Between the information that’s available online, what your friends and family tell you and the advice that is no longer relevant due to the ever changing laws, it can be genuinely difficult to determine whether your employee expenses are tax deductible or not. And, if they are, what records you need to keep to substantiate them.
Whilst not all expenses associated with your employment are deductible, Nexis can help you to understand what you can and can’t claim and will ensure you get the deductions you’re entitled to.
To help you get your head around things as they currently stand under the income tax law, we’ve compiled some of the most common myths about work expense deductions.
Myth:
Everyone is entitled to automatically claim $150 for clothing and laundry expenses, 5000km under the cents per kilometre for car expenses, and $300 for work-related expenses (even if you didn’t spend the money).
Fact:
There is no such thing as an automatic or standard deduction. It is true that you don’t need receipts for claims under $300 for work-related expenses, $150 laundry expenses (not including clothing expenses) or 5,000km or less when using the cents per km method for car expenses. However, you must have spent the money, not been reimbursed for these expenses, and they must be directly related to earning your income. The big item to remember here is you must be able to explain how you calculated your claim.
Myth:
I don’t need a receipt, I can use my bank or credit card statement.
Fact:
You must keep receipts unless there is a specific exemption available. Generally, you must be able to show that you spent the money to claim a tax deduction, including the supplier and when you paid. This information is not included on bank or credit card statements and the ATO will not accept these as the basis of your claim.
Myth:
I can claim all my travel expenses if I add a conference or a few days’ work to my holiday.
Fact:
Work-related travel expenses can be claimed in part, if you apportion the travel expenses between the private and work-related components and only claim the work-related component. Your personal holiday cannot be claimed!
Myth:
I don’t need to keep records because my vehicle is a ute, and I use it for work.
Fact:
If you are using your own ute (with a carrying capacity of more than one tonne) for work, you must keep original receipts for all your ute expenses and provide evidence of how you calculated your work-related use of the ute. A logbook is the easiest way to demonstrate how you apportioned your usage between work and private use.
These are just a few myths surrounding employee deductions, so make sure you check out the ATO’s guide, so you sort the fact from the fiction.
Alternatively, Nexis can help you confirm the deductions you’re entitled to. Contact us today to learn more.
