Even though the 2021/22 tax year ended on 30 June 2022, you have until the end of October to file your tax return with the Australian Tax Office (ATO). If you use a tax agent or accountant to complete your tax return, you’ll be eligible for an extended tax return deadline. This deadline can vary depending on circumstances, but can be as late as May 15.
It always makes sense to take some time over this and try to reduce the amount of tax you owe – or even claim a refund. Given the current cost of living crisis, that’s now even more important.
Here you can find out about five tax deductions that you may well have overlooked for the tax year in question, and that you may be able to utilise going forward.
1. You can claim deductions for working from home
The series of lockdowns and restrictions on travel over the past two years have meant that, at some stage, you may well have been working at home rather than in your office or usual workplace.
Indeed, for thousands of people in Australia, working at home is now standard practice.
The ATO have a handy home office expenses calculator that outlines what you can and can’t claim for, and helps you figure out your work-related expenses.
Work out the hours that you worked from home in the 2021/22 tax year. You may find that there is a substantial amount that you can claim for and so bring your taxable income down.
During the pandemic, the government introduced a “shortcut” fixed-rate method of claiming for working at home expenses. The period you can claim for ended on 30 June 2022, so this return will be the last where you can use the shortcut basis.
2. Work-related travel expenses are deductible
As well as claiming for working at home, you can also claim business-related costs when you use your own car for work purposes.
As well as car costs, you can also claim for taxi fares, and the cost of train and bus journeys taken in the course of your work. It is important to note, you cannot claim for the journeys between your home and place of business.
Keep a note of the distance you drive when you use your car for work. The current amount you can claim is 72 cents a kilometre for the 2021/22 tax year. This is rising to 78 cents in this tax year.
As well as claiming for the actual cost of travelling for work, you can also claim for other work-related travel expenses such as the cost of hotel rooms, meals and other incidental expenses.
3. There are a range of deductions if you rent out a property
If you rent out a property, there is a series of deductions you can claim for when you file your tax return.
Clearly these deductions apply to any property you rent out. However, it’s likely that, if you have a portfolio of rental properties, you’ll have a company set up to manage these and so will be claiming deductions through the accounts and return for the company itself.
To start with, you can claim a deduction for the interest you’re paying on any loan you have on the property.
On top of that, you can also claim a deduction on a whole series of other items.
- Maintenance and repairs to the property
- Servicing and upkeep costs including gardening and cleaning
- The fees you pay to a letting agent
- All costs associated with finding a new tenant, including advertising and background checks.
As with working from home, the ATO have a useful website that details all the deductions you can make.
4. You can claim for the cost of professional subscriptions
If you belong to a professional or trade association that is directly related to the work you do, you can claim a deduction for the annual subscription costs.
You can also claim for the cost of subscriptions to professional and trade magazines and websites.
Additionally, you can also claim a deduction for trade union subscriptions and the cost of subscriptions to investment periodicals if you have your own personal investment portfolio.
It’s likely that none of these deductions will be substantial, but every tax reduction can help.
5. If you have income protection insurance it may be deductible
If you have an insurance policy designed to protect you against any loss of income, you may well be able to claim a tax deduction based on the annual cost of the insurance.
However, you should be aware that this deduction is only applicable if you’ll receive a regular income in the event of you having to make a claim. If you’ll receive a lump sum then you can’t claim a deduction. This means that you can’t claim for the costs of life insurance or critical care insurance.
You should also note that, if you have income protection as part of your superannuation package, the cost of this is not tax deductible.
It pays to keep accurate records
Looking to the future beyond your current tax return, one of the best ways to minimise the tax you pay is to keep accurate records as you go through the year.
Keeping detailed records can also help you keep your affairs in order and gain control of your finances.
It shouldn’t be an arduous process. Maybe resolve to set aside time each month to keep your paperwork up to date and ensure your records are in order.
It could save you time, and money, in the future.
Get in touch
bdhSterling have a tax planning arm – bdhTax – that can help you with your tax arrangements. They provide specialist advice and have a wealth of expertise to ensure you’re maximising opportunities to keep your tax down.
Related to the subject of this article, you can claim a deduction for the cost of any ongoing tax advice you get during the year, although note that upfront advice fees are not deductible.
If you’d like to know more about our tax planning service, or have any queries regarding your financial planning, please get in touch with us.
This article is for information only. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances.
All contents are based on our understanding of HMRC and ATO legislation, which is subject to change.