There are so many tax deductions that freelancers, sole traders and small business owners can claim. However, each year the Australian Taxation Office (ATO) analyses the tax returns of Aussies to ensure everyone is only claiming exactly what they are owed. This year, the ATO has announced they will be keeping a close eye on ‘other’ work-related deductions.
What are ‘other’ deductions?
The ATO classifies a number of deductions as ‘other,’ from personal super contributions to education workshops and union fees. This year, the ATO is particularly focused on work-related deductions, such as mobile phone, internet and home phone expenses.
Apparently, claims for work-related expenses have skyrocketed over the last decade. So while there are still opportunities to claim technology expenses, it’s more important than ever to ensure you correctly claim for your work-related tax deductions this year.
What do I need to claim ‘other’ deductions?
There are three rules you need to follow in order to claim ‘other’ deductions, according to the ATO. First, you must ensure you paid for the expense and it has not been reimbursed in any way. It also must be directly related to earning your income and cannot be a private or personal expense.
If you have an expense that is used for both work and personal, for example, your mobile phone, you can only claim a deduction for the work-related portion. The third, and perhaps most important rule, is that you must have a record to prove your deduction.
What about home office expenses?
You also need to take care when claiming deductions relating to your home office. According to the ATO, you may be entitled to a deduction based on the costs you incur when running your home office, such as heating, cooling and lighting and the cost of repairs to home office furniture and fittings.
You may also be able to claim a deduction for home office equipment, such as computers and printers and work-related phone calls. However, remember to always keep receipts and written evidence of your expenses, including any depreciating assets you may have purchased.
For any freelancer, sole-trader or small business owner, tax deductions are a vital part of reducing your tax bill. So while there are strict guidelines as to what you can and can’t claim, don’t miss out on tax deductions that you are actually eligible for. To ensure you correctly claim your tax deductions in 2018, consider getting an accountant onboard to help you.