Q & A

What home office expenses can I claim?

If you work from home some or all of the time, you can claim deductions for both the running costs of a home office and any office equipment or electronic devices you use in the home office.

Eligible running costs may include:
  • Work related calls including mobiles apportioned accordingly and it was necessary that you made the calls from home 
  • Heating and lighting and air conditioning 
  • Repairs and maintenance 
  • Cleaning costs
Occupancy costs such as mortgage payments, house insurance, interest or rates are not generally deductible.
 
Eligible equipment or device costs may include:
  • Computers and software
  • Office furniture
  • Technical instruments and safety equipment
  • Protective items such as safety glasses and hard hats
The cost of repairing and insuring tools and equipment may also be deductible expense as well as any interest you pay on any loans taken out to buy them.
 
You can deduct the full cost of eligible assets worth up to $300 and the decline in the value of asset costing over $300. As with all deductible expenses you need to be able to support your claim with receipts, a diary, or other written evidence.

*GST turnover is your business's gross income, not your business's profit.

Is there a cap on the amount of work-related expenses I can claim?

Currently there is no limit to the value of work-related expenses you can claim as long as these items are supported by receipts and the claim is for legitimate deductible expenses. You must be able to show you actually paid the expense, and that it was incurred in the course of earning your living.  There is a cap of $300 if you have no receipts.  
 
Recent media coverage suggests the Government is examining the possibility of a cap on the amount of work related expenses that can be claimed in a bid to cut costs. This could be in the form of a maximum amount up to e.g. $1000, effectively a standard deduction applicable to all claims. 
 
This and any other changes that might impact on your year-end tax return will be covered in our May budget update.

What’s the difference between a tax offset and a tax deduction?

While a tax deduction reduces the income your tax is assessed on, a tax offset, or rebate as it’s sometimes known, reduces your tax liability after it has been calculated.
 
In practical terms a $500 tax deduction will only reduce your tax by the percentage you would have paid on the $500 – so anything from 32.5 to 45 percent for 2015 if your income is over $37,001 - but a $500 tax offset will reduce your tax by $500.
 
Offsets are generally calculated by the ATO when you submit your tax return but it’s worth being aware of what offsets are available so you can plan for the maximum benefit.
 
Some common offsets include: 
  • Private health insurance which you can claim as a premium reduction or a tax offset. This offset is income tested and will reduce as your income increases
  • Superannuation income stream offset for 15% taxed (10% untaxed) element of any income you receive from your superannuation fund provided you are over 55
  • Tax offset for super contributions on behalf of your spouse up to a maximum of $540 provided your spouse’s income is less than $13,800
To get the most from available offsets consider options such as transition to retirement that allow you to continue working and start drawing a pension from your superannuation which could lower your marginal tax rate.

If I have an ABN, do I have to register for GST?

The simple answer is no. Your business only has to register for GST if:

  • Your business has a GST turnover* of $75,000 or more (or reasonably expected to exceed $75,000); or
  • Your non-profit organisation has a general turnover of $150,000 per year or more; or
  • You provide taxi travel for passengers in exchange for a fare as part of your business, regardless of your GST turnover. This rule applies to both taxi owner drivers and people who just rent a taxi.

There are special rules apply to taxi drivers. Please contact us for more information.

*GST turnover is your business's gross income, not your business's profit.

Why didn’t my tax refund go into my bank account?

There are some reasons why a taxpayer may not receive their refund into their nominated bank account.

Firstly, if any debts are owed by the taxpayer to either the Australian Tax Office (ATO) or Centrelink, any tax refund will be taken and used towards paying off that debt.

Secondly, if a taxpayer owes any child support, any tax refund will again be used to cover any amounts owing in child support.

Lastly, if neither of the above cases apply, the bank account details may be incorrect. In this case, a cheque will issue in due course.

I was paid an allowance, can I claim against the full amount in my tax return?

The payment of an allowance does not mean an automatic deduction can de claimed. Before a deduction can be claimed:

  • It must be an allowable deduction under income tax law such as motor vehicle, travel and meal allowances.
  • The Australia Tax Office annually issues an income tax ruling in relation to some expenses such as travel and meals. This ruling can be used as a basis for your claim if all conditions are met.
  • Some allowances will not have an allowable deductions.

This is a complex area, please call us to discuss your individual situation.

Do I need a logbook for my Ute?

It is an urban myth that you are entitled to claim 100% of your Ute expenses regardless of your situation. You generally do not need to keep a logbook when using a Ute for work purposes provided your private use is incidental to your work use.

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