What can I claim in my Tax Return?
hello everyone and welcome to this month's webinar now this one's a very special one this month I am going to basically try and answer the mother of all questions and that is because I kept this a lot
claimin my tax
returnit's a really big question and I'm willing to take this question on because this time of year is when people are doing their tax
returns I get that a lot from people they might have a few deductions and stuff like that and then they turn around they go Derrick
whatelse can I
claimso I am going to attempt to do that in this webinar and
whatis it's designed for people who are selling wage earners even though I'd do a lot of them small businesses here I do do a lot of tax
returns as well so I'm going to try and do my best to try and answer that question so that's me I'm doing Nolan I'm the business owner of twelve child accountants I've been doing these webinars for a few years now so hopefully and if you haven't seen the other ones before you go back and have a look at them go to her go to my webpage 12.com day you and have a look at the past ones Beaver dis
claimer there and make sure that you get your independent advice okay so I'm going to move straight into this and get right down into some meaty stuff because there I wants to know
claimso now there are few of things we're going to passed through and have a look at today but why I'm gonna try and do...
it in order of the way it appears in a tax
returnbecause that's the way I think so I'm going through so d1 happens to motor vehicle expenses d2 happens to be travel d3 is self-education for his uniforms fives donations etc so that's the way I'm going to do it today in no particular reason but that's just why I'm going to do it so motor vehicle expenses are now this is this is a really good topic anyhow and good good meaty one to get into now I have done a webinar on this on how to make your motor vehicle a tax deduction so I won't go through a lot of detail so go watch that one it'll be on my webpage but I want to go through the basic details because a lot of people get get motor vehicle expenses I just want to clarify a few things so there's basically two methods to
claimmotor vehicle deductions I usually call them the easy method and the hard method the technical side of it is the cents per kilometer method and the logbook method now the reason I called the easy method is the cents per kilometer is pretty much you just have to have some sort of diary that shows that you've used your motor vehicle for a work-related trip then some smart guy the tax office has worked out that 68 cents per kilometer is a reasonable deduction for a kilometer of using your car now that person never worked out whether you're driving a Porsche or a Corolla or a VW or anything doesn't matter to him or that person so that rate is the same it used to...
be different depend on the size of the car but now to 68 cents per kilometer and that's
whatit is it is limited to 5,000 kilometres per car per year but the important thing there is is per car so if you happen to have two cars during the year you might have a car for the first six months and you sell it and you have another car so you actually have two cars so the first kind clamped to 5,000 the second car you can also
claimup to 5,000 kilometres leaving your 10,000 but but 5,000 kilometers that's about a hundred kilometres a week obviously the second method which is the harder method is the logbook method so this is where
whatyou try and do is you try and work out a percentage of the actual total usage of that car and you you need to carry you need to keep a diary or a logbook a minimum of 12 weeks and over that 12-week period you're supposed to then keep a track of all the business trips that you did and then divide that into the total Kilmer's that the car travels for that 12-week period and come up with with a percentage I always think it's funny when people keep a log book and make they keep all their business trips but they'll keep their private ones as well and they give it to me to look at and I don't need to know you went shopping that day or anything like that you only need to keep business ones and a total for the period anyhow normally the logbook method but then with a higher the percentage the more you
claimbecause the running...
costs of the car will usually be more expensive with a more expensive car because the registration insurances probably the finest the depreciation all those things are more expensive for a more expensive car now things you need to keep the long but for a period of five years so it's 12 weeks but it's good for five years most people get those deductions and how you keep records most people get those so I'm not really challenging that at all
whatpeople do struggle with is
whattrips can they
claimso I'm just going to go through a few examples here and just try and make it clear so travel to your regular place of work is not
claimable so everyone has a regular place of work and they go to and I guess the tax office try and say we'll watch regular if you go to one place on a Monday another place on Tuesday another place on a Wednesday and as long as that's regular the taxes say well that's regular if you might not be the same place every day because a regularity about it they're saying well that's that can't be
claimed but if you for pretty much five days a week every day of the week go to one place that's your regular place of work then for some reason you go somewhere different well that's then
claimable and if you go from your regular place to the non regular place that travel is clearly a deductible excursion also from home to that non regular place is also deductible but the easy thing is that travel to and from your regular...
place is not
claimable no local will argue on that one but that's that's pretty clear travel between two places of employment is deductible so you're allowed to have two jobs so say you're an accountant by day and a bartender by night so if you went from your day job to your night job not going home of course go from one to the other that travel is deductible pretty good pretty clear your travel from your home to an alternate workplace and then to your normal workplace so the travel - like I talked about your non regular place is deductible usually goes from home even if you drive straight past your regular place to get there so you your regular place might be in Sutherland but you've gone to Loftus for example for somewhere different all the way from home to Loftus is deductible not just a bit past summer so that's deductible and then call back from Loftus - to Sutherland is is also deductible but then when you go home it's not deductible other ones then you attend a work-related conference or meeting away from your normal workplace again if you go from home to that place it's deductible if you go from your workplace or your regular workplace to the the meeting place it's that's deductible as well you travel from your normal workplace to alternate workplace and then back again to you again well correctly for as long as it's not your regular place you'll be able to
claimthat as a deduction now the other things about motor...
vehicle expenses and we're not going go into a lot more detail than that it's all in my other webinar so go and watch that one it's all about the difference between getting reimbursed or giving a car allowance there's a big difference and the tax office effect they were going to say is that if you try and
claimyour cents per kilometer Schumi no problem at all because the
claims fairly minimal 5000 climbers at 68 cents about $3,400 no big deal tax office doesn't get too upset about that if you try and
claimthe longer the deduction can be a lot bigger the tax office are looking at are you getting a car allowance because if you try and
claima fairly large deduction for your logbook method and car deductions and you're not getting a car allowance the tax dollars go we'll hang on why aren't you giving a car allowance there's something wrong here now
whatI find in a lot of situations is that you are getting a car allowance but your employer for some reason got it wrong and decide to put into your gross gross wages you need to make sure that your employer is putting it in the car allowance section so on your PAYG summary comes out as an allowance so if you're getting like a 16 thousand dollar car allowance it makes it really easy to
claimyou know sixteen thousand dollars worth of car deductions but if you're not getting anything here and you try and
claimto sixteen thousand dollars the tax office go something wrong he better go and...
have a look at it so so again watch the video we're it's really important to understand the difference between allowance and reimbursement because a lot of my staff if they just go to visit a client get some files or something like that I'll just reimburse them for it so it's not deductible to them it's not accessible to them but it is deductible to me as the employer so it's really important that you understand all those sorts of things but don't watch my webinar on this how to make your car a tax deduction and you will get all the answers you need okay moving on to travel now again it's day two on the tax
returnnow I hope no one's going to get bored by this I'm going to try my best to answer this is a big question and I probably really should be doing a separate webinar on every every deduction but I'm going to try and do all in one now travel there's a couple of things I wanted to make an issue about here the first one no one ever thinks about this one it's all about relocation costs now you as an employee cannot
claimrelocation costs and I'm talking about not just if you're working and your current job makes you relocate I'm talking about you leaving one job and moving to take up another job with a completely different employer so if you're living in Melbourne see an ad in the paper for another job in Sydney and you decide yet that jobs for me and then you decide you get the job and you move to Sydney...
I'm talking about the cost of packing up all your possessions and moving them to Sydney now generally that's well it isn't it's not tax deductible there's nowhere on your tax
claimrelocation costs however this is the good news your employer can under fringe benefits tax rules relocation costs for a new or existing staff member whose fringe benefits tax exempt for the employer this is good news so
whatthat means is that I can pay to have someone relocate and so if again if someone from Melbourne to Sydney to work for me I can say listen I'll pay for your relocation costs and there's no limit on it which is great the person receiving that benefit doesn't have to declare it as income because they're not physically receiving it yeah even if I get reimbursed for it just they're not getting a benefit for it and it's exempt for a fringe benefits tax so how good's that so
whatyou need to do if you've done this if you're looking at relocating is that talk to your your next employer about it and see if they'll reimburse you for it now they might not want to actually mention it to them like yeah good idea I'll do that but they probably won't but there's nothing wrong with say that cost is $10,000 to relocate talk to your employer and say listen can I salary sacrifice $10,000 for relocation costs and if they understand how the rules work like a year no problem at all so when you first turn up...
you've got your $10,000 receipt which you've probably already paid for and you then handing to payroll and get reimbursed for it drops of salaries therefore you're saving tax at that tax rate the other good thing too is that the employer gets to
claimthe GST on it so not only they saving you're saving $10,000 through tax they're actually eating $1,000 back through GST and getting a tax deduction for the other $9,000 it's almost like a win-win situation so think about that one that that's any how it's not in the travel part of your tax
returnbut all that's something I want to talk about because it's related to travel okay Travel is all about getting a travel allowance so bit like the car deduction the you to
claimanything in the travel deduction or the travel area of your tax
returnyou needed to have got a travel allowance which will appear on your PAYG summary and by appear on your PID summary you got to pay tax on it like it's accessible but if you don't get anything I'll get to that in a second makes it really hard to
claimanything so if you get a travel allowance it's accessible but
whatthe tax office say is that then depending on where you go it's against a bit like this cents per kilometer for the car some smart guy the tax officers worked out
whatthey believe a reasonable amount amount is depending on where you go and the tax office even broken it down into accommodation food and anyway the food...
they're broken down into breakfast lunch and dinner and then incidentals which is toothpaste or something like that so that's the total that they're saying is assessor is allowable without receipts now normally it was first derive the travel outs for employers so if I sing a staff member way to work now normally I'll pay for the air fares I'll probably even pay for their accommodation so it is
whatit is I may or may not pay for food but I'll probably give them some money now I'm not expecting receipts to come back for it if it's under in this case here we've got the example Melbourne food is the hundred eleven dollars as an employer I get a deduction for it by the mere fact that person has gone to Melbourne if I given them a hundred and eleven dollars I get a tax deduction for it I don't require receipts to come back using the exact same assessable it can this is comfortable tax ruling the tax office update every year is for example Melbourne accommodation 173 food 1 111 111 its nails 20 so total 304 dollars now that's even adjusted for salary level so that's the lowest level but someone on say up to $120,000 they're between 120 and 210 you get a higher amount on 210 thousand dollars and above is your salary you get a higher amount because you stay at nicer accomodation you eat quail for lunch and serve chicken and things like that so this this example here is the lowest lowest amount I'll get to the International...
Travel anymore but even that's even more as you can see foods $200 in sales or $20 but there's no accommodation and I'll explain a little bit in a second so basically
whatthe tax office allow you to do if you get a travel allowance in your tax
returnas your income you're then allowed to
claimas a travel deduction anything that you spend on accommodation food and incidentals now if you have receipts for those expenses you can
claimit if you don't have receipts these are the amounts that you can
claimall you need to prove as you are there now a lot of people might go and stay with their sister who lives in Melbourne but you still
claimone hundred and seventy three dollars okay with overseas you can't
claimaccommodation the accommodation expense for overseas is only deductible for the employer okay that's just a rule the tax office has made but still as you can see the food incidentals are very high because just-just is the important thing here though is if you don't receive a travel out you can't
claimanything in your personal tax
returnit's that simple okay so a lot of people come to me and say oh Derek oh yeah I had 18 nights away during the year I had so many Melbourne something that allowed so many in Brisbane so me around the place and I'd like to
claimthem might accident tax
returnbut you don't have anything in your travel allowance no I don't so the tax office have a problem with that because it's saying...
well that doesn't make sense that doesn't make sense that someone would travel for work and our the goodness of their heart pay for at all the tax office smell a rat on that one and they say well we will the tax office I don't know don't love me they think that you'll been reimbursed for it they probably have or you're a work paid for it directly and that happens a lot so you go to a conference and your accommodation and your food is all paid for us at the one hotel and you come home again that's probably
whathappens so it's really generally you need to beginning a travel out so come my staff here that I just got sick of living them reimbursements all the time I just pay them a travel ounce at the start of the year and then they just
claimin in their own tax
returnunder travel a reasonable amount of of travel but in a way I'm doing it the clever way because it's it's still a cost to me I get a deduction for it but it allows my staff members who had gained the trail allowance to
claimprobably a lot more as a as a travel deduction okay so again stick to the assessable amount even without you don't mean receipts how good set and you know haven't really ever tested that much like if you receive a travel allowances income likes like two thousand dollars how much you can
claimas the Dutch could you go to twenty thousand probably not could you go to two thousand of course you go to two thousand three four not too sure better...
be interested to tip to test one day all right moving along this ones are the easy ones self education most people get this one most people get it self education if you're doing if you're working and you're doing some sort of education as long as there's a really good connection between the work and the education you get it as a tax deduction so again a few things they're nice for you to do with your current employment and needs to maintain or improve your your skills required for your current employment it needs to increase or likely to increase your income from your current employment they're the sort of things you can
claimif you connect the course so if you're working for me who's an accountant and you're doing a commerce degree that's very very likely to increase your your income in the future if you're working for me as a as an accountant but you're doing a course for legal studies it's got really no connection to
whatyou're doing for me so
whatyou can't do is that you can't
claimthe deduction of self-education that relates only in a general way and again the tax office will have their interpretation on
whatgeneral is and
whatspecific there is so the other thing it can't do is that you can't
claimeducation cost for something that is going to be your next employment so it's exactly so if you're working as an accountant but you really do want to become a lawyer you can't
that so it's the me speed at the same time now I've done a few other things that one of my other webinars are touched on who are most well favourite deductions it's all about hex debt if you are
claiming or able to
claimself education as a deduction I always encourage people to pay their course fees upfront pay the hex fees because it might be a real hit but it's better off paying them now and getting a tax deduction for them than having to put them onto your hex or help den or
whatever like that and worry about it and pay it off in 10 or 20 years time after playing a lot of interest on it and you don't get a tax deduction for it then so if you've got the money or you haven't got it borrow it and pay off your course fees now and get a tax deduction for it okay watching came yeah I don't need to go through those things just normal stuff textbooks travel to courses and stuff like that again
claimis like the hex debt but you can you can
claimthe course fees before they become a hex debt hope you quite understand that and then you can't
claimany home office for study okay moving on to d4 which is clothing and laundry again not too much to worry about here and probably off the top of my head there's not too many tricks that I can or things that I need to sort of point out there's three categories of clothing the first one is protected clothing I don't I don't even bother doing a slide on that one predictive...
clothing most people get protective clothing it looks like protective clothing it smells like protective clothing it pretty much is the next category is compulsory uniform or just uniform in in general with uniform mode there's two types there's compulsory uniform and basically doesn't matter which way you throw it uniform must have a logo okay I've written everything on it there's a lot of things that that aren't true out there on the internet but you need to have a logo now I know Westpac they have a logo on the pants which are black in black cotton can't even read it but it's there apparently so so that's how they get around it but must have a logo the other type of uniform which is called the non-compulsory uniform and this is sort of a set up set of clothing that distinctly identifies a particular employer protis service that is not compulsory to wear okay they're enough the only way this is deductible is if it's actually registered with ODS industry I never even heard of that - I started researching it so pretty much the all I can say there is is that the uniform was deductible as long as it's got a logo now obviously the cost of all these things the the protective clothing and the buying of the uniform is deductible no problem but also the laundry the dry-cleaning and stuff like that is also deductible I think it's certain there's a certain rate for the laundry I think it's like um thirty four cents a wash or...
some smart guy and the tax officers work that out which sort of the soap powder a bit of electricity and I think it's 3439 sensors not much the third area which always creates arguments is occupations specific clothing so because people say to me are I want to
claimmy suit why do you want to
claimit well I'm an accountant I don't wear a suit unless I come to the office so an accountants all need to have suits so there's a lot of debate about occupation specific clothing but this is the best I could find you can
claimfor clothing really specific to your occupation it isn't everyday in nature and allows the public to easily recognize your occupation such as check pants for a chef that's the key to it it needs to be so recognizable that people look at you and know
whatyou are so if someone's to look at an accountant mind you gray suits if it's not that obvious so it actually has to be that obvious you can't
claimthe cost of purchasing or cleaning clothes that you wear for work that's not specific to occupation or they can be used outside of work so even a black t-shirt if you're working in a coffee shop is an occupation specific because you saw a purse on the street wearing a black t-shirt that doesn't mean are that person must work at a coffee shop if they got the logo no comment all because comes on a uniform in okay so there's not that many things actually that comes under occupation specific clothing so they're the...
three things and so so have a think about that I won't argue is me if you want but I'm just the messenger okay d5 is gifts and donations again this one's pretty straightforward I'm not going to spend too much time on this one except for the second point I've got there which is school building fund I there's a lot of people forget to
claimtheir school building fund a lot of the a lot of the schools as part of their voluntary compulsory school fees he's a school building fund and that's a hundred percent tax deductible I know you've just down the road here there's a the symmetric some college if your staff here have children that go there I know there's a school building fund there because I just do and when people come in there I know that kids go there and they I say well at the school building from first they've heard of it sometimes so so go back and look at your fees and sure enough in a month's at all 100 City dollars worth of school building fund a hundred percent deductible so make sure you pick that one up but most people would get the whole anything graded two dollars is tax deductible and all that sort of stuff the other thing the decent is that Balan thing there is that raffle tickets you can actually get any benefit from the donation that you did so a lot of people try and
claimthose sort of deductions there's nothing on this is actually a raffle ticket not a and a donation moving on this is one of my...
favorite deductions and should be used a lot more by people is superannuation now the reason I like this deduction is because when it comes to a lot of deductions for tax nearly all of them a lot of them rely on you having to pay money to something to get a tax deduction now that's not fabulous because you might pay $10,000 to something say a donation depending
whattax bracket you're eating you might get up to 47% of those you in the highest tax bracket back but the other 53% you'll never get back and if you're in the lower tax brackets it's less obviously so I always say to people well if you've got to spend money to get a tax deduction why don't you just pay your accountant more they'll get you a nice tax deduction they always think I'm being funny but I'm not I'm not pay your accountant more they deserve it but they get a tax deduction for it so with superannuation though it's different is that you can pay money to super get a tax deduction for it but it's still yours like the money is still your so that's
what's so really good about this
whatif people really should think about this a lot more than they do and the reason they should think about it is because the rules changed a couple of years ago before if you were a selling wage person if you wanted to put money to super the only way you could do is to go back to your employer and salary sacrifice it so say you're already on a hundred thousand dollars a...
year now you get nine and a half percent of your salary paid into super anyhow so there's nine and a half thousand dollars going there if you want to put more in you have to go back to your employer and drop your salary down to say ninety thousand and then extra ten thousand dollars going to super as a salary sacrifice that's the only way you could do it now a lot of people left it too late in the evening and think about it and they just couldn't do it they like there wasn't enough time in the year and I were to do it in time so
whatthey did the first of July last 2018 you can actually go and basically make a money contribution yourself to your super fund and get a tax deduction for it so I'll get to that mistake but $25,000 is the limit that a person per year can go into superannuation and get a tax deduction for it now if you're already on two hundred and fifty thousand dollars a year as a salary you're nine and a half percent pretty much makes up the bulk of that like twenty three twenty four thousand dollars there's other people out there earning three hundred thousand dollars a year so they're already over and there's some contributions taxes and extra things they need to pay because of that to try and even it all out but twenty five thousand dollars is the limit including the nine half percent so so like I said from the first of July 2018 you can now go to your super fund hand over some money and do on the 29th of June if you...
could although most super funds are they get really busy at that time of year but you could hand over $10,000 $15,000 $30.00 I don't care how much it is hand it over get the receipt go and see your tax agent and say I'd like a tax deduction for this it's exactly the same as a donation or a new computer or anything else is exactly the same in your tax
returns d7 the difference is the money's gone to your superannuation fund hasn't gone anywhere it's still yours but you're a tax deduction for it pretty good I really really liked one couple other things about superannuation the spouse contribution is still available which means that if your spouse is earning I think it's less than I'm going to say less than nine thousand dollars I should have checked that on before the webinar you can make a contribution into her into their superannuation fund sorry that and you get a rebate for it not a deduction you actually get a rebate of eighteen percent now you can put more and if you wanted to even come up with $10,000 $20,000 in but you don't get a rebate for it you only get a rebate for the first $3,000 which effectively is five hundred and forty dollars cash back to you okay which is pretty good make sure you do that one as well and the last thing to make a point about is this co contribution which is came in probably ten or eleven years ago remember was originally a hundred and fifty percent of your contributions into super now this is...
contributions that you're not getting a tax deduction for by the way which is slightly different so when you put your own money into super the tax office will match it with fifty percent so you've put a hundred dollars in they'll put $50 in themself now here's an income test so you need to be earning less than thirty seven thousand six hundred ninety seven to get the fifty percent and then it phases out somewhere between thirty seven and fifty two thousand six hundred ninety seven so if you're around fifty thousand dollars you might be getting five percent but it's better than nothing it's barely enough and this is up to a maximum of $1,000 I always mention that to people there are I don't I didn't do it because I didn't have a thousand dollars but if he had eleven dollars he inputted it like it doesn't matter you don't have to have a thousand dollars so again make sure you think about those ones because easy money stuff easy money and we've super it's not going anywhere it's still your money so think about all those for all those four points regarding superannuation really important d8 is income protection premiums most people know this is that your income protection policy if it's in your own name and you're paying the policy not your employer you get a tax deduction for it now up until recently I've always had income protection but I just got old I think when I hit 50 at 52 now the premiums just went...
through the roof I couldn't believe it they just basically say we don't want you as I am as a customer anymore you're too high-risk but lease is tax deductible up and to a point now don't get confused there between income protection and salary continuance which is inside your superannuation fund that's not deductible it's doctor or your superannuation fund and sometimes you need to make more contributions to your superannuation to cover that but income protection is completely different talk to your insurance advisor about that one I should do a webinar on this one actually with with things inside of super like life insurance trauma and things like that you can actually make those things tax deductible they're normally not you can't get a deduction for your life insurance but if they're inside of superannuation you can because
whatactually happens is that your your superannuation contributions part of that say you're on a hundred thousand dollars a year nine half percent goes into super which is nine thousand five hundred dollars say your life insurance is inside a super and the pre per year $1,000 the thousand dollars comes out the nine and a half thousand dollar contribution and pays the premium it's the only got eight and a half thousand dollars left thousand dollars gets taken away but effectively
whatyou could do is that you say well hang on I want nine and a half thousand dollars to go to my superannuation fund I don't...
want the thousand so you actually salary sacrifice another thousand dollars or put it as a co contribution or something like that but get a tax deduction for for another thousand dollars by just taking more money to super that covers the life insurance premiums or left to going risk to go back into super effectively you're knocking in tax deduction for the life insurance premiums but you arguing a tax deduction for the extra super you pay to cover life insurance C so it actually does make the premiums tax-deductible so I should do a webinar on that one one day okay so now we've got to the last section of the tax
returnand this one is all other work-related deductions so the tax office had a carry me for all those other ones D one down to d8 there's a couple I jumped over today nine and ten that's to do with the tax deductibility of interest that you borrowed to invest not to do with rental properties that has own section but say you've got a portfolio of shares or managed funds that you're getting income from and dividends and things like that the money you borrowed to invest if you did and most of these like you know through margin lending and things like that that's where the deduction is okay so I mean over that was more related to the income if you've got income from shares and dividends and you borrowed the money but if you look at some of my other webinars where I talk about my favorite tax deductions some of those things talk about...
converting some of your home loan deduction so your home loan interest sorry which is not deductible into interest that is deductible and there's a few things I talked about in
whatso go and find my 12 favorite tax deductions it may be in small in the favorite text asset of businesses you don't have a look at that one but the last one is all other work related actions and these are things like home office although home office I'm going to say there's not much you can
claimon that a lot of people think they can
claimbecause they work a lot from home they can
claima portion of they rent a portion of their mortgage repayments a portion of their council rates and all that no you can't you cannot only people who have a small business and are working from home can
claimall those sorts of things as a cellaring wage person pretty much all you can
claims a bit electricity and maybe internet things like that anyhow the good thing is I did another webinar on this call all your home office tax deductions explained I'd go through that in a lot of detail so go and find that one on my um on my website so all the other ones like telephone internet computer expensive stationery sun protection union theend subscrip the work-related deductions tools sunglasses meals all these types of deductions come under add that work-related deductions now
whatI decided I wasn't going to go through all these things in detail because they all can do it and I'll explaining...
in in a sec first I want to do is talk about evidence so the evidence require by the tax office is evidence of your expenditure and proof of payment now normally that comes in the way of her other receipt proof of payment would be a credit card statement or a bank statement or something like that the tax office require it and fair enough fair enough that they require the tax office only require this evidence if they ask you to provide it back and I'll select university tax
returns we're done and all your receipts had to be stapled to it with an explanation of why you're
claiming it and then sent off to the tax office and then about three or four months later would come back with green ink all over it stamped and stuff like that and approved or disapproved that's how the tax office did it back in the 80s then in the late eighties self-assessment came in that's a wonderful thing you didn't need to provide any evidence anymore however the tax I said you you need to keep in case we come and ask and in the 90s in the early 2000 thousand lots and lots of audits they used to do on average about two or three hundred thousand desk audits on individuals every year must have really worked out for them very well because now the numbers are probably closer to ten or twenty thousand a year because there's no money in it for the tax office but they still require every person who
claims a deduction in etosha turn to keep evidence of that expense as we talked about...
already - there's some things your evidence can be just be a logbook so but most things particularly in the other workload deductions you need to keep a receipt my last statement there is of course you only need a receipt if you get audited so don't get audited okay and I'll explain
whatI mean by that a little bit later but just don't get order to stay under the radar like just don't put yourself out there don't go on
claimthings that you know aren't true simple as that so don't get audited now like I said the number of audits they're doing is dropping but the tax office is getting a lot better in matching data matching details and and trying to understand how people's own income and deductions should be looking now the way I'm going to answer all other deductions is fairly simple I'm going to pretend on the tax office and whenever you try and
claimsomething your tax
returnI'm gonna ask some questions and the first one is have you been reimbursed by your employer for that expense fair enough because the tax office feel this happens a lot that people sure they've got a receipt sure they've got evidence that they paid for it but they're probably God and got it reimbursed from their employer and they're double dipping tax office have a a real fear and probably justifiably so the second question is why would you as an employee spend money on behalf of your employer and not expect to be reimbursed for it why...
would you do that maybe you're going for employee of the month I don't know a lot of people say to me I'm just too lazy well I don't think the taxes would actually accept that but the reality is they probably are too lazy
whatI don't understand from people is why wouldn't you go and get it reimbursed from your employer you get a hundred percent of it back or come to your tax agent and
whattax bracket you're in maybe only 34 percent of it back it doesn't make a lot of 60 though they won't look too lazy to come and
claimit from me and get 34 percent back as as you get to their employer and getting it a lot of cases that probably have been reimbursed for they're trying to double-dip but there are sort of questions the tax office asked a third one and this is a general question well how does this expense with internet meals travel it won't put up travel but because it would cover that in another area how does that relate to you earning income there they're the sort of the main things the tax office will are so if you're trying to
claimyour telephone well how does that directly relate to you earning income and if you say well is actually fairly essential that I have my telephone to receive messages from the office all right good enough for me so how does it relate to you earning income neither that's the main thing so if you understand from the tax office point of view when you're trying to
something those questions it makes things a lot easier now the tax office has a process this is how they try and assess
whatyou should be
claiming as a deduction they look at your job description now there's 16,000 different job descriptions so when I do a tax
returnfor someone I got the first question is occupation code I click on them there's 16,000 different ones to choose from now a lot of them actually have the same code but the actual SiC the 16,000 are choose from now the tax office thinks that's really really important but you get that job description right the other thing they look at is the amount of your income and
whatthey do they combine those you know through obviously history and looking at different things your job description and that size of your income and in a way I hate to use this but it's a reasonable amount for other work related actions the tax office almost say well if you like this type of job and you're in this much money we believe a reasonable amount as your other work related actions should be this amount now the tax office won't tell me
whatit is but I've been around long enough to get a fair idea on a lot of these sorts of things now for example if you are a receptionist earn $50,000 a year nothing but receptionist of course the other work related actions will be a lot lower than if you were a I don't know a firefighter earning $50,000 a year makes sense or if you're a firefighter on $50,000 a year...
compared to a firefighter on $200,000 a year so I'm saying is that that there's a function now the tax laws won't tell me
whatit is I have seen a little bit of a a window into some of their thoughts sometimes when the taxes come out to me as a tax practitioner and they show me
whatmy clients are
claiming as a whole compared to other tax practitioners and they also try and compare very briefly show me
whatmr. average and mrs. average doing so I sort of give an idea but again it's never occupations specific but this is the process that you need to go through as I understand where you're at so the other thing that tax offers do is that they have now started on prefilling reports now
whatare prefilling report is that is all the income that they've already gathered on you
whatthey're doing now is they're issuing warnings on the pre-filling so if you don't you if you're doing your texture and yourself or your tax say here's the first thing they'll see now under deductions area is if the tax office thought your deductions last year for your occupation if they believe that was too high there's a warning there really clear we believe your client deductions last year were in excess of
whatsomeone of a simian civil occupation would have
claimed when you see that warning you know you've pushed the boundary first thing I always do is to look at the occupation code because the occupation code it was wrong had a couple come in...
last year and they're both police officers similar income we
claimsimilar deductions one this year got warnings the other person didn't when I looked at the occupation code the person who got the warnings their occupation code was police officer where the other person didn't get the warnings their occupation was detective even though that pretty much do the same work in the same so
whatit said to me are ha here we go the tax office part of their process is that they are allowing detectives to have more deductions so I'm saying so the first thing we did this year of course the person got the warning changed them to a detective but it's really important that you get this whole process try and get in the head of the tax office because that shows you
whatthe tax office are going to allow the deduction the other thing which is really important but none clients you mine don't care about but they should tax agents are subject to tests from the tax office and probably a lot more work is done in that area that people realize because if you can go and look at a tax agent like myself who paid lodgers over a thousand tax
returns every year and compare them to the other twenty thousand tax agents in the country a trend will appear one or two or three or many tax agents will stand out now it might not be across the board and might be in certain areas I know one year the tax office came to me and goes ah Derek you're very high in number of your clients that...
claims donations during the 90 something percent all bad why is that and I had to admit that really I asked my question my clients that do you have any donation they all go struggling shoulders yeah a few got any receipts now so I used to put fifty dollars down for people that said that to me just fifty bucks but
whattheir deal it wasn't the dollar value it was the number of people like forty nine percent of my clients had something where the national average was only fifteen percent see
whatI'm saying I just don't do that anymore don't ask that question but see I'm saying is the tax offers onto this sort of stuff and they'll find tax agents so if so if you've got mates they say hey listen got a tax agent down the road he you
claimstuff for you just be really wary on that one because I've heard stories where tax agents get audited and then all next thing you know all their clients are being audited because that's
whathappens so the tax office use that is a really powerful talk okay so again why I'm going to say here again the tax office would hate me saying these sort of statements but people with higher income makes it easier to have higher deductions okay the other really good thing about that and try and comfort people in the top tax bracket with this is that the higher income you have your in the higher tax bracket which means that every dollar you
claimas a tax deduction you get more back though that should be exciting for you...
it's some sort of comfort and that sort of makes sense because people say to be doing I'm putting a lot of tax here
whatcan I do about it
claimin my tax
returnso I say well listen we go through the whole process having said all this
whatit means is exactly that though read between the lines and have a look is this a well don't get audited
whatI mean by that is stick within the guidelines of
whatthe tax offers thoughts are look at your occupation look at the size of your income talk to people like myself and say well
what's a reasonable amount I've got a bit of an idea and it's all specific to different occupations and things like that and if you stay with inside those guidelines the tax office won't challenge you because one thing you didn't mention was under all other work-related deductions and this is like all the other d1 through to D 10 D 11 the tax office don't get the details so for other work related actions on the texture and I prepare I might have you know telephone internet tools sun protection client meetings briefcase stationery all these things listed and might total to $2,300 the $2,300 of peers at D 11 and other work clay deductions the tax office doesn't get the schedule I prepare that I give to my clients breaking it all down they just get the $2,300 that's all they get so they're know
claiming okay is that this is really important because if they don't know...
claimed all they've got to go on is the amount they go back and look at your occupation they go back at your income then they divide and they go hang on nothing to see here now you go remember it's probably artificial intelligence doing this or a computer program to to pick these things out so if that
claimwas high say yeah someone you know an occupation code that shouldn't really have many deductions and their incomes fairly low and they're
claiming $2,300 the first thing the tax office does is come back and ask
what's in that two thousand three hundred dollars and we give it to them they go oh okay well can you provide evidence on these things but that's always the first thing they ask
whatit is so
whatyou try to do is to don't get to that point so understand where your threshold are so come and talk to me talk to other people that you know been around for as long as I have and who who care about this and get it because that's the secret that's
whatyou can train now obviously you still need to have the
whatwe talked about the the evidence and the connection between you earning income and the deduction but when it comes to this all other deductions you need to also understand
whatis available for you to
claimand work within those boundaries because some people my job is to pull them back a bit they sort of gone up I've already know in my head
whatwould be a reasonable man and they trying to
claimall this year...
my job is to pull them back a bit other people though there are sort of think well hang on I can encourage you a little bit have you thought about this have you thought about these sorts of other different things but I hope you get