities that relate to your employment or seminars and conferences, such as first-aid courses, are eligible deductions you can claim. School fees for you or your children are not eligible tax deductions.
Gifts & Donations
In order for an expense to be classified as a gift or donation, you must have voluntarily transferred money or property without receiving or expecting to receive a benefit in return. Gifts must satisfy the deductible gift recipient (DGR) requirements in order for them to be claimed. Gifts and donations include money or property, including financial assets such as shares. Gifts of money must be $2 or more, and the requirements and valuation rules for property or shares can be found on the Australian Taxation Office website.
Union Fees & Professional Memberships
Union fees, subscriptions to associations or bargaining agent fees are all expenses you can claim on your tax return this end of the financial year. Expenses arising from attaining and maintaining a working with children check (WWCC) are examples of professional memberships which you can claim as a deduction on your tax return.
Investments, Insurances & Superannuation
You can claim deductions on expenses that arise from income protection insurance, personal superannuation contributions and foreign pensions. Specific eligible examples include the costs arising from earning interest, share dividends, income from other investments, premiums you pay for insurance against the loss of your employment income and deductions for personal superannuation contributions.
Conclusion
In conclusion, when filing your tax return at the end of the financial year, you can claim various deductions to reduce your taxable income and lower the amount of tax you owe. Eligible deductions include work-related expenses such as transportation costs, work clothes and tools, education and training expenses, and costs associated with working from home. Additionally, you can claim deductions for gifts and donations made to deductible gift recipients, union fees, professional memberships, and expenses related to investments, insurances, and superannuation contributions. It is crucial to keep accurate records and receipts for all expenses you intend to claim as deductions. By understanding and taking advantage of these deductions, you can maximize your tax benefits and ensure compliance with tax regulations. However, it is advisable to consult with a tax professional or refer to the Australian Taxation Office’s guidelines for the most up-to-date and specific information regarding eligible deductions for your individual circumstances.
