Individual Tax Deductions
I have provided a bit of info about each of the main types of tax deductions.
Australian tax rules are not simple – which is why a lot of Australians pay a tax agent to do their tax return (and you can claim the tax agent costs under D10 in next years return – ie. the year you paid).
And of course – this is only a VERY Brief summary, so to clarify what you can actually claim, it is probably best to speak to a tax agent or review e-tax and/or the ATO website.
Standard deduction of $500 from 2013
Luckily the government has announced that in the 2013 year you can get a standard deduction of $500 (and $1,000 in the 2014 year) and this might mean you don’t have to lodge a return.
Some of the most common types of tax deductions claimed would be:
D1 – Car Expenses, D5 – Other Work Expenses, D9 – Gifts and Donations, D10 – Cost of Managing Tax Affairs
Types of tax deductions
Work Expenses – D1 to D5
Gifts – D9
Managing Tax Affairs – D10
Non-work Deductions – D6 to D8
Supplementary Deductions – D11 to D16
D1 Work related car expenses
If you have used your car to travel to a client (ie. not to work from home)
The easiest way to claim: cents per kilometre
The ATO cents per km rate changes but in the 2009 year a 1.6-2.6 engine you could claim 74c per business kilometre (up to a maximum of 5,000 kilometres).
So 5 trips to client x 5kms (x 2 if you went back to work afterwards) x 74c = $37 tax deduction
D2 Work related travel expenses
If you have paid for a work trip (accommodation, flights etc.)
D3 Work related uniform, occupation specific or protective clothing, laundry and dry cleaning expenses
If what you wear for work has a logo (eg. McDonalds) or you need steel capped boots or sunglasses (Tradies)
D4 Work related self-education expenses
If you work and are doing a course relating to your work. I did an accounting cadet ship – so I claimed textbooks, stationary and car expenses.
People this might apply to: Accountants, Tradesmen, Apprenticeships.
D5 Other work related expenses Job
Other job work deductions not listed above which may include the business percentage of:
Working from home expenses – telephone, internet
For example you might claim 10% of your internet cost (10% x $50/month x 12 months) as you do some work from home and $80 for home phone calls (you made about 16 interstate long calls which cost about $5 each).
Depreciation from working from home assets – depreciation on a desk or computer you bought
Income Protection Insurance (life insurance is not tax deductible)
D6 Low Value Pool Deduction Business or Rental
Assets purchased put into a low value pool
D7 Interest Deductions Bank
D8 Dividend Deductions Shares
For example, if you spend time managing your share portfolio, you might be able to claim your magazine subscription, internet costs etc.
Unfortunately, if you only have 1,000 Telstra shares – the ATO might not like you claiming your subscription to Money Magazine (and they definitely won’t like you claiming your Foxtel subscription).
D9 Gifts & Donations All
Receipts from amounts paid to charities (Note: you can’t claim when you get a pen, stuffed toy, raffle ticket etc.).
Usually charities give you a receipt that says that you can claim $x in your tax return. If not, you can look them up on The Australian Business Register at www.abr.gov.au
D10 Cost of Managing Tax Affairs Accountant
Your accountant’s costs for managing your tax affairs
Possible other costs to get your tax return lodged
D13 Personal Superannuation Contributions
If you are self-employed or receive more than 90% of your income not from your job (ie. business/investments), then you might be able to claim a deduction for money paid into super. You need to make the payment and tell your super fund so they issue you with a special notice that allows you to claim this deduction.
Other (Rare) Deductions
Aside from personal super contribution, the other supplementary deductions are rare. I have listed them below. Mostly they relate to special circumstances/industries where you can claim a deduction but the ATO want to know about it.
D11 Film Industry Incentives
D12 UPP of Foreign Pension
D14 Deduction for Project Pool
D15 Forestry Managed Investment Scheme Deduction
D16 Other Deductions