How to claim tax deductible expenses as an individual
As an individual taxpayer, you know it’s mandatory to submit your annual tax return to the Australian Taxation Office (ATO) at the end of each financial year (ending each June).
Did you know that you claim expenses against some of your work and personal expenses?
Let’s look at what expenses you can claim and the process for reducing your taxable income.
What’s your taxable income?
You only pay tax on what’s known as your ‘taxable income’. By making an eligible claim for expenses, you can reduce the total of this taxable income. In short, this means you will pay less in tax – with the tax deductible items deducted from your total taxable income.
Work-related expenses you can claim
If you’re incurring expenses as part of your job or self-employment, you can claim some of these expenses back and lower your overall income tax bill.
To claim a deduction for a work-related expense:
- You must spend the money yourself and not get a reimbursement
- The expense must directly relate to earning your income
- You must have a record to prove it (usually a receipt)
Costs that you may be able to claim against include:
- Cars, transport and travel expenses
- Tools, computers and items you use for work
- Clothes and items you wear for work
- Working from home expenses
- Education, training and seminar expenses
- Memberships, accreditations, fees and commissions
- Some meals while working overtime
- Medical and health expenses
Not all tax deductible expenses relate to your employment. There are other areas where you may be able to reduce your taxable income.
These include:
- Gifts and donations
- Expenses related to earning income from investments
- Personal super contributions
- Income protection insurance
- The cost of managing your tax affairs.
How to make a claim for expenses
Keeping records is a vital part of making a claim for expenses. The ATO will need to see receipts and records that show you incurred the expense.
You can use the myDeductions tool in the ATO app to help keep track of your work-related expenses (such as vehicle trips) and general expenses (such as gifts and donations).
These records can be uploaded when you lodge your return online with myTax, or you can share them with us, as your registered tax agent and accountant.
Talk to us about about making a claim for expenses
Claiming the expenses you’re due can make a big difference to your tax bill.
Talk to our team about setting up the right record-keeping processes and claiming the tax deductible expenses that you’re eligible for, both in and out of work.
