Looking for spare cash? With the 2019/20 income tax year having come to a close those extra dollars you are on the hunt for could be just around the corner. In this article, money coach and financial counsellor, RAEWYN BLOMFIELD outlines the steps *individuals and *sole traders can take to ensure they maximise the chance of receiving a refund when lodging their tax return.

Claiming tax deductions is easy pickings if you are set up correctly. But it’s not just a matter of hooking up with a good tax agent; you have to do prep too.

What information do you need to collect?

There is now no need to wait for the paper copy of your income statements (previously called payment summaries or group certificates) before submitting a tax return; this information is now sent straight to the Australian Taxation Office (ATO).

But if you want to claim any deductions you have to show you are entitled to it. That means proof, usually receipts.

Common deductions and rebates are:

  • Work related expense deductions. Allowable deductions vary according to your occupation.
  • The ATO has set out the deductions available for working at home under COVID.
  • Private health insurance rebates – your health provider sends an annual summary.
  • Gifts and donations deductions if the charity as the ATO’s ‘deductible gift recipient’ status.
  • Investment income deductions, including savings, dividends, and rental property expenses.

What work related deductions can you claim?

They fall into these categories:

  • Vehicle and travel expenses;
  • Clothing, laundry and dry cleaning expenses;
  • Home office expenses;
  • Self-education expenses;
  • Tools, equipment and other assets; (Note: if the cost of the tool is over $300 you may not get the whole cost back).
  • and other work related deductions.

To claim these deductions:

  • You must have spent the money yourself and were not reimbursed.
  • It must directly relate to earning your income.
  • You must have a record to prove it.

Your accountant or tax agent will know what deductions your occupation is entitled to – but they work with what’s in front of them.

It is your job to collect the right information in the right format. If you haven’t gathered your receipt evidence, they won’t include it, even if you are entitled to the deduction (well, you could go back a second time and get charged a second fee). However, you need to keep in mind the responsibility is on you as most agents do not ask to see the evidence; they just ask you if it exists.

If you are not sure what’s needed, you can:

  • Check the ATO website or
  • Phone your accountant or tax agent ahead of time and ask what information you need and have it available if requested.

Less common deductions include personal super contributions, income protection insurance (under some circumstances) and interest charged by the ATO.

Record keeping

You must maintain your receipts for the entire 12 month period (1 July 19 to 30 June 20). There are lots of apps available to store receipts or you can use the cloud. If you prefer to keep hard copies, set up a system to keep the receipts in monthly folders.

In addition, after lodging your return generally, you must keep your written evidence for (5) five years from the date you lodge your tax return.

Remember that a printed receipt on a ticket roll fades and therefore needs to be photocopied.

If you choose to use the logbook method to get business related travel deductions, you must show a minimum of three months’ activity.

If you used your phone for work as well, you need three months’ evidence showing the percentage of business use of your phone.

You can visit this page at the ATO website where it spells out what record keeping is required.

Further information

The ATO has set up the Community ATO. It’s a great resource as it answers many of the common questions you might have about your tax.

* Please note: This information is applicable if you are an individual or sole trader, not a limited company and you usually get your tax done through an accountant or tax agent.

I would love to work with you to give you the skills you need to move forward on your financial journey and to better prepare you for the future. With your spending controlled you can then start to create for yourself and your family a better lifestyle and more secure future.

Money coach and financial counsellor, Raewyn Blomfield, is the principal of Money Health Money Wealth. Raewyn helps people to manage their money and take control of their spending and debt so they can achieve their financial dreams.  

General Advice Warning: This blog is not designed to replace professional advice. It has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice, in light of your own objectives, financial situation or needs before making any decision as to what is appropriate for you.

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AccountingIt’s Tax Refund Time – How to Claim Your Entitlements