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Friday 21

September, 201812:18 PM



Top tips for tax time as EOFY looms

Top tips for tax time as EOFY looms

It's almost tax time and there are a few simple steps you can take to avoid getting into hot water and to trim your tax bill.

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By AAP 28.06.2018 11:00 AM

One of the most flagrant attempted tax scams of recent years was when an IBM worker tried to claim his seven-year-old son as a deduction for secretarial services.

While most false or exaggerated claims might not be that ridiculous, it pays to be aware of the hot spots under the tax office microscope this year and what steps you can take to legitimately slash your tax bill.

EMPLOYEES

Around six million people last year claimed work-related clothing and laundry expenses, with claims totalling nearly $1.8 billion.

H&R Block director of tax communications Mark Chapman said you can claim up to $150 of work-related clothing and laundry expenses without receipts but the garments must be a uniform, occupation-specific or protective clothing.

"In the ATO's (Australian Taxation Office) view a lot of tax payers who are not entitled to claim that are abusing that, which is why the ATO has said that they're going to crack down this year," he said.

To claim work-related expenses you must not have been reimbursed for the item, it must be directly related to you earning income and you have to have a record of the purchase.

For expenses relating to both work and private use, like a work trip with a personal holiday tacked onto the end, you can only claim a deduction for the work-related portion.

Mr Chapman said that one tax minimisation strategy is to top up pre-tax superannuation contributions made by your employer on your behalf, up to a $25,000 cap.

It also is worth paying for professional annual subscriptions and making charitable donations before the end of financial year on June 30.

SMALL BUSINESS OWNERS

The ATO has signalled it will closely scrutinise small businesses operating on a cash-only basis, including restaurants, beauty salons and home-based ones.

Mr Chapman said that under the instant asset write-off rules, small business owners can immediately deduct the business portion of most purchased assets costing less than $20,000.

LANDLORDS

If you own a holiday home that you both rent out and lend to family and friends, you can only claim deductions for the period during which it is being legitimately rented out. You cannot claim for times when you are using it yourself or letting family or friends stay rent free.

Mr Chapman said landlords who visit their rental properties also can no longer claim the travel expenses as a tax deduction.

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