Tax time needn’t be a nightmare
Prepaid expenses
Expenses are deductible when incurred. For an individual this is when they are paid, so wherever possible pay for deductible expenses prior to 30 June. This includes insurance and interest on rental properties.
Sickness and accident insurance
A deduction is available for the cost of insurance to cover loss of income.
Superannuation contribution deduction
Employees generally cannot claim a tax deduction for personal superannuation contributions. However, you may claim a deduction for a personal contribution if you are self-employed and you earn less than 10% of your total income from employment income.
Eligibility for super co-contribution
You will be eligible for the government super co-contribution (a maximum of $500 in 2014-15) if you made personal contributions to your superannuation account during the financial year (maximum $1000), your total income is less than $49,499 and 10% comes from employment related activities and you were less than 71 years old at the end of the financial year.
Motor vehicle
If you use your motor vehicle for work related purposes, the following four methods are available for use in calculating your deduction:
- Cents per kilometer
- 12% of original value
- One third of actual costs
- Log book
Home office
If you use a home office for income producing activities you may be able to claim a proportion of some expenses as a tax deduction (e.g. telephone, electricity, gas). To be able to claim the deduction, you must keep entries for a representative period (minimum 4 weeks) to indicate the hours you spend in the home office.
A deduction is also available for work related telephone calls. You can substantiate deductions by:- Identification from an itemised telephone account; or
- Diary entries for a minimum of a 4-week period, (together with telephone accounts).
Increase to Medicare levy low-income thresholds
The Medicare levy low-income threshold is $20,542 for individuals, $34,367 for families (with no children) and $32,279 for seniors and pensioners for the 2014-2015 financial year.
Travel expenses
A deduction can be claimed for expenses incurred in work-related travel. If you did not receive a travel allowance written evidence is required and, if your trip was for more than 6 nights in a row, a travel diary is required.
Depreciation
If you purchase assets to be used for a number of years, you can claim a decline in value each year.
Substantiation
To claim personal tax deductions, you must be able to substantiate them. Claims exceeding $300 must be supported by written evidence for the entire amount, not just the amount over $300. The $300 limit does not include award transport payments or car, meal or travel allowance expenses. Expenses of $10 or less, provided they do not total more than $200, can be substantiated by a written note with the same details as those on a receipt if a receipt is not available.
