Common ATO Tax Return Error Exposed as Australians Claim $3,500 in Deductions

Essential Tax Deductions for Australians: A Comprehensive Checklist

As tax season descends upon Australia, taxpayers are encouraged to ensure that they are maximising their deductions. Historically, the average Australian has claimed around AUD 3,518 in tax deductions, yet numerous often-overlooked claims remain untapped each year.

Tax App director Alesha Masaud highlights that many individuals regularly fail to claim work-related deductions for assets and equipment that the Australian Taxation Office (ATO) allows. Items such as laptops, phones, monitors, printers, and office furniture are all eligible for deductions.

Understanding Asset Deductions

For assets costing less than AUD 300, taxpayers can claim the entire expense immediately. Conversely, more expensive items must be depreciated over their useful lifespan. To simplify the process of calculating depreciation, taxpayers can utilise the ATO’s depreciation and capital allowance tool or perform manual calculations using either the prime cost or diminishing value methods.

Chartered accountant and Tax App’s managing director, Fahad Gul, points out that contributions to personal superannuation can also offer significant tax deductions, with many Australians neglecting to lodge a notice of intent. Such contributions are taxed at a flat rate of 15%, a benefit particularly advantageous for higher-income earners.

It’s essential to lodge the required form with your super fund either on the day you file your tax return or by the end of the income year following the year in which the contributions were made.

To aid in the preparation for tax filing, both Masaud and Gul have assembled a checklist of common tax deductions that taxpayers may be eligible to claim. Importantly, individuals must maintain records such as receipts to substantiate their claims.

Common Tax Deductions

Here’s a summary of typical deductions to consider:

1. Vehicle and Travel Expenses: Logbook or cents per kilometre method.
2. Home Office Expenses: Choose between a fixed rate or actual cost.
3. Communication Costs: Apportion for work-related phone and internet expenses (not applicable if claiming a fixed rate for working from home).
4. Tools and Equipment: Claim for assets used in work.
5. Uniforms and Protective Gear: Expenses incurred for work uniforms and protective clothing.
6. Union Fees or Professional Memberships: Deductible costs associated with joining professional bodies.
7. Self-Education Expenses: Costs associated with improving skills relevant to your work.
8. Conference and Seminar Costs: Fees incurred for professional development events.
9. Industry Publications: Journals, subscriptions, or applications related to your field of work.

Additional Deductions Include:

• Tax agent or accounting fees
• Interest on investment loans
• Income protection insurance (not through super)
• Donations exceeding AUD 2 to registered deductible gift recipients (DGRs)
• Bank fees associated with investment accounts
• Management fees for dividends and shares

Equipment and Assets

Work and Office Equipment:

• Laptops, phones, tablets
• Monitors, printers, scanners
• Ergonomic chairs and desks
• Specialty tools and machinery
• Filing and storage systems
• Camera and lighting equipment for content creators

Vehicle Usage for Work:

• Car depreciation (requires a logbook)
• Utes, vans, or motorbikes used for work purposes

For specific industry demands, the ATO provides occupation and industry-specific guides to help taxpayers identify additional deductions available to them.

In summary, as Australians prepare their tax returns, being aware of the deductions available is crucial for minimising tax liabilities. With proper documentation and an understanding of eligible expenses, individuals can make the most of their tax claims.