The Australian Taxation Office (ATO) recently disclosed that Australians claimed an impressive average of $3,518 in tax deductions on their 2022-23 returns, signalling a significant uptick in claims compared to previous years. Tax time is upon us, prompting specialists to advise taxpayers to meticulously familiarise themselves with eligible deductions.
### Key Tax Claim Insights
According to new figures from the ATO, Australians collectively declared an average of $2,639 in work-related expenses, the highest average claim in over a decade, surpassing amounts seen during the pandemic. Out of 16.1 million individual tax returns processed, more than 10.3 million Australians claimed work-related deductions, which notably included expenses from remote work.
Belinda Raso, director of Tax Invest Accounting, emphasised the necessity for taxpayers to be informed about their entitlements. “It’s crucial that you prepare yourself with the knowledge of what you can claim this year,” she advised, adding a target figure of $3,500 for many taxpayers.
### Common Deductions
The most popular deductions claimed were for managing tax affairs, with about six million Australians declaring an average of $370 spent on tax-related services, such as hiring accountants. Notably, donations surged this year, with over 4.4 million Australians claiming an average of $2,032 — a significant rise from the previous year’s $1,067.
Personal superannuation contributions represented the most substantial deduction, with almost 679,000 individuals claiming an average of $17,380. Furthermore, it is worth mentioning that over 302,000 taxpayers previously claimed deductions related to interest charged by the ATO; however, this practice is no longer permissible from July 1, 2023, due to a regulatory change aimed at ensuring fairness for timely taxpayers.
### Focus on Work-Related Expenses
Rob Thomson, ATO assistant commissioner, stated that work-related expenses would be under closer scrutiny this year. “Any work-related expense must be directly tied to your income-generating activities, and you should be prepared to validate your claim with corresponding receipts or invoices,” he instructed.
Thomson further cautioned that any claims not meeting the ATO’s stringent criteria could be rejected. The ATO will also closely examine deductions related to home office expenses, offering taxpayers the option to utilise either the fixed rate or actual cost method for claims.
### Best Practices for Tax Claims
To avoid complications, Thomson recommended reviewing the ATO’s online resources or consulting with a registered tax professional for clarity on what can be claimed. “Don’t merely submit claims in hope; penalties and interest could arise from incorrect submissions,” he warned.
For further guidance on specific deductions for varied occupations, the ATO has made informative materials available on its official website.
### Conclusion
As tax season escalates, Australians are encouraged to make informed claims to maximise their deductions legally. The rise in claims serves as a reminder of the financial benefits available to conscientious taxpayers who keep thorough records of their work-related expenses.
