5 tips to maximise your tax return, according to the ATO

·6-min read
Hands holding $50 notes
Hands holding $50 notes

The end of the financial year is approaching quickly and if you want to make sure you get the most out of your tax return.

While, according to Debt Busters the average tax return in Australia is $2,574 Yahoo Finance has put together the top five handy tips to maximise your return ahead of the end of financial year.

1. Work from home expenses

With the pandemic-induced lockdowns over the past 18 months it’s important to know what you can and can’t claim for working from home - and a good way to boost your returns if you do it right.

Director of Tax Communications at H&R Block Australia Mark Chapman outlined for Yahoo Finance a comprehensive list of what you can and cannot claim when working from home.

But the long and short of it is if you work from home, you can claim a tax deduction for the work-related proportions of household costs such as:

  • Heating, cooling and lighting bills

  • Costs of cleaning your home working area (including cleaning products or payment for a domestic cleaner if required)

  • Depreciation of home office furniture and fittings

  • Depreciation of office equipment and computers

  • Costs of repairing home office equipment, furniture and furnishings

  • Small capital items such as furniture and computer equipment costing less than $300 can be written off in full immediately (they don’t need to be depreciated)

  • Computer consumables (like printer ink) and stationery

  • Phone (mobile and/or landline) and internet expenses

“Ideally, you should have a specific room set aside as a home office. If you are using a room with a dual purpose, or a room shared with others you can only claim the expenses for the hours you had exclusive use of the area,” Chapman said.

However, to streamline the process the ATO has created a shortcut method to make it easier because so many Aussies haven’t been able to attend the office since last year.

“The ATO has introduced a temporary ‘shortcut method’ of calculating additional running expenses allowing those working from home to claim a rate of 80 cents per work hour during the coronavirus crisis,” Chapman said.

“You will need to keep a record of the number of hours you have worked from home as a result of COVID-19.”

However, it should be noted that if you use the 80 cents per hour method, you can make no other claims in relation to working from home. So, items like mobile phone and internet usage are included in the 80 cent rate.

2. Make a charitable donation

Did you know that you can make a charitable donation and get the money back at tax time?

Doing good makes you feel good and as an added bonus can boost your tax return.

According to the ATO to claim a tax deduction for a gift or donation you make, it must meet the following four conditions:

  • Must truly be a gift or donation – that is, you are voluntarily transferring money without receiving, or expecting to receive, any material benefit (that is anything that has a monetary value) or advantage in return.

  • Must be of money or property, and can include financial assets such as shares.

  • Must comply with any relevant gift conditions – for some authorised charitable organisations, the income tax law adds extra conditions affecting types of deductible gifts they can receive.

The donation must be over $2 in value and you must have proof of the donation.

Additionally, if you make “bucket donations”, that is putting money into a donation bucket from a reputable organisation, you can claim up to $10 of donations without needing a receipt.

However, the ATO warns that not all charities are among the accepted organisations. For example, crowdfunding websites like Kickstarter are not accepted.

3. Sign up to an educational course

You can also claim a deduction for self-education and study expenses if the education relates to your current job.

You generally can't claim the first $250 of expenses for your self-education, according to the ATO.

Again, there is certain criteria you must meet, and the course must have a “sufficient connection” to your current job plus one of the following:

  • maintains or improves the specific skills or knowledge you require in your current employment

  • results in or is likely to result in, an increase in your income from your current employment.

However, the ATO warns you can't claim a deduction for self-education and study expenses for a course that doesn't have a sufficient connection to your current work activities or only relates in a general way to your current employment.

For example, you can’t claim a deduction for a full-time fashion photography course if you’re working as a casual sales assistant on the weekends.

Additionally, you cannot claim for courses or study that will change your career path. This means if you’re a nurse, you can’t make a claim for study that will lead to you becoming a doctor, the ATO explained.

4. Sign up for newsletters and subscriptions

Again, this has to be industry specific but if you work in a certain industry you can sign up for access to industry-specific news.

The ATO outlines that you can claim a deduction for books, periodicals and digital information you use as part of your job, if you are the one who incurs the expense.

Books and periodicals include library subscriptions, academic journals, technical journals and reference books.

Digital information services can include online subscriptions, electronic material, such as e-books or e-journals and other digital materials that you might buy.

The ATO said if the item costs $300 or less you can claim an immediate deduction so long as the item:

  • is mainly used for earning your employment income (not from carrying on a business)

  • is not part of a set of assets you acquire in the same income year, where the total cost of the set is more than $300

  • is not one of a number of identical or mostly identical items you acquire in the same income year that together cost more than $300 - that is you can’t buy a round of subscriptions to a magazine for you and your mates and claim the whole thing.

So, if there is an industry magazine that has caught your fancy, now would be the right time to sign up so you can claim the cost back.

5. Sign up for that union or organisation

If you work in an industry that is part of a union but you haven't joined yet, now is the time to do it.

The ATO outlines that for the industry you work in, you can claim a deduction for:

  • union fees

  • subscriptions to trade, business or professional associations

  • the payment of a bargaining agent’s fee to a union for negotiations in relation to a new enterprise agreement award with your existing employer.

The ATO specifies that you can also claim up to $42 per income year for the cost of each subscription you incur for membership of a trade, business or professional association where it's not in direct relation to earning your employment income.

Most unions and associations send their members a statement of the fees or subscriptions they pay, so check these before you sign up.

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