With tax time just around the corner, it’s worth knowing what you are entitled to claim to get the most out of your tax return.
Most of us know that if you own an investment property, you can claim various expenses as a tax deduction. But did you know that there are several other deductions home owners may be able to claim?
Here’s a hit list of some of the commonly overlooked deductions that you may be missing out on. Some may surprise you!
1. Rental Income
If you receive income from a rental property, you can claim a deduction for any expense incurred in earning that income. For rental properties, this can include interest associated with a mortgage, landlord’s insurance, council rates and body corporate fees. You can also claim for the cost of any maintenance or improvements made to the property.
If you have been earning some extra income by renting out your spare room on Airbnb, you have to report that income (and the ATO does check). But the good news is that you can claim any expenses related to earning that income, including platform fees, key cutting and the cost of cleaning.
2. Home Office Expenses
Have you been working from home over the last twelve months? Great news, you may be able to claim a deduction for home office expenses.
Home office expenses include:
● Phone and internet expenses
● Computer consumables, including printer paper and ink
● Stationery
● Home office equipment, including computers, phones, furniture and furnishings
You can apply different methods when working out how much your claim will be for home office expenses. You will need to figure out which method is the most appropriate for your situation.
You can claim the total cost for individual items less than $300 or the decline in value (depreciation) for items over $300.
Most people cannot claim home expenses like mortgage interest, rent or general household items like coffee and milk.
Finally, with so many people working from home during the COVID crisis, the ATO introduced a temporary ‘shortcut’ method. Under this method, you can claim 80 cents per hour for all additional running expenses incurred as a result of working from home.
It is worth talking to a qualified tax agent about which method is best for your personal circumstances.
3. Other Investment Income
Other investment income includes interest received on your savings, dividends from shares or any other type of investment income. If you have received any of these, you could claim a deduction for the costs associated with earning the income. That might include brokerage fees, the interest charged on money borrowed to buy shares, and possibly even the cost of investment or financial advice that you paid for.
4. COVID Tests
If you work in an industry that requires you to take a rapid antigen test before you attend work, you can claim the cost of the rapid antigen tests.
5. Dogs
As a general rule, the family pet cannot be claimed as a tax deduction. However, there are specific circumstances where you can claim the costs associated with acquiring and keeping a dog. These include guard dogs used to secure your premises and working farm dogs. The retired greyhound you adopted during lockdown probably won’t qualify, though.
6. Tax Affairs
This is possibly the most satisfying deduction you can claim.
Tax agents are experts in tax law and deductions. They are essentially tax deduction seeking missiles, and their objective is to help you get the most out of your tax return.
If you paid someone to prepare your tax return, you can claim the cost of that as a deduction for the following year. Not only does that drastically reduce the amount you pay, you may find that they uncover deductions you didn’t know about – meaning you come out ahead.
When it comes to claiming deductions, there are three simple rules to follow:
1. The expense must be directly related to earning income
2. It must have been incurred during the relevant financial year; and
3. You must have proof of the expense (e.g., receipts)
How you keep your records is up to you. Some people opt for the good old fashioned shoe box method, while others like to file them electronically.
Whichever you choose, make this year the one where you claim everything you’re entitled to.