Accounting News & Updates

Public Accountant, Registered Tax Agent and Business Specialist

Getting your work-related deductions right this tax time

This tax time the ATO is continuing to pay close attention to the $19.5 billion in work-related expenses claimed each year as deductions by individuals when they lodge their tax returns.

Incorrect expense claims are becoming easier for us to detect. To avoid your tax return being held up or reviewed this year make sure your deduction claims are correct.

What’s new this year?

This year the ATO will not be limiting its attention to particular occupations.

Instead, particular attention will be paid to work-related expense claims relating to:

  • overnight travel
  • transporting bulky tools and equipment; and
  • the work-related proportion of use for computers, phones or other electronic devices

As-well-as these areas of focus, we will continue to review incorrect or excessive claims for all other work-related expenses.

If taxpayers are claiming work-related expense deductions, they must have spent the money, they must be related to their job and they must have a record to prove it.

What do I need to do?

When completing your tax return this year, it is important to remember you can only claim the work-related expenses you are entitled to.

Some things you should consider are:

  • You must have incurred the expenses in the year you are claiming them.
  • The expense must be work-related and not private.
  • If the expense has been reimbursed by your employer it cannot be claimed.
  • Receiving an allowance from your employer does not automatically entitle you to a deduction.
  • You need to keep records to support your claim. You can use records other than paper receipts; a full list of accepted records is available on the ATO website.

Common mistakes

  • making claims for home office, mobile phone and computer expenses without any evidence supporting how the claims were apportioned between private expenses and work-related expenses. The ATO recommends keeping a logbook recording business use & private use for 4 weeks!
  • incorrectly claiming travel between home and work as a work-related expense.
  • receiving a travel allowance and claiming the full amount without actually having spent that much.

Small Business: instant asset write off and simplified depreciation

On 2 May 2010, the government announced instant asset write-off and simplified depreciation changes for small business.

The changes will enable small businesses to write-off all depreciable assets where the taxable purpose proportion is less than $5,000 in the income year in which they start to use the asset, or have it installed ready for use.

This amount was subsequently increased to $6,500 as part of the carbon pricing announcements.

It also allows for most other assets to be depreciated in a single pool at a 30% rate. The change applies from the 2012-13 income year.

Private Health Insurance Rebate

Most Australians with private health insurance currently receive a 30 per cent rebate from the Australian Government to help cover the cost of their premiums.

From 1 July 2012, the private health insurance rebate will be income tested.

If you expect to earn more than $84,000 as a single, or more than $168,000 as a family in the 2012-13 financial year, your rebate will be affected.

Using the table below, work out your tier to see how the changes will affect you.

To avoid a potential tax liability, contact your private health insurer and tell them which tier you are in. They will adjust your rebate for you.

Private health insurance rebate for the 2012-13 financial year:

health insurance rebate

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I am a proud member of the Institute of Practicing Accountants, Registered Taxation Agents and highly experienced specialist in tax, accounting and business.

Please call 8322 1900 or contact us for an initial discussion or appointment at my office in Hallett Cove. I primarily service (but no way confined to) the southern areas of Adelaide.

Late? Overdue? Unpaid? ATO Penalties? There is no need to stress! We can deal with any late tax returns or BAS. If penalties or interest have been incurred, these may be able to be reduced or completely cancelled. With tax debts, assistance is available to arrange payment arrangements as well as explain your rights and obligations. Got ATO issues…call now!