The start of a new financial year often brings about changes to tax laws and rates and its always a good time for a reminder on certain tax deductions you could be claiming. Planning early means you ensure you have the correct record keeping in place now from the start of the financial year.
We review below some common tax deductions and areas of ATO scrutiny, so that you can be ahead of the game and ensure you aren’t incorrectly claiming or failing to keep all required records.
Work from home – Fixed Rate Method
- The fix rate method is for individuals that want to claim their work from home hours.
- The fixed rate is 67 cents per hour.
- To claim the work from home fixed rate method, you need to incur at least ONE of the following deductions
- Mobile (excluding handset)
- Internet
- Electricity
- Stationery and computer consumables
- If you work in multiple homes, you can combine the work from home hours in both properties.
- To claim this method, you must have kept a full year of records for the hours you have worked from home – for example, a timesheet, roster or diary. Note, previously you could apply an average, now you must have a record for the full year of actual hours.
- If you are reimbursed with only some of the above expenses, you can still claim this method. If you are reimbursed for all of the above expenses, you cannot claim any work from home hours.
- Even if you claim the fixed rate method, you can still claim depreciation on expenses that are over $300 and also claim any costs not incurred for which the rate per hour doesn’t cover.
Motor Vehicle deductions
- The motor vehicle set rate for claiming the km’s travelled has increased from 85 cents in the 2023/24 year to 88 cents for the 2024/25 year. You can claim a maximum of 5,000km using this method.
- If you want to claim your actual expenses, you need to have kept a 12-week logbook showing the business use of the vehicle. You then can claim the business use % of expenses such as:
- Fuel
- Repairs & Maintenance
- Insurance
- Rego
- Depreciation (only for the business use)
Electric Vehicles
- For electric vehicles deductions there is a simple rule for claiming the electricity usage of charging your vehicle. This is 4.2 cents per km.
- To be able to claim this, the vehicle must be zero-emissions (no hybrids).
- You also must have incurred the cost of electricity.
- And you must have kept a logbook for the business kms travelled.
Short-term Rental Properties
- The ATO has become increasingly concerned that many individuals providing such accommodation do not understand (nor comply with) their tax obligations. Many of these errors are from not apportioning expenses correctly.
- You cannot claim the expenses for when the property is:
- Used for private purposes
- Not rented to tenants and
- Not available for rent
These expenses must be apportioned using the number of days rented and the number of days used for private use/not available.
Personal Superannuation Contributions
- Notice of intent (‘deduction notice’) requirements – The following two basic deduction notice requirements must be satisfied to be able to claim a tax deduction:
- The individual has given a valid written notice in the approved form to the trustee of the receiving fund to advise them of the personal deduction
- The fund trustee has provided the individual with a written acknowledgement. There is no time limit on the written acknowledgement, however the individual cannot claim a deduction for their contributions until this has been received.
- It is important you have the correct notice before lodging your personal tax return.
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