No one likes filling out tax returns. However, it’s worth doing a good job and ascertaining that you have all of the relevant deductions you can claim in order to minimize your tax bill. If you have a Home Office, you should be able to reduce your tax liability considerably.
Of course, simply working from home isn’t enough to mean you can claim every single home expense as a deduction. You will, however, be able to claim a number of running expenses and occupancy expenses.
Running expenses comprise the gas, Electricity and depreciation on office furniture within the office spaces. You can either opt for the easier option or 34 cents on the hour, or you can claim the actual expenses. Of course, you have to have a provable dedicated office space in order to do this, you can’t claim if you’re simply working out of a room in your house- say a living room-that’s not used specifically for work. Also be aware that claiming a home office will have an effect on the main residence exemption that you use if you’re claiming capital gains deductions.
Another area also worth exploring is your travel expenses. Travel expenses that relate directly to your job will be deductible. This can even include incidentals such as meals, accommodation, fares and more, especially if you are away overnight. Toll fees, car hire charges and parking fees will also apply so long as your need of them is solely related to your work.
Of course, alongside this stipulation that they only be work related, you will need to be able to provide full supporting evidence to make this claim. A travel diary is the best you can do for this. Keep all receipts relevant to the expense you incur, so that on demand they can be examined and audited.
Keep in mind, too, that you will never be able to claim the cost of travel between your home and place of work. This is viewed as something that is not tax deductible. However, you can claim the travel incurred between two different places of work, regardless of the mode of transport you use, if it is required for work purposes.
Don’t be afraid of exploring the legitimate tax deductions open to you and your specific field. There’s a ton of incidental things that would not be claimable in one field, but is in another, depending on your industry of work.
Overall, while compiling your annual tax return may seem like a scary prospect, it’s important to streamline the process and be sure that you’re receiving all of the deductions due to you legitimately within your industry. This way, you will avoid over-paying your tax for the year while still paying your due sums, and both you and the ATO will benefit from fair and equitable taxation. Take the effort to get your tax return correct today.
Keyword: tax returns