Last week we discussed the Golden Rules all first timers should follow… in this blog, we discuss the Lemon Rules… Read on!
Lemon Rule #1
Don’t get fooled into thinking that tax deductions are good. Don’t spend the money in the first place if you don’t need to.
Creating a tax deduction can suck and here’s why!
If I have $100 in my pocket and I need to buy a calculator to do my job properly. The calculator costs $100. Woo Hoo, I can get a tax deduction. Yep, you’re right…BUT…. when you claim the tax deduction the real effect on your purse is that you only get 30 cents* in the dollar back. So, you spent $100 and the Tax Office gives you back $30 – you’re still out of pocket $70. If you got your boss to pay for it, or didn’t really need it, then you’d still have the $100 in your pocket to spend on something cool like a new pair of shoes.
Lemon Rule #2
You can’t claim for things that are considered private. So even though you eat lunch at work it’s not considered a tax deduction because you need food to survive – hence “private”. Using your car to go to work seems like a logical tax deduction, right? But! (We all love that word “but”) You can only get a tax deduction when you start to earn your wages. You don’t start to earn your wages until you get inside the front door – not before.
Lemon Rule #3
You can’t claim invisible things. So, your mates are telling you that they claimed $80 for a tool kit that they didn’t even buy (haha). BAD! If you didn’t have to buy it for work, you can’t claim it! Seriously, the risk of audits and fines should heavily outweigh claiming invisible things.
Lemon Rule #4
Don’t stash away cash. The ATO are pretty smart at sniffing out tax evaders. If you have made money, you need to tell the ATO on your tax return that you’ve made it. Even if it’s $1.
Lemon Rule #5
Lots of lemons leave a bitter taste in your mouth.
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Note that the information provided is general in nature and subject to change, please contact one of our professionals who can evaluate your circumstances and provide more accurate advice to your current situation.