Work-related Deduction Tag

03 Aug

Posted at 09:58h in Accounting, Related Services, Tax

The ATO has published a list of common mistakes and misconceptions taxpayers have around tax time:

  • bank details don’t update themselves: the ATO does not keep track of changes to bank nominations for taxpayers to receive tax refunds;
  • it’s not okay to double dip: it’s important to remember that if you’re claiming under the shortcut method (of working from home expenses), you cannot claim a separate additional deduction for any expenses you incur as a result of working from home;
  • home to work travel is not claimable: generally, most people cannot claim the cost of travelling from home to work unless, they are required by their employer to transport bulky tools or equipment and there is not a safe place to store these at the workplace;
  • you can’t just claim a flat $300 if you had no expenses: you don’t need receipts for claims of expenses up to $300, but you must have actually spent the money and be able to show the ATO;
  • work-related expenses need to be work-related: taxpayers can only claim for expenses that are directly related to earning their income;
  • lodging earlier doesn’t always mean getting your refund earlier: each year the ATO automatically includes information from employers, banks, private health insurers (and this year JobKeeper for employees and JobSeeker amounts) in people’s returns. Taxpayers are advised to include all relevant information if lodging before the ATO automatically updates the information, so as to avoid delays in the return.

23 Oct

Posted at 17:52h in Accounting, News, Tax

As a business owner, do you sometimes take work trips? When a trip is clearly for business purposes only, the rules for deducting your expenses are fairly straightforward. But what happens when you’ve planned a holiday or to catch up with family or friends while you’re travelling?

Airfares

Assume you travel to London for a two-week trade show and stay a few extra days for sightseeing. If business is the primary purpose of the trip, you can claim the whole cost of the return airfares as a business deduction, because the sightseeing is just incidental. If you have a significantly longer holiday, so the primary purpose of the trip is not just business, you may need to apportion your airfares. And if the primary purpose is clearly private with some incidental work activities, you generally can’t deduct airfares.

Accommodation

Accommodation deductions are limited to the nights that you’re required for the business purpose. In our London example, you couldn’t deduct your accommodation costs for the nights you stayed for sightseeing. This applies even though you could deduct the full airfares.

Record-keeping

Sole traders and partners must keep a diary if they travel for six or more consecutive nights, detailing each business activity, the location, the date and time it began and how long it lasted.

If your business runs through a company or trust structure, it’s not compulsory to keep a diary, but it’s strongly recommended.

Tip: For companies, be careful about your business paying for any private part of your travel, as this could have consequences under the “deemed dividend” rules about benefits for shareholders and their associates.

07 Aug

Posted at 12:17h in Accounting, Tax

The ATO has released an employees guide for work expenses to help employees decide whether their expenses are deductible, and what records they need to keep to substantiate them. The Guide says that not all expenses associated with employment are deductible and also debunks some myths about work expense deductions.