Tax tips for under 30s
We get to the end of the financial year and everybody is planning for tax again. But (of course) all the information is geared to 40 plus, not for young people (which is the reason I started nomoney.com.au).
Tom Shearman from Regret Nothing, a site that looks to help Aussies get smart with money suggested I write some tax tips for the young guys – with a focus on the deductions you might have and things you can do.
- Employees generally can’t claim many deductions but the ATO provides guides for deduction types and for what you can claim in many occupations.
- Your deductions only get you a small percentage back in tax refund.
- The low income tax offset is automatically calculated when you do your tax return.
- If you really want to get some money from the government, think about opening a first home saver account or trying to get the super co-contribution instead.
Minimal or no tax deductions
It is sad to say but if you have a job, there might not be much you can do to increase your tax refund. You might be able to claim some expenses from your work, but not many.
Most of the cash you pay when you are working (your travel from home to work and back, clothes you wear, food/drink while you work) are likely to be thought of as ‘private’ to the taxman (and not tax deductible).
What can I claim?
Generally – the tax office has guides on what specific types of employees can claim. See www.ato.gov.au/occupations for more.
For example: teachers, nurses, travel agents, salesmen etc. all have guides on what sort of expenses they can claim with some examples on how to work out your claim and whether it is legitimate.
Disclaimer – the ATO provides information about what you can claim under each type of expense category. This article is not provided to give advice – only ideas about general expenses that may be able to be claimed. Please do your own homework (such as checking ATO information) and/or see a professional (such as a registered tax agent).
If you have a retail job – expenses you might be able to claim:
Car expenses (item D1)
There are a few different methods to claim car expenses – but cents per kilometre is the easiest. You can claim maximum 5,000 km with the cents per km method (eg. if you have 10,000 business km you can still use the cents per km method but only claim 5,000).
The cents per kilometre claim for a small car (1.6L or less) is 63c, (1.6-2.6L) is 74c or 75c for large (more than 2.6L) car.
For example, you made 5 trips between workplaces or out to clients @ 10kms = 50kms x 74c (1.6L -2.6L car) = $37 tax deduction.
Travel Costs (item D2)
As mentioned, travel between work and home isn’t tax deductible.
Travel between jobs – if you travel from home to Job A then to Job B then home, the trip between A and B is deductible. From Job B to home isn’t deductible.
This can be claimed using the cents per kilometer method. You can base this on a reasonable estimate. So every fortnight you have a staff meeting at another office, or once a week you go from 1 part time job straight to another, then you could estimate the kilometres and trips to get the years worth.
Uniform costs (item D3) – if your uniform has a company logo on it you might be able to claim it (if you have paid for it – not if you have been given it).
If it is a ‘uniform’ (as defined by the ATO) you might be able to claim uniform washing and dry cleaning.
Where you wash it yourself, the tax office considers a reasonable amount as $1 per load of washing, drying and ironing - if the ‘load’ includes only uniform/protective clothes or 50c per load if mixed with other laundry.
But washing once a week (50c x 52) will only get you a deduction of $26. Not much.
Self-Education Expenses (item D4)
Previously you could only claim in this category if your education expenses (uni, TAFE, a course etc.) were to improve your current work skills or used for your current employment (eg. an apprenticeship or cadet ship where you work and study or a course that you pay for to improve work skills like managing staff).
But thanks to Anstis’ case, those receiving a government allowance (and going to uni or TAFE for example) may be allowed to claim study costs.
Even those who are searching for a job may be able to claim expenses!
See www.ato.gov.au/studyexpensechanges – if receiving Austudy, ABSTUDY or youth allowance
See www.ato.gov.au/jobsearchexpenses for Newstart allowance recipients and Youth Allowance job seeker.
Other work related deductions (item D5) – something work-related you have paid for that your boss hasn’t reimbursed you for.
If you work in hospitality you might be able to claim the following:
Your uniform (see ‘if you work in retail’)
Course Costs (item D4 or D5)
You could claim the cost of getting your responsible service of alcohol or any other similar courses that would increase your work.
If these are claimed under D4 Self Education Expenses – then the first $250 is not deductible (ie. if you paid $300 less $250 threshold = $50 tax deduction).
Tips – are technically assessable (item 2)
Of course you put in the tips that you earn at Item 2 in your tax return (allowances tips and directors fees).
If you work a trade (or are an apprentice)
Tradies actually have it pretty good when it comes to tax time. You might be able to claim:
Uniform Expenses (item D3)
As well as your uniform (if you have one that meets the requirements such as a logo), you might be able to claim your:
Sunglasses, protective clothing, sun cream
Tools used for work can be claimed if the cost is under $300. If more than $300 you can only claim the decline in value (eg. $500 tool / 5 years life = $100 per year x owned for 300/365 days of year = $82 claim in first year). Seems complicated…well it is. The ATO’s Guide to depreciating assets might help here or a tax agent.
If you work in an office
See above re: car expenses if you use your car for work (eg. going to a client or separate office at work in the same day).
Travel costs (D2) – if you traveled to a work-related event (like a conference) it may be deductible. If you put a holiday on the end you may need to reduce your costs (eg. 2 days holiday after 8 day trip = claim 8/10 of costs).
Self-Education Expenses (D4) – if you pay for a course that increases your skills at work. See the ATO instructions for more guidance about this as you can’t claim costs of getting new employment or costs to get you a job (eg. your uni course, unless you are working doing the same thing while studying at the same time).
Other work related (D5) – if you use your phone (or internet connection) to do work, you can claim a portion.
With your phone, you might claim the percentage of work calls x total bills. Or you might highlight the work calls and claim them (eg. the large conference call/overseas call you had to have on your mobile). Same goes for internet – if you use your internet for work a bit then you could claim a percentage. You can keep a diary for 4 weeks to work out a pattern of use (if you don’t get detailed bill).
Unreimbursed costs from work – if you buy your own stationary, keyboard etc.
If you buy a laptop you use for work – you can claim a percentage of the cost each year (as a rough guide it might be Cost x 80% work use / 3 years useful life x days owned/total days in year). The ATO’s Guide to depreciating assets or e-tax might help more here or a tax agent.