9 common tax deductions you might not know about

WeMoney

It can often be all too easy to approach your tax return as a tick-box exercise. But, even if you’re thorough, chances are you’ll lose out on money if you only do the bare minimum.

There are plenty of not-so-obvious and new tax deductions that could lessen the blow to your bank account come tax time, many of which are directly related to your work and income-related activity.

To make it easier for you to discover what tax deductions you’re eligible for, we’ve rounded up some of the most common. Check them out below now and you can thank us later, after you’ve lodged your tax return.

Let’s get to the following commonly asked questions:

  • What is a tax deduction?
  • What can you write off working from home?
  • What expenses can you write off for a home office?
  • What can I claim for work-related travel expenses?
  • How much can I claim for washing work clothes?
  • What self-education expenses can I claim?
  • What are work industry-related deductions?
  • What deductions can you claim for rental property?
  • What donations are tax deductible?
  • Can I claim medical expenses as a tax deduction?
  • Can I claim deductions for managing my own tax affairs?

Q1. What is a tax deduction?

There are so many costs associated with everyday life, from student loans and credit card debts to your phone bill and more. And, as it turns out, most people are probably overpaying on almost everything anyway. Then, why add to those costs?

Tax deductions are, crucially, different to tax cuts. By claiming tax deductions, you can either reduce your taxable income (which basically means you’ll pay less in tax), or increase the amount you receive in tax refunds.

So, get savvy and learn how to claim tax deductions. When you do, you’ll get back some of the money you spent on everything from vehicle and travel expenses to education expenses. And, you might be eligible for a home office deduction if you worked from home during the pandemic, too. By the time all of these deductions add up, you could even end up dropping down a tax bracket.

For more information on what tax deductions are, reach out to a financial advisor and visit the Australian Taxation Office website or related sites. In the meantime, though, tax deduction guides like this one can help you figure out which tax deductions to start claiming on.

There are several expense related deductions that most people can claim when the annual tax due dates roll around. However, if you’re unsure exactly what deductions you can claim depending on your tax rates and other factors, your registered tax agent can help you out.

Or, if you don’t have a registered tax agent, the ATO website will provide you with additional valuable information. For the most part, though, most people will be able to claim an expenses deduction on the following.

Q2. What can you write off working from home?

If you work from home because you’re self employed, there are a number of tax deductions you can claim. Just keep in mind that they will have to be directly related to your work.

For example, if you want to claim on the fees charged to your mobile phones, you will have to be able to prove that you use those phones for work. Other work related expenses you might be able to claim on include things like union fees and internet expenses.

In recent tax news, the ATO introduced an easy-to-calculate 80 cents per hour claim amount for employees forced to work from home because of COVID-19. It’s applicable between 1st March, 2020 and 30th June, 2021, and you just need a record to prove you have an entitlement to claim.

Q3. What expenses can you write off for a home office?

You can claim the costs of some home office expenses as a deduction, which will help you maximise your earned income. These include any costs related to keeping your home office running, such as computer equipment, lighting, heating, and rent, if you can prove they are a business expense.

Q4. What can I claim for work-related travel expenses?

If you have to travel for work (outside of commuting to and from the office), you might be able to claim deductions on car expenses if you use your personal car, and other travel expenses if you don’t. So, if your standard mileage has gone up as a result of your work, you can minimise the financial burden that brings. It’ll only be the car insurers you have to worry about now.

Q5. How much can I claim for washing work clothes?

Workers required to wear occupation-specific uniforms or protective clothing for work can claim on the cost of purchase as well as any cleaning costs up to $1 per laundry load. You can even claim on sunglasses if you work outside for long periods.

Q6. What self-education expenses can I claim?

Another standard deduction that a lot of people miss out on relates to self-education, but only if it is carried out in connection with your job. Claims on courses that are only tangentially related to work are unlikely to be accepted. Some of the self education expenses you claim deductions on include:

  • Internet usage.
  • Stationery.
  • Student union fees.
  • Student services and amenities fees.
  • Textbooks and journals.
  • Travel costs.

Q7. What are work industry-related deductions?

It is also possible to reduce your estimated tax by claiming deductions on expenses related to specific occupations and industries. As an example, if you work as a nurse or midwife, you can claim on things like agency commissions and fees, first aid courses, and overtime meal expenses. To find out if your industry is covered and what (if any) deductions you can claim, visit this page on the ATO website.

Q8. What deductions can you claim for rental property?

Those operating in the real estate sector can claim deductions, too. While it isn’t possible to do so on the big things like property tax,  landlords can, for example, claim deductions on maintenance and operations costs for their rental properties, including gardening, bookkeeping, and inspections fees.

Q9. What donations are tax deductible?

Any gifts and donations you make to a charity are likely to be tax deductible if they are over $2 and donated to an appropriate organisation. You cannot, however, claim deductions on private donations and crowdfunding campaigns.

Note: You will only be able to claim deductions from organisations that have a registered deductible gift recipients (DGR) status. And, not all charities are DGRs. You can check whether or not a charity is a DGR by using the ABN lookup via the Australian Government’s Business Register portal.

Q10. Can I claim medical expenses as a tax deduction?

Medical expenses for disability aids, attendant care, and aged care are all tax deductible. Other medical and related expenses, including life insurance and some forms of health insurance, are not.

Q11. Can I claim deductions for managing my own tax affairs?

You can claim deductions on the costs of managing your tax if you pay a tax agent to do so for you. To claim on the fees associated with managing tax affairs from before the previous financial year’s tax deadline, simply do so in the section marked “Costs of Managing Tax Affairs” on your return.

Summing up

You can claim any of the above tax deductions when you lodge your tax return. Do so in a way that best suits you, either by doing an online tax return, a paper return, or paying a third party agent for services related to managing tax. For those that don't have much financial experience, then approaching an expert is advised, particularly if you’re unsure about which deductions you can claim.

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Disclaimer: The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.

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