Top 5 TAX Mistakes
Have you ever wondered whether you're claiming the right tax deductions? Well, we go over 5 of the top tax mistakes the average person makes on their tax return.
1. Claiming your uniform when it’s not a uniform
If you have to wear normal clothes or a nice suit to work because your employer wants you to look professional and tidy, it doesn’t mean you can claim the expense as a tax deduction.
If you are wondering why you can’t claim your normal clothes or suits for work, well, the answer is simple. They are considered to be everyday clothing that you could wear to the beach or out shopping.
There are 3 criteria for your clothes to be tax deductible:
1. Your clothing must be compulsory or identifies with your employer,
2. Specific to your job or;
3. Might not be compulsory but must have your employers logo attached to it.
An added bonus of your clothing meeting one of those categories is that you can also claim laundry and dry cleaning.
2. Claiming driving to work when you can leave your tools at work.
People are claiming driving to work and back home again with bulky tools, as a tax deduction.
This only applies if there is no safe place to leave your tools at work.
Heed warning friends, the ATO is now asking bosses to confirm that there is nowhere at the worksite to leave their tools.
So, if you are claiming this tax deduction, make sure your have a letter from your boss stating that the tools can’t be safely stored at the worksite.
3. Claiming immediate tax deduction for tools and equipment
If you spend over $300 on tools and/or equipment, you cannot claim the deduction outright.
For those with tools and/or equipment under $300 you can claim an outright tax deduction, if your deductions are over $300 the tax deduction needs to be spread over a number of years.
4. Claiming Self-Education when it doesn’t have anything to do with work
If you’re a bricklayer and want to take a pottery class. You can’t claim a tax deduction for self education (unless its to learn how to make your own bricks of course)
Your course must be directly related to your job and either improve your current skills or lead to an increase in income within your current role.
So, if you’re a bricky going to do a course on bricklaying a new kind of brick you can claim the self education expenses as a tax deduction.
5. Not keeping your receipts
Those without receipts don't get a tax deduction - you can put it on your tax return, the tax office may come sniffing and if you don't have the receipts to prove you spent the money, you can't claim it.
Unfortunately, this is quite common, it’s better to be safe than sorry, if the tax office audit you, and you don’t have the receipts, your claim will be removed and you’ll have to pay some tax back.
A year is a long time, and everyone forgets to keep receipts. But if you take a photo of your receipt as soon as you buy something and email it to a ‘TAX’ folder, you’ll be less likely to lose your receipts and then you can claim more back at tax time.
Remember, you need to keep all of your receipts (and any other tax documents) for 5 years from the date you receive your Notice of Assessment.
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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.