With EOFY on our doorstep, we believe you need Mark Chapman's bespoke expert tax tips which are specific to women.
Question: How can we begin preparing for lodging our 2017/2018 tax return?
Mark Chapman: As we head into June, take some time out to gather together all the information you will need to help you prepare your tax returns, including invoices and receipts for work-related expenses and any bank/credit card statements that contain items of work-related expenses that you no longer have (or never had) receipts or invoices for. If you're not sure if its claimable, collect together the receipt or invoice anyway and discuss it with your tax agent. If you don't have the paperwork, you can't claim a deduction so it makes sense to set aside this time in advance of the end of the financial year to spare yourself a stressful document hunt whilst you're actually in the process of getting your return prepared!
In addition, if you're claiming any expenses that have a work-related element and a private element (such as for the use of a personal mobile phone) set some time aside to work out what a reasonable apportionment is for the work-related bit.
As we've not yet reached the end of the financial year, it's not too late to generate some additional tax deductions this tax year. If you have any professional subscriptions or union fees due for instance, pay by 30 June and you can claim the deduction for the whole amount this year. Charitable donations are also tax deductible – anything over $2, with a receipt, paid to a charity registered as a deductible gift recipient (which covers most major charities) will be deductible. Finally, if you have some spare cash, look at making a personal contribution into your super fund. Provided the total amount of your contributions (including the contributions made on your behalf by your employer) does not exceed $25,000, this can be a great way to boost your retirement savings and claim a tax deduction for the personal contribution. The payment must be made by June 30th and you need to advise your super fund that you've made the payment (your super fund or accountant can give you guidance on how to complete the form and there's a standard form on the ATO website here: https://www.ato.gov.au/forms/notice-of-intent-to-claim-or-vary-a-deduction-for-personal-super-contributions/)
Question: What types of tax claims are most commonly missed in a woman's tax return?
Mark Chapman: There are a number of tax deductions that women sometimes miss. They won't apply to everyone but if they are relevant to you, make sure you include the claim:
• If you use a bag for work (to carry paperwork or a laptop for instance), you can claim a deduction for the cost of the bag provided it is less than $300. Bags over $300 need to be written off over several years.
• You can claim a deduction for the cost of buying occupation-specific clothing, protective clothing and unique, distinctive uniforms. You can also claim for the cost of washing, drying or dry-cleaning those items.
• If you're required to work outside for prolonged periods, the cost of sun protection, including creams and sunglasses is deductible.
• If you've paid for a course that relates to your current job this year, make sure you claim the cost of the course fees and any associated costs like travel, accommodation, textbooks, etc.
Question: Have any rules changed since we lodged our tax return, last year?
Mark Chapman: If you own a rental property, there a couple of significant things you can't claim this year; you can no longer claim travel expenses to visit your rental property and the rules have also been tightened up on the depreciation claims you can make for items of plant and equipment in your rental property. The new rules are complex so it's worth talking to your accountant for guidance.
Question: What are the advantages of using a company like H&R Block to lodge our tax return over doing it ourselves?
Mark Chapman: Tax is a complicated business. The rules are difficult to understand and many find lodging themselves to be time consuming and stressful. That's why 75% of Australians choose to lodge their tax return through an agent like H&R Block. It simply takes the pain out of the process and the cost of the fee is itself tax deductible!
Question: When do we, legally, need to record our vehicle kilometers in a logbook?
Mark Chapman: If you use your own car for work-related journeys, you can claim a deduction in one of two ways:
• Either claim a flat rate 66c per kilometre up to 5,000 km's per vehicle, in which case you don't need to keep a logbook but you do need to keep a record of all your business journeys so you can work out the kilometres travelled or;
• If you want to claim the actual costs you've incurred (or you want to claim for more than 5,000 business kilometres), you need to keep a logbook (and keep all your receipts). The logbook itself needs to be kept for 12 weeks, which can a painful process, but can then be used for up to 5 years.
Question: Most of us now work from home, even partially, how can we claim a home office?
Mark Chapman: If you work from home (in the evenings perhaps or at weekends), you can claim a flat rate of 45 cents per hour for every hour of work at home, or you can claim a proportion of your actual costs (but you'll need to keep detailed receipts for all the expenses you are claiming plus a calculation of how you arrived at the work-related proportion).
Question: How can we claim our mobile phone on our 2017/2018 tax return?
Mark Chapman: If you use your personal mobile phone for work, claim a deduction for the work-related element. If you're not claiming a deduction of more than $50 in total, you can claim the following amounts without having to analyse your bills:
$0.25 for work calls made from your landline
$0.75 for work calls made from your mobile
$0.10 for text messages sent from your mobile.
Otherwise, you'll need to record of your mobile phone usage over a four week period and work out a reasonable split between private and work use.
Question: What else should we be aware of as we approach end of financial year (EOFY)?
Mark Chapman: Remember the golden rules with work-related tax deductions. To be claimable, you must have incurred the expense, you must be able to prove that you spent the money (with an invoice, for instance) and you mustn't have been reimbursed by your employer.
As we head towards tax time, many people look to lodge their tax returns as soon as possible after 1 July.
These days, with the push of a button, you can pre-fill lots of your income information straight from the ATO's systems. Take care though and don't assume that income data is correct or complete. If you plan to lodge early, always use your own information (payment summaries, etc) as the key source data. Many third parties, such as banks, pass information about you to the ATO late in July or even into August so early lodgers will often find lots of data missing from their pre-fill. Some people assume that because the data comes from the ATO, it must be right. That's a dangerous assumption.
If you omit income and get questioned by the ATO, the legal burden will be on you, even though you've taken the information straight from the ATO's pre-filled data.
Interview by Brooke Hunter