6 common expenses people didn’t know were tax deductible

The end of financial year (EOFY) means more than plenty of sales from local car yards and at shopping centres. It is the last chance for Australians to make any decisions regarding changes to their finances that could affect their next tax return. This article details what you should be looking out for/to do prior to the EOFY to save money on tax.

 

1. Charitable donations

Did you know that all donations over $2 (to deductible gift recipients or DGRs) are tax deductible? There are some interesting rules that you need to follow if your invoices cannot be found, which is why it is extremely important to keep your invoices when making donations to charity.

 

2. Income protection insurance

If you pay premiums to an insurer in the case of loss of income, these premiums are deductible. This article is not recommending or condoning income protection insurance, it is merely stating that if you have deemed it important enough to acquire, there is an additional benefit of this being tax deductible.

 

3. Home insurance

This is particularly relevant if you run your business from home. If you do work from home, you may be eligible to claim some/all of your premiums as a business expense.

 

4. Superannuation contributions

You may be able to claim on your personal super contributions. If you’re an Australian resident and already pay your compulsory superannuation contribution (oftentimes your employer will make this contribution on your behalf), any extra contributions (on top of this) may be tax-deductible.

These after-tax contributions are known as “non-concessional contributions” and you should talk to an accountant prior to making these contributions. There are certain caps for the amounts of contributions you can make per financial year and the consequences can be dire if you exceed these caps.

 

5. Your car

You may be able to claim a deduction for your car if you use it for work. There is a couple of different methods to claim your car which can range from a cents per kilometer method or keeping a logbook to claim the running costs and depreciation. The rules can be quite complex, so it is imperative to chat to an account prior to putting any deductions in your tax return.

 

6. Home office expenses

With many of us working from home during the coronavirus crisis, there are several home office expenses you may be able to claim as tax deductions. Whether this is claiming a cents per hour worked or things like:

• Phone and Internet expenses
• Computer consumables (e.g. printer paper and ink) and stationery
• Home office equipment (e.g. computers, phones, printers, furniture, and furnishings)

 

You need to make sure that you don’t miss out on any tax deductions. The ATO has a great webpage that lists deductions that are reasonable as per your industry. You can view these here.

If you have any questions or would like to discuss tax deductions, contact Link Advisors and we can provide our thoughts.