tax deductions

Uniforms Tax Deductions

Don’t get taken to the cleaners with laundry deductions

A timely warning at tax time for people wanting to claim laundry expenses.

The Australian Tax Office is concerned about the increasing levels of claims by tax payers for clothing and laundry expenses and will be “increasing attention, scrutiny and education” this tax season.

Assistant Commissioner Kath Anderson said that last year over 6.3 million people made a work-related expense claim for clothing and laundry expenses, totalling almost $1.8 billion.
“We have seen claims for clothing and laundry expenses increase around 20 per cent over the last five years. While this increase isn’t a sign that all of these taxpayers are doing the wrong thing, it is giving us a reason to pay extra attention,” she said.

Ms Anderson said common mistakes the ATO has seen include people claiming ineligible clothing, claiming for something without having spent the money, and not being able to explain the basis for how the claim was calculated.
“For your clothing to be eligible for a deduction, it needs to be occupation-specific clothing, protective clothing or a uniform that is unique to the organisation you work for,” she said.

Ms Anderson said it is a myth that you can claim a standard deduction of $150 without spending money on appropriate clothing or laundry. She said that while record keeping requirements for laundry expenses are relaxed for claims up to this threshold, taxpayers do need to be able to show how they calculated their deduction.

Ms Anderson said there are three golden rules to follow which will help taxpayers to get their deductions right.
“One – you have to have spent the money yourself and can’t have been reimbursed, two – the claim must be directly related to earning your income, and three – you need a record to prove it,” she said.

It is a myth that taxpayers can claim a standard deduction of $150 without spending money on appropriate clothing or laundry. While record-keeping requirements for laundry expenses are “relaxed” for claims up to the $150 threshold, taxpayers do need to be able to show how they calculated their deduction.

If you are unsure of what you can claim, contact your Tax Agent for advice and sleep easy this tax season.

Emma Baxter
Accountant
YOUtax

Tax time tax returns tax agent

Have you lodged your tax yet?

Yes, it’s that time of year again. Tax time! Are you ready for it?

According to the Australian Tax Office, as at 17 July 2017, more than 1.4 million people have already lodged their individual current year tax returns! With an average refund of $3084, these early birds have been rewarded for their promptness.

If you haven’t lodged your return yet, no need to worry, the ATO has given us until the 31 October 2017 to process and lodge your income tax returns. However, if you are registered with a Tax Agent and have a good lodgement history your lodgement day may be able to be extended.

Now is a great time to get organised as you should have received your payment summaries or annual statements from various agencies. Hopefully you have kept accurate records throughout the year the year and remember that now the ATO has its data matching program to capture not only your employment income confirmed by your boss or interest amounts sent by your bank but it includes payments made to contractors in the building and constructions industry, capital gains tax from the sale of your shares, foreign income paid to Australian employees overseas and contractor payments made by government agencies. This is rapidly closing any gaps on omitted or forgotten declared income.

In the last year the ATO cross checked more than 650 million transactions from third parties such as employers and banks to ensure all income was declared and the correct offsets and exemptions are claimed.This year, they contacted about 200,000 taxpayers who had apparent discrepancies in the information they reported in their tax returns. Nine out of ten returns were adjusted as a result the ATO enquiries.

It is important to note the majority of these returns were lodged before the ATO prefill were made available to individuals or tax agents to cross reference and check their clients’ details.

So if you are still itching for that tax refund as early as possible and do not want to wait until late August for the ATO prefill to become available, it might be best to contact a tax agent who can advise correctly of all the required income. Here are some tips that may help you…..

  • Remember all income from multiple jobs
  • Include your bank interest which is easier today to access with online banking
  • Include any foreign income you may have earned, making note that the tax year of the foreign country will most likely differ to the Australia financial year. Your tax agent can assist with calculating this correctly.
  • Wait for those important end of year managed fund statements
  • Check your share registry using your SRN or HIN numbers to not miss any dividends paid.
  • Start collating all your rental property information, ensuring you have all the statements for the required periods e.g. four statements for quarterly water rates or two statements for 6 monthly rates.

If you are worried about where to start with collating your 2017 financial year tax information contact your tax agent they will be more than happy to help.

Emma Baxter
Accountant
YOUtax

ATO warning on claiming of expenses

Source: THE NORTHERN STAR

THE ATO will be focusing on unusually high work-related expense claims across all industries and occupations this year, taking a wider approach than in previous years.

Assistant Commissioner Adam Kendrick said the ATO’s ability to identify and investigate claims that differ from the norm is improving each year, due to enhancements in technology and the use of data.

“These enhancements mean that every return is scrutinised and it is becoming a lot easier to identify claims that are significantly higher than those claimed by people with similar occupations and employment income,” Mr Kendrick said.

In addition to focusing on work-related expense claims that are higher than expected, the ATO will also be paying particular attention to claims that have already been reimbursed by employers, and for private expenses such as travel from home to work.

Get it right

IT’S important for people claiming to carefully review deductions before lodging their tax return to avoid a delay in getting a return.

Mr Kendrick said there were three key points for people to remember when claiming work-related expenses:

Firstly, you must have spent the money yourself; second, it must be related to your job, and third, you must have a record to prove it.

When claiming work-related travel, it’s important to remember you cannot claim for a normal trip between home and work, unless: you use your car to carry bulky tools or equipment which you use for work and can’t leave on the work premises; your home is a base for employment or you have shifting places of employment (you regularly work at more than one place each day).

The ATO website has a series of videos to help with getting deduction claims right.

For more information, visit ato.gov.au/deductions or phone 132861.

Don’t be a dummy with your deductions

The Australian Taxation Office (ATO) is warning taxpayers to avoid incorrect claims for work-related expenses at tax time this year.

Assistant Commissioner Kath Anderson said the ATO is using real-time data to compare taxpayers with others in similar occupations and income brackets, to identify higher-than-expected claims related to expenses including vehicle, travel, internet and mobile phone, and self-education.

“It is important to know what you’re eligible to claim before lodging your tax return and to make sure you don’t claim more than you’re entitled to,” Ms Anderson said.

“Many taxpayers don’t have a good understanding of what deductions they can claim, and believe they can claim for items which they in fact can’t. Some taxpayers even think that you can make a standard claim of $300 without having spent the money. You don’t need receipts for claims up to $300 but you must have actually spent the money, and be able to show us how you worked out your deduction if asked.”

Ms Anderson said that deductions for work uniforms are also a common trap for employees at tax time.

“It’s a myth that you can claim everyday clothes, for example, black pants and a plain white shirt, even if you only wear them to work, and your employer says you have to. To legitimately claim your uniform, it needs be unique and distinctive, such as a uniform with your employer’s logo, or be specific to your occupation and not for everyday use, like chef’s pants or coloured safety vests.”

“It sounds like a small thing, but we aren’t talking about small sums of money here. There are 13 million taxpayers, so if everyone over claims even $100 that adds up to a lot.”

Ms Anderson said the ATO’s focus is on helping taxpayers get it right in the first instance, but the ATO is also on the lookout for red flags to find people who are doing the wrong thing.

“The ATO scrutinises every return. We have the technology and experience to detect non-compliance and we are continuing to catch taxpayers who are deliberately doing the wrong thing.”

Ms Anderson says there are three golden rules for taxpayers to remember to get it right.

“One – you have to have spent the money yourself and can’t have been reimbursed, two – the claim must be directly related to earning your income, and three – you need a record to prove it.”

The myDeductions tool in the ATO app can help make keeping records easier, and at tax time you can send your deductions to your tax agent or upload them directly to myTax. This year myDeductions is available to sole traders as well as individuals.

The ATO also publishes a range of information on its website to help taxpayers figure out which of their expenses are deductible.

“If you are using an agent, you can also talk to them to make sure the work-related expenses that you claim are right,” said Ms Anderson.

For more information about work-related expenses, visit ato.gov.au/deductions and to find out about myDeductions, visit ato.gov.au/mydeductions

11 deductions you (probably) can’t claim

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Here’s a list of things you probably can’t claim on your tax return:

  1. Trips between home and work. Generally you can’t claim a deduction for these because they’re considered private travel.
  2. Car expenses for transporting bulky tools or equipment, unless:
    • you need to use your bulky tools to do your job
    • your employer requires you to transport this equipment
    • there is no secure area to store the equipment at work.
  1. Car expenses that have been salary sacrificed.
  2. Meal expenses for travel, unless you were required to work away from home overnight.
  3. Private travel, so if you take a work trip that includes personal travel you can only claim the work-related portion.
  4. Everyday clothes you bought to wear to work (eg, a suit or black pants), even if your employer requires you to wear them.
  5. A flat rate for cleaning eligible work clothes without being able to show how you calculated the cost.
  6. Higher education contributions charged through the HELP scheme.
  7. Self-education expenses when the study doesn’t have a direct connection to your current employment – your future or dream jobs don’t count.
  8. Private use of phone or internet expenses – only the work-related portion counts.
  9. Up-front deductions for tools and equipment that cost more than $300. However, you can spread your deduction claim over a number of years. That’s called depreciation.

The ATO website has lots of information about what you can and can’t claim as a tax deduction, visit ato.gov.au/deductions