FAQ’s

As your Tax Agent here are the 6 most common questions we are asked during an appointment:

I have a job which requires me to be on the road a great deal and I have to use my own car. What do I need to do so that I can claim a tax deduction for my car?

There are two different methods for claiming work related motor vehicle expenses and each have different record keeping requirements.  To use the method that ensures you the best claim it is advisable to keep a log book and all receipts for expenses (e.g. insurance, registration, repairs, services, tyres, etc.). You can claim fuel and oil costs based on either your actual receipts or you can estimate the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year. Your log book should be kept for a minimum of 12 consecutive weeks and generally it will be valid for five years unless there are significant changes in your circumstances. You also need to keep the opening and closing odometer reading for each year.

It is not necessary for you to use the same claim method each year. The choice of method should be made on the basis of which is more favourable to you and which you have the appropriate records for. If you don’t have a current logbook or have not retained all receipts you will be limited in which method you can choose. You cannot, however, claim any car expenses if your car is salary packaged.

I am paid an allowance for travel. Can I claim a deduction for that on my tax return?

A deduction will only be allowed if you have actually incurred a work-related expense and have the necessary documentation. Travel to and from your job is generally not claimable unless, for example, you are carrying bulky equipment. Some awards allow for a payment of an allowance even though an expense is not necessarily incurred by the employee. If a deduction can be claimed it cannot be for more than the expense that you incurred even if the allowance that you have received was higher.

Your travel must be relevant to your job function for you to be eligible to claim a deduction for those expenses. Where this is the case, and you have the necessary documentation, you can claim the cost of transport and incidentals. If your travel involved an overnight stay you would be able to claim for meals. Travel overseas also requires you to keep travel diary.

Am I entitled to claim $300 for work related expenses as this does not have to be substantiated?

You cannot just claim $300. You must actually incur any expense before it is claimable. Whilst you may not need receipts for expenditure up to $300 you must have spent the money and it must be relevant to your employment.

I keep a room set aside in my house for a home office and would like to claim some expenses.

If a taxpayer carries on all or part of their employment activities from home and has an office set aside to do the work, some portion of the running expenses can be deducted. A diary should be kept for a minimum of 4 weeks stating hours the office was used for work related purposes. The Commissioner’s rate of 52 cents per hour can then be claimed for the hours the home office is used.  Only running expenses (electricity, heating and depreciation of office equipment) can be claimed for home office unless the home is being used as a place of business.

Where a home is a place of business (and is easily identified as such – for example a separate entrance, signage, clients/customers coming to set area of your home etc.), deductions can be claimed on occupancy and running expenses including:

  • mortgage interest
  • rent
  • house insurance
  • council rates
  • insurance
  • repairs
  • cleaning
  • pest control
  • maintenance
  • decorating
  • telephone
  • heating
  • lighting
Is there a limit on how much I can claim as a tax deduction each year?

There is no limit on the amount claimed each year, provided the expenses are necessarily incurred in earning your income. The expenditure must be work related and you may need receipts to substantiate the expenditure. Keeping incomplete, incorrect or no records at all may be limiting your ability to claim deductions. Advice can be obtained from a registered tax agent. Shellharbour Accounting and Business Advisers are happy to advise on appropriate record keeping that will enable you to maximise allowable deductions.

Is a credit card slip acceptable as a receipt?

Provided it gives full details of the supplier and date of purchase the tax office would accept a credit card slip as proof of purchase. Taxpayers can make a notation on the document indicating the type of goods that were purchased. Many taxpayers use the internet to purchase or pay for their work related expenses and so the ATO will also accept Bpay or email receipts provided they contain the necessary information: date, supplier, nature of the goods and the amount.

Whatever your business goals are, we can help you get there.