Work and Wealth
6 ways you may be able to reduce your tax bill
It’s that time of the year, the financial year has ended and it’s now time to start preparing to lodge your tax return. It’s probably been twelve months since you last looked at your tax so here is a little refresher on six legal ways you can reduce your tax bill. As Kerry Packer once said, “I don’t know anybody that doesn’t minimise their tax”.
1.Vehicle and Travel Expenses
Travel expenses are a great deduction if you have travel in your job, have multiple workplaces you travel between or if you have multiple jobs then you should be able to claim travel between the workplaces. If your employer paid any allowances or reimbursements for travel, it’s a sure sign you can probably claim a deduction.
There are a number of methods to calculate expenses, the simplest method being the cents per kilometre.
2. Clothing and Laundry
Do you work in a role with occupation-specific clothing, protective clothing and unique, distinctive uniforms? Then you might be able to claim the cost of purchasing and cleaning these clothes. Unfortunately, it’s very specific and restricted, the clothing or uniform has to be not everyday in nature and allows the public to easily recognise your occupation – such as the checked pants a chef wears. Suits, gym wear, etc.. are not likely to be deductible.
3. Gifts and Donation
Have you been very charitable during the year, supporting the causes that matter to you? The donations must be made to a charity with Deductible gift recipients status and be for $2 or more. On the other hand, gifts of assets must be made without receiving mutual material benefits or advantage, so those raffles tickets and fundraising dinners aren’t deductible (but hey you might have a new car!).
4. Education Expenses
If you’ve had any education expenses during the year for courses and seminars that have a direct connection to your work, either as maintaining skills/knowledge or could lead to increases in your income from current employment, you might be able to claim deductions.
5. Investment Income Deductions
If you earned income from savings, dividends from your investments in shares, rental payments from an investment property or some other type of investment income then you can potentially claim costs associated with producing this income. Some expenses that could be claimed as deductions include account service fees, transaction and brokerage fees, costs of advice or services and interest expenses on borrowed money.
6. Other Deductions
There are a number of other potential deductions you can claim depending on your income sources and timing of expenses. Some of the more common expenses include:
– Cost of managing your tax affairs
– Union fees and subscriptions to associations
– Books, periodicals and digital information
– Personal super contributions
– Income protection insurance
– Health insurance (especially for high income tax earners)
– Interest charged by the ATO
You’re now ready to get your documents ready, start preparing those deductions and get that tax return lodged which will hopefully deliver you a refund. Remember, if you are unsure on any tax matters you should seek the advice of an accountant, registered tax agent or financial planner.
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