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Andrew Jeffers CEO / February 21, 2017

How Much Do You Know About Tax Deduction?

Have you ever thought about getting a tax deduction for – say – a briefcase or for your home internet expenses?

Well, you’re not the only one. In fact, some of the most claimed tax deductions are for: internet expenses, gym memberships and online news access.

tax-deduction-tips

What are the rules for claiming a tax deduction?

When it comes to tax deductions, the rules are pretty strict and straight-forward, discouraging people to make claims for items that are not clearly related to their work.

But don’t let that intimidate you from requesting tax deductions for things you definitely need in order to do your job.

Here are some simple rules to take into account before you claim a tax deduction:

  1. There needs to be a link between your income and the item you purchased;
  2. You need to be able to prove that you paid for the item;
  3. You need to prove that the expense is required for you to do your job.

Let’s take a closer look at each of these rules.

You may also be interested in: What Is Tax Deductible At Your Company’s Christmas Party?

Do you need it to do your job? Then it’s deductible.

One of the first things to take into account when claiming a tax deduction is being able to prove a connection between that item and your job, especially if you claim the full cost of the item you purchased.

For example, if you’re thinking of claiming the full cost of a Louis Vuitton bag, you might have some trouble proving the work purposes of the bag. Whereas, proving that a briefcase is essential in your daily activities would be a totally different story.

It’s all about the item’s functionality.  Ask yourself: Do I need it for my job?

You may also be interested in reading: Checklist To Get You Read For Tax Time or What Can An Uber Driver Claim As A Tax Deduction

Can you prove you paid for it and not someone else?

You need to keep the receipt of the item you claim a tax deduction for, just in case the ATO (Australian Tax Office) demands paperwork to confirm the purchase.

It’s better to be prepared, otherwise, there’s a greater chance of the ATO denying your request. And you don’t want that. So, being organised with your receipts and finances can go a long way.

You might be interested in reading: 4 Accounting Software That Are Probably Perfect For Your Business

Does the price tag really matter?

Yes. The answer is: Yes.

But the good news is it all comes down to a matter of need: can you prove you need the extra expense for your job?

[ctt template=”4″ link=”w6Ipu” via=”no” ]It all comes down to a matter of need: can you prove you need the extra expense for your job?[/ctt]

The issue with excessive claims is that you’re are more likely to be reviewed by the ATO if expenses are extravagant. They will be paying closer attention to your tax affairs if they notice extreme claims – so try to keep them within a decent limit.

In a nutshell…

Now that you have a clearer picture on how tax deduction claims work, you start making a list of the things you can claim deductions for. Just remember the question of need is one of the most important things here.

If you have further questions about tax deduction claims, our qualified specialists are ready to assist you. Contact us today:

contact-shuriken-today

Filed Under: Business, Deductions, Tax Tagged With: deductions, Tax

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