It's tax time again so here's ASIC's Moneysmart guide to what you can and can't claim in your Australian 2017 tax return, as well as tips to make lodging your tax on time a breeze. Don't have time to read the whole article? Watch the video below
Records you'll need to complete your tax return
Before you sit down to do your tax, you'll need to gather all the right information. Here are some of the documents you'll need to complete your tax return.
- Payment summaries - Outlines the income you have received from your employer, super fund or government payment like Centrelink and the Department of Veterans Affairs.
- Bank statements - Details any interest you have earned during the period and fees you have paid.
- Shares, unit trusts or managed funds statements - Information on dividends or distributions you've received. Dividends that you've elected to reinvest must be declared as income.
- Buy and sell investment statements - Needed to calculate capital gains and losses. If you bought or sold any shares you can access the details on your online broking account or you can get them from your investment adviser or stockbroker.
- Records from your rental property - If you use a property manager you will probably get an annual tax statement that details income and expenses, otherwise you will need to gather details of income received and expenses paid, including any capital gains or capital losses from the
sale of property.
- Foreign income - Details of foreign pensions or other foreign income.
- Private health insurance policy statement - Information needed to complete the private health insurance section of your tax return.
What tax deductions are not allowed?
- Travel between home and work - which is generally considered private travel.
- Car expenses - unless you are transporting bulky tools or equipment, that you need to do your job, that your employer requires you to transport, and there is no secure area to store the equipment at work.
- Car expenses - that have been salary sacrificed.
- Meal expenses - unless you were required to work away from home overnight.
- Private travel - including any personal travel portion of work-related travel.
- Everyday clothes - you bought to wear to work (for example, a suit or black pants), even if your employer requires you to wear them.
- The cost of laundering eligible work clothes - unless you can show how you calculated the cost.
- Higher Education Loan Program - contributions charged through the HELP scheme.
- Self-education expenses - where there is no direct connection to your current employment.
- Phone or internet expenses - that relate to private use.
- Tools and equipment that cost more than $300 - however, you can depreciate the cost over a number of years.
What tax deductions are allowed?
To claim a deduction for work-related expenses:
- You must have spent the money yourself and not been reimbursed.
- It must be directly related to earning your income.
- You must have a record to prove you paid for it.
When your expenses meet these criteria, here's a list of the things you may be able to claim.
- Vehicle and travel expenses - This does not normally include the cost of travel between work and home but if you use your car for work or work in different locations then you you may be able to claim a deduction.
- Clothing, laundry and dry-cleaning expenses - To legitimately claim the cost of a uniform, it needs be unique and distinctive, for example it contains your employer's logo, or is specific to your occupation, like chef's pants or coloured safety vests.
- Gifts and donations - to organisations that are endorsed by the ATO as deductible gift recipients.
- Home office expenses - Costs could include your computer, phone or other electronic device and running costs such as an internet service. You can only claim the proportion of expenses that relate to work, not private use.
- Interest, dividend and other investment income deductions - Examples include interest, account fees, investing magazines and subscriptions, internet access, depreciation on your computer.
- Self-education expenses - Providing the study relates to your current job, you can claim expenses like course fees, student union fees, textbooks, stationery, internet, home office expenses, professional journals and some travel.
- Tools, equipment and other equipment - If you buy tools or equipment to help earn your income, you can claim a deduction for some or all of the cost. Examples include protective gear, including sunscreen, sunglasses and hats if you work outside, office equipment, safety equipment and technical instruments.
- Other deductions - other items you can claim include union fees, the cost of managing tax affairs, income protection insurance (not if it's through super), overtime meals, personal super contributions and other expenses incurred in the course of earning an income.
Lodging your tax return in 2017
You can lodge your tax return online using myTax - it's quick, easy, safe and secure. Visit the ATO website to find out how to lodge online. If you have a spouse you will also need details of their income and expenses to make sure your entitlements are correctly calculated.
Once you have lodged your tax return keep an eye on your myGov inbox for your notice of assessment and tax receipt.
Lodge your return before the deadline
If you are lodging your own tax return, you have until 31 October 2017 to lodge it. If you decide to use a registered tax agent, or are using a different agent to last year, you will need to contact them before 31 October.