Tax Time 2018 is underway meaning that over the next few months millions of Australians will lodge their tax return.
With average refunds last year hitting $3,600, it pays to make sure that you're claiming all the deductions that you're entitled to. The best way to do that is to get professional help from a tax agent like H&R Block, who will be able to guide you to all the deductions you can claim that you might not have realised were available, whilst guiding you away from anything you thought you could claim that's actually not allowed.
When it comes to work-related expenses, the general rule is that if a purchase is made to enable you to earn income or to operate your business, you can claim a deduction. Some of those deductions will be obvious but some of them could be just a bit unusual….
Can you seriously claim a tax deduction for your pet pooch? Unfortunately not. But there are circumstances where a deductible dog could be a real possibility.
If your business uses a guard dog to keep your premises secure, a dog is indeed deductible. It's regarded as a capital asset of the business and you can claim an immediate deduction for the whole cost using the very generous $20,000 instant asset write-off for small businesses.
Obviously, it needs to be a dog suitable for the purpose; a poodle is unlikely to cut it. The same logic applies to dogs used on a farm, such as a sheepdog.
2. Sex toys
It's well established that you can claim a deduction for the tools you use in your trade. But depending on what your trade is, your tools could be very different from the hammers, spanners and drills usually claimed.
If you work in the adult industry, you could be looking at a deduction for sex toys, lube and all manner of "accessories". You can only claim the business use element of course; if you use them in your personal activities, forget the tax deduction.
3. Performance tools
If you're a professional performer (actor, musician, dancer, magician, circus performer, etc), there are all manner of strange deductions which you might look at claiming.
Mime lessons? Absolutely. The cost of ceremonial swords? Certainly, if you're a professional sword swallower. Acting classes, dance classes, musical instruments, magic tricks….if you make a living from stage or screen, a whole world of odd and interesting claims opens up to you.
4. Social functions
As a general rule, the ATO won't let you claim tax deductions for a night out. The exception is where attending the function is actually part of your work.
An example would be where a journalist attends a function that they will later report on through their media outlet; in that case, a deduction can be claimed.
5. Gym memberships
The ATO takes quite a hard line around deductions relating to personal health and fitness but there are a few people who are entitled to claim gym memberships, typically those who require a level of fitness well above the norm.
Examples might include professional sportspeople and those defence force personnel who perform duties designed to keep them in tip-top shape, such as members of the special forces.
6. An apartment in another city
Of course, if you own an investment property, you can claim deductions against the rental income but did you know that in some cases you can claim deductions against a place you live in yourself?
Under new guidelines issued by the ATO, if you're required to work away from home by your employer, your assignment in the other place is only temporary (so you haven't actually relocated) and you choose to rent or buy an apartment in the other work location rather than relying on hotels or motels, you can claim a deduction for the work-related costs relating to the apartment, including either rent or interest on the mortgage, depending on whether you rent or buy.
7. Charitable donations
Any donation over $2 is claimable as a tax deduction provided you have supporting documentation (such as a receipt) and it's paid to a Deductible Gift Recipient (DGR). Most well-known charities are DGR's.
8. Tax affairs
If you paid for a tax professional to complete last year's tax return, you can claim a deduction for the cost in this year's return.
Better still, you can also claim a deduction for any travel costs you incurred in getting to and from your agent. If you've paid for any tax advice during the year, that too is deductible.
9. Income protection insurance
If you pay for insurance premiums against loss of income, those amounts are tax deductible. But be careful; that doesn't include life insurance, critical care insurance or trauma insurance. It also excludes policies paid for out of your superannuation contributions.
Great care is required here. The handbag needs to be fit for work purposes and actually used for work purposes, such as carrying work papers or a laptop computer.
You might struggle to claim that new Gucci bag but a more modest bag – genuinely used only for work purposes – should be claimable. For men, a work briefcase, satchel or backpack should also be claimable.