Ready your wallets and maximise your tax deduction by spending on these five things.
The end of the financial year is fast approaching, and that means it’s time to reduce your taxable income ASAP!
Yep, with EOFY deals going off, you’ve finally got an excuse to make purchases that you’ve been holding off on…as long as you can get juicy tax deductions on them.
It might be work from home expenses, work-related education, travel expenses - believe it or not, there’s a lot you can claim back as a tax deduction.
A quick refresher on tax deductions
…just to make sure we’re all on the same page.
A tax deduction isn’t free money in your pocket (as much as we wish it was). Instead, it’s something that helps reduce your taxable income, and therefore the tax that you owe the ATO.
The general rule is, you can claim a tax deduction on something where:
✅ You’ve spent your own money on something that directly relates to you earning an income
✅ You weren’t reimbursed for the money you spent
✅ You have some record of the spending ie. a receipt
And to make the process of pulling together your eligible deductions a pain-free and easy-breezy process for you, we’ve pulled together the ultimate check-list of tax deductions you should claim (if they apply).
1. Work from home expenses
If you’re working from home, you may be able to claim your home-office expenses as tax deductions.
Think: phone and internet expenses, stationary, home office technology like computers, monitors or desk chairs.
So if you need to update your work-from-home set up, or stock up on new printer paper and pens, now is the time to do so, if you want to claim the deduction in this financial year.
If you buy items for work that cost $300 or less eg. some stationary, you can claim the full amount as a single deduction in one tax return.
Bear in mind that if you’re planning to spend a bit extra, say on a new laptop or desk, you might get a good bargain on EOFY sales, but you won’t be able to claim it all in this financial year. That’s because the ATO expects you to use that item across a number of years, and therefore deduct the amount by which it depreciates over time. And if the item is partially for personal use, you can only deduct the proportional value that applies to work.
If you’re wracking your brain trying to think of what work-from-home purchases might be worth your while before the EOFY, here are some ideas for you:
And if you don’t need anything new, flick through your old bank statements to look for small incidental work-related purchases. They might seem negligible, but a couple of $20 purchases here and there can add up quickly and help boost your deductions.
2. Subscriptions
Relevant subscriptions that you use as part of your job can be claimed as tax deductions (as long as you pay for it). The cost of subscriptions like antivirus software, or journals or magazines you use for work can be claimed.
Butttt they have to be directly related to your work. The ATO has seen its fair share of sneaky tricks, like retail employees claiming Netflix and video game subscriptions as deductions, claiming to be “entertainment consultants”.
3. Charitable donations
Any donations you make to a registered charity for $2 or more will be tax deductible, as long as you have your receipt. And there are so many causes to donate to!
For the nitty gritty details on how tax deductions for donations work, check out our article on the topic, here.
4. Your handbag
Need a new bag for work? No need to think twice when you can claim it back as a tax deduction.
BUT you need to use your bag specifically for work purposes ie. to carry your laptop, iPad, stationary etc.
It’s easy to get carried away with this one… A designer bag you sometimes take into the office might be hard to convince the ATO of, but a standard handbag or briefcase for work will be claimable.
5. A tax-deductible super contribution
What better way to reduce your taxable income than by investing in your future?
When you make a personal (after-tax) contribution to your super, you’ve paid tax on that income at your marginal tax rate. Usually your marginal tax rate is higher than the rate at which super is taxed - 15%.
A tax deduction on your after-tax super contribution allows you to claim back the amount you’ve contributed. And your contributions are treated as pre-tax contributions in your superfund and taxed at 15%.
That way you’re receiving the same tax benefit you would if you had made a pre-tax super contribution ie. salary sacrifice.
To claim the deduction, you’ll need to fill the ‘intent to claim form’ and lodge it with your superfund on either 30 June or before you lodge your tax return.
To learn more about how tax-deductible super contributions work, and see some worked examples, head over to the Maximising Your Super Academy.
So, whether you’re decking out your home office, giving your super a little love, or finally justifying that work-only tote, now’s the time to get savvy. The EOFY clock is ticking, and a few smart moves now can mean a smaller tax bill (and maybe even a cheeky refund) later.
Just make sure you’ve got those receipts, play by the ATO’s rules, and don’t wait till the last minute to pull it all together. Your future self will thank you!
Disclaimer: Flux Technologies Pty Ltd (ABN 86 634 507 172) is an authorised representative (Representative No. 525288) of Mozo Pty Ltd who is the holder of AFSL No. 328141. We also provide general advice on credit products under our own Australian Credit Licence No. 530103. The product information presented does not constitute an offer and we are not recommending or suggesting any particular product. Any product advice presented is of a general nature only, and is not to be taken as any sort of advice as it has not taken into account your personal circumstances, objectives, financial situation or needs. Flux may not cover all products available to you. Check out our Credit Guide and Financial Services Guide for more information.
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