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For many Australians, navigating the tax system can be quite overwhelming (especially for those engaging in building and construction which is often project-based, contracted work). To help take the stress out of their tax returns and maximising your return, H&R Block Director of Tax Communications, Mark Chapman, has provided some expert advice.
CONTRACTOR OR EMPLOYEE?
It’s common in certain trades for people to be taken on as independent contractors rather than employees. Deciding whether a person is a contractor or an employee can be a minefield, both for the individual and for the business taking them on. Getting it wrong can have a big impact, with consequences both for you and the business that has engaged your services.
VEHICLE AND TRAVEL EXPENSES
The most important thing to remember when it comes to work-related vehicle and travel expenses is that you must keep records, making everything easier come tax time. If you use your car for work you are entitled to claim the work related travel expenses that relate to the business costs of using your car to do your job.
Travelling to and from work on a daily basis cannot be claimed as this is considered as private travel, even if: you do minor tasks on the way to work, such as picking up mail; you travel back to work for a security call out or parent teacher interviews; you work overtime and no public transport is available to use to get you home. Methods you can use to claim car expenses include:
You can claim the cost of work-related car expenses if they are incurred whilst performing your job as an employee, such as:
DEDUCTIONS FOR WORK CLOTHING When it comes to what you wear to work, there are some clothes-related deductions you can claim – the cost of buying and cleaning occupation-specific clothing such as:
Claiming the cost of work uniforms:
It’s possible to claim the costs of washing, drying, ironing and dry-cleaning eligible work clothes. Written evidence for your laundry expenses, such as diary entries and receipts must be kept if both the amount of your claim is greater than $150, and your total claim for work-related expenses exceeds $300. This doesn’t include car, meal allowance, award transport payments and travel allowance expenses.
DEDUCTIONS FOR COURSES & TRAINING
Most of us want to better ourselves at work and a large part of doing that is equipping yourself with the skills you need to advance your career. The good news is that you can often do that, and claim a tax break on the costs you incurred at the same time.
Self-education expenses are tax deductible when the course you undertake leads to a formal qualification and has a sufficient connection to your current employment and:
You can’t claim a deduction for self-education expenses for a course that does not have a sufficient connection to your current employment even though it:
You can claim the following expenses in relation to your self-education:
You can’t claim:
MOBILE PHONE USE
If you use your own phone for work purposes, you can claim a deduction if you paid for these costs and have records to support your claims. If you use your phone for both work and private use, you will need to work out the percentage that reasonably relates to your work use. You can’t double-dip and claim for phone expenses that have been reimbursed by your employer.
To work out your deduction, you need to choose a typical four-week period from some point in the tax year.
If you have a phone plan where you receive an itemised bill, you need to determine your percentage of work use over that 4-week period. You can then apply that to the full year.
PROFESSIONAL ASSOCIATONS, MAGAZINE SUBSCRIPTIONS & TRADE UNION FEES
As a part of your profession, you may be a member of an association – the good news is, you can claim your subscriptions. If you’re part of a trade union, your fees are also deductible.
Magazines can make a dent in your return, as can subscriptions to mags associated with your line of work. If you’re an investor, financial publications and research services are claimable.
TOOLS & EQUIPMENT
You can claim a deduction for some or all of the cost for tools and equipment if you require it for work purposes. If the work is used for both work and private expenses you need to divide what you can claim. The cost of the asset will affect the type of deduction you can claim:
So now there is no excuse, be well prepared if you want a rewarding End of Financial Year!
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