Work-related expenses are the largest category of deductions the ATO sees for individuals each year, with more than eight million claims last year.
Keeping good records can reduce the cost of managing your tax affairs and ensures you can claim all expenses that you are entitled to.
Records can be kept as a paper version, an electronic copy or a true and clear photo of an original record.
“While you might have a special place to store your vinyl collection, you don’t want to find yourself searching far and wide for receipts at tax time if you’ve forgotten to store all your records in one spot,” Mr Thomson said.
“Remember, regardless of how you keep your records, you need to keep them for five years from the date you lodge your tax return.”
Work-related expenses
The three golden rules to determine if a work-related expense is deductible are: You must have spent the money yourself, the expense must directly relate to earning your income and you must have a record (usually a receipt) to prove it.
Working from home expenses
You can use the fixed rate method or the actual cost method to calculate your working from home deduction.
With the fixed rate method, you will need a record of the actual number of hours you worked from home for the whole financial year between July 1 – June 30, and at least one record for each of the additional running expenses you incurred that the rate includes. You must also keep records for other running expenses you are claiming as a separate deduction that the rate doesn’t include.
To use the actual cost method, you need to keep records for any additional running expenses you incurred, the depreciating assets you buy and use while working from home, and show how you apportion work-related use for your expenses and depreciating assets. You must also be able to show the time you worked from home during the year.
Car expenses
In order to claim a deduction for car expenses: You must own or lease the car, the expenses must be for work-related trips, you must have spent the money yourself and weren’t reimbursed and you must have the required records.
Good records vital to maximise return
THE Australian Taxation Office (ATO) is encouraging taxpayers to consider what work-related expenses they will be looking to claim in the new financial year, and what records they will need to substantiate those deductions.
