To claim a deduction successfully for work-related expenses, it’s important that you must spend the money yourself and weren’t reimbursed, it must be directly related to your earning, and importantly you must have a record to prove it.
When completing your tax return, you’re entitled to claim deductions for some expenses, most of which are directly related to earning your income.
You can only claim the work-related expenses. If an expense relates to both work and personal use, the ATO will expect that you have used a portion of the expense for business use on a reasonable basis and only claim the work-related portion.
For an expense to be deductible for tax purpose, it must be:
– incurred in performing your work expenses – e.g. travel, home office and phone expenses
– sufficiently connected to your employment activities, eligible clothing and self-education expenses. The connection between the expense and your income earning activities must be more than remote or minor, and the incurring of the expense not merely peripheral to the activities.
Records you need to keep
If your work-related deductions (not including certain car, travel allowance expenses and meal allowance expenses) are more than $300, you must have records to support your claims.
Records are usually a receipt from the supplier of the goods or services. The receipt must show the:
– name of supplier
– amount of expense
– nature of goods or services
– date the expense was paid
– date of the document.
In some instances, you may not need to keep records, but you will still need to be able to show how much you actually spent the money and how much you calculated your claim. Exceptions to the record keeping rules are there to make things simpler
Keeping your records
By law you need to keep your records for five years from the date you lodge your tax return.
If you are claiming for the cost of a depreciating asset that you have used for work for example a laptop you must keep purchase receipts and a depreciation schedule
As the ATO may ask you to produce your records during the five years, it is important that you have sufficient evidence to support your claims.
The records you keep for accounting purpose don’t have to be in paper form. The records made and stored electronically are recognised as documents – this may include photos of your receipts.
Keeping a track of your records on the go is easy with the ATO app my Deductions tool, which is available at app store.
You can keep records of:
– any work-related expenses (including car trips)
– cost of managing tax
– gifts or donations
–affairs interest and dividend deductions
At tax time you can send these records to us for use in completion of your return.
Call us at 1300 300 106 to get a professional advice, filling your tax return and maximising your tax refund.