Nov 9, 2020 Author: Accounts Junction
Things You Must Know About Australian Tax-Deductible Expenses
When an individual earns income, he/she has to pay the taxes and file the income tax return to the respective Government. Australian citizens and Australian businesses are supposed to pay income tax to Australian Taxation Authorities (ATS), though from the overall tax filings a few particulars fall under the tax-deductible expenses.
Tax, Tax, and more Tax
There are various thresholds limits set up by ATS in terms of income taxes as stated below.
In addition to that, a 2% medical levy is charged as well. An individual has to pay taxes on employment, pensions and annuities, investments, income from trusts, partnership or businesses. Most government payments, capital gains and foreign.
Thus, to provide Australian businesses and citizens with some relief, expenses incurred for the purpose of work are deductible from tax. In short, business expenses are allowed to fall under tax-deductible expenses.
Tax Deductible Expenses for Australian Businesses
While filing income tax, an individual or business can claim deductions for expenses directly related to earning income.
Business Expenses eligible to be claimed as deductible
1. Vehicle and travel expenses: Under this tag, you can claim the following deductions.
- Travel between home and work and between workplaces
- Car expenses
- Removal or relocation
- Accommodation allowances and expenses when travelling away from home for work
2. Clothing, laundry and dry-cleaning expenses: For claiming deductions under this tag, you have to provide written proof that the clothing, protective gears, or uniform bought is for fulfilling the professional duties.
3. Home office expenses: If you work from home or run your Australian business from home, you can claim certain expenses for deductions here like electricity bill, internet charges, equipment, etc. Though, there are certain particulars like expenses for tea, coffee, etc. that can’t be included.
4. Self-education expenses: If the self-education you undergo is related to gaining a work opportunity or your help in your current job, or if you have earned a taxable bonded scholarship, you can claim them under this deduction.
5. Tools, equipment and other assets: If you buy tools that are utilised in your profession, you can claim them under deduction. Though, if you use that tool or asset for your personal usage like a laptop, you can only make a partial deduction claim.
6. Other work-related deductions: Under this tag, you can claim deductions for particulars directly relating to your income-producing activities like Books, periodicals and digital information, Income protection insurance, Overtime meals, Seminars, conferences and educational workshops, etc.
7. Other deductibles: This list includes,
- ATO interest – calculating and reporting
- Gifts and donations
- Cost of managing tax affairs
- Interest charged by the ATO
- Interest, dividend and other investment income deductions
- Undeducted purchase price of a foreign pension or annuity
Exempted from the tax-deductible expenses list
- You cannot claim for an expense if you have incurred it for the non-professional purpose.
- If the amount has already been reimbursed to you by your employer.
- Fine and penalties are not tax deductibles.
- Personal activities.
- Political contributions.
- Gifts amounting more than $25, etc.
We understand that all these formalities seem very complicated and time taking, but why worry when Accounts Junction is here to help you. Get in touch with us and our experts having years of experience for Australian businesses would take care of the rest.
