Tax time is here and whether you plan to use an agent to complete your return or do it yourself, it’s vital that you claim deductions for everything that you’re entitled to. Here’s a list of some of the tax deductions you might not have known you could claim.
1. Face masks, hand sanitiser and antibacterial spray
COVID-19 has changed the way we work, not least in relation to the need to socially distance and maintain good hygiene practices. If you work in an occupation where it simply isn’t possible to maintain social distancing, or you need to have physical contact with clients, you may be able to claim personal protection items such as face masks, hand sanitiser and antibacterial spray.
People who can claim include teachers, hospitality staff, retail staff, medical staff (including ancillary workers such as receptionists and cleaners), hairdressers and beauty therapists.
2. A handbag
If you use a bag for work purposes – for example to carry an iPad, phone, calculator, stationery or anything else you need for work, you can claim a deduction for the cost of the bag. Be careful though; the handbag needs to be fit for work purposes and actually be used for work purposes. You might struggle to claim that new Gucci bag but a more modest bag – genuinely used only for work purposes – should be claimable. For men, a work briefcase, satchel or backpack should also be claimable.
3. Sunscreen, sunglasses and hats
If you work outside for long periods of the day, you may be entitled to claim the cost of sunscreen because of the dangers to your skin from prolonged exposure to the sun. Gardeners, farmers, building and construction workers and outdoor recreation staff, such as those who run outdoor fitness classes are amongst those who could potentially claim sunscreen. Sunglasses and hats are also claimable by the same groups.
4. An apartment in another city
If you own an investment property, you can claim deductions against the rental income but did you know that in some cases you can claim deductions against a place you live in yourself? Under recent guidelines issued by the ATO, if you’re required to work away from home by your employer, your assignment in the other place is only temporary (so you haven’t actually relocated) and you choose to rent or buy an apartment in the other work location rather than relying on hotels or motels, you can claim a deduction for the work-related costs relating to the apartment, including either rent or interest on the mortgage, depending on whether you rent or buy.
5. Performance tools
If you’re a professional performer (actor, musician, dancer, magician, circus performer, etc), there are all manner of strange deductions which you might look at claiming. Mime lessons? Absolutely. The cost of ceremonial swords? Certainly, if you’re a professional sword swallower. Acting classes, dance classes, musical instruments, magic tricks might also be an option. If you make a living from stage or screen, a whole world of odd and interesting claims opens up to you.
6. A dog
There are circumstances where claiming a deduction for a dog could be a real possibility. If your business uses a guard dog to keep your premises secure, a dog is indeed deductible. It’s regarded as a capital asset of the business and you can claim an immediate deduction for the whole cost using the instant asset write-off for small and medium-sized businesses. It needs to be a dog suitable for the purpose; a poodle is unlikely to cut it. The same logic applies to dogs used on a farm, such as a sheep dog. The work-related costs of keeping the dog – food, vet bills, etc – could also be deductible.
7. Social functions
As a general rule, the ATO won’t let you claim tax deductions for a night out. The exception is where attending the function is actually part of your work. An example would be where a journalist attends a function that they will later report on through their media outlet; in that case, a deduction can be claimed.
8. Professional subscriptions
If you’re a member of a professional or trade association as part of your work, you can claim a deduction for the amount you pay in subscriptions. This also covers union fees if you’re a member of a trade union, as well as subscriptions to trade or professional magazines.
9. Home office expenses
Working from home expenses are the big deductible item this year, with many Australians working full-time from home and even more spending at least part of the year working from home.
You can claim the work-related portion of your actual working from home expenses. Amongst the items you can claim are:
- Heating, cooling and lighting bills
- Costs of cleaning your home working area (including cleaning products or payment for a domestic cleaner if required)
- Depreciation of home office furniture and fittings
- Depreciation of office equipment and computers
- Costs of repairing home office equipment, furniture and furnishings
- Small capital items such as furniture and computer equipment costing less than $300 can be written off in full immediately (they don’t need to be depreciated)
- Computer consumables (like printer ink) and stationery
- Phone (mobile and/or landline) and internet expenses
Similarly, if you use your home internet service to deal with work-related matters, such as responding to work emails, you can also claim a proportion of those costs. Remember, keep a diary.
As well as claiming actual costs, there are two other methods to be aware of.
The temporary shortcut method of calculating additional running expenses at a rate of 80 cents per work hour applies throughout the tax year right through to 30 June 2021 (and potentially beyond). You will need to keep a record of the number of hours you have worked from home as a result of COVID-19, such as a diary or timesheet. If you use the 80 cents per hour method, you can make no other claims in relation to working from home. So, items like mobile phone, internet usage and the cost of office furniture and technology are all included in the 80 cent rate.
Alternatively, the 52 cents per hour rate allows you to claim 52 cents per hour and actual phone and internet costs plus the costs of computer consumables and stationery and the decline in value of equipment, such as phones, laptops, etc. For many workers, this gives a much bigger claim than the 80 cents rate.
Speak to your tax agent for guidance on which method is best for you.
Main image source: Master1305/Shutterstock.com
About Mark Chapman
Mark Chapman is Director of Tax Communications at H&R Block and is a regular commentator on tax matters for a variety of Australian broadcast and print media outlets, including; Money Magazine, My Business magazine, The Australian Financial Review, The Daily Telegraph, The Age and The Business Spectator. Mark is an author, Chartered Accountant, CPA and Chartered Tax Adviser and holds a Masters of Tax Law from the University of New South Wales. Follow him on LinkedIn.