Tax Time Toolkit 2019 - ATO
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2019 Tax Time Toolkit Aviation NAT 75049-06.2019 DE-4941
The 2019 Tax Time Toolkit We encourage you to share this information with your staff, clients, members and networks. Welcome to the Tax Time Toolkit for 2019! Once again deductions are a focus of We received great feedback on this the toolkit and we are committed to working product last year so we are excited to with agents and the community to help provide you with an updated version. people get their claims right. Small incorrect deductions have a big impact. In 2014–15, This toolkit has been designed to give you and we estimate $8.76 billion was lost (from your clients the information needed to lodge individuals not in business), mostly due to correctly this year. It has tips on how to avoid incorrect deductions and omitted income. common mistakes for flight attendants and pilots as well as ‘ready to use’ messages you Thank you for your support and working can adapt for your own communication with us to help the community get their channels and much more. tax right this tax time. You’ll also find practical and tailored Alison Lendon information about: Deputy Commissioner ■■ income that needs to be declared Australian Taxation Office (including income from working overseas) ■■ claiming gifts and donations ■■ keeping the right records.
A helpful directory for tax time The ATO has a range of information, tools and services available to help Australians prepare and lodge their tax return every year: ■■ ato.gov.au/whatsnew – changes to ■■ ato.gov.au/calculators – a range of be aware of before you complete your popular calculators and tools to help you tax return work out the answers to questions unique ■■ ato.gov.au/doineedtolodge – an easy to your tax and super circumstances tool to find out if you need to lodge a ■■ ato.gov.au/whereismyrefund – track the tax return this year progress of your return ■■ ato.gov.au/lodgemyreturn – lodge using ■■ ato.gov.au/onlineservices – access myTax or a registered tax agent. If you are a range of tax and super services in one going to lodge your own return, myTax is place, including lodging your tax return, the quickest and easiest way to lodge tracking the progress of your return and ■■ ato.gov.au/deductions – it pays to know making a payment or entering a payment what you can claim at tax time arrangement ■■ ato.gov.au/occupations – guides from ■■ ato.gov.au/community – ask your specific industries and occupations to help tax and super related questions over on you correctly claim the work-related the ATO’s online community forum expenses you are entitled to ■■ ato.gov.au/findus – keep up to date ■■ ato.gov.au/mydeductions – a useful way with the latest tax and super information to keep track of records throughout the on the go! Follow the ATO to get tax tips year to make tax time easier and updates in seconds, share information and stay informed. ■■ ato.gov.au/incomeyoumustdeclare – find out what income you must declare in your tax return ■■ ato.gov.au/rental – find out what you need to declare and what you can claim for your investment property
Occupation guide The following page contains an occupation guide for flight attendants. ■■ Flight attendant
If you’re a flight attendant, it pays to learn what you can claim at tax time To claim a deduction ■■ you must have spent the money yourself and You can only claim the work-related part Self-education expenses for work- weren’t reimbursed of expenses. You can’t ■■ it must be directly related claim a deduction related for any part of the You can claim a deduction for self-education expenses if to earning your income expenses expense that relates your course relates directly to your current job – eg updating ■■ you must have a record to personal use. required first aid certification. to prove it.* * You can use the ATO app myDeductions tool to keep track You can’t claim a deduction if your study is only related in of your expenses and receipts throughout the year. a general way or is designed to help get you a new job – eg training to become an air traffic controller while you are employed as cabin crew. TAXI Travel expenses Clothing and grooming expenses You can claim a deduction for travel expenses if you are required to travel overnight to perform your work duties. 'Overnight' can be taken to mean a mandatory rest break after being on duty and You can claim a deduction for the cost of buying, hiring, before recommencing duty, that is of sufficient length for you to mending or cleaning certain uniforms that are unique and sleep (around 7 hours or more), and would usually involve you distinctive to your job. taking up accommodation for that purpose. You can’t claim a deduction for the cost of buying or cleaning Travel expenses could include meals, accommodation, fares and plain clothing worn at work, even if your employer tells you to wear incidental expenses that you incurred and your employer has not it – eg plain, black shoes. However, if your employer has a strictly- provided or reimbursed you. enforced uniform policy that stipulates the characteristics of shoes you must wear – eg, minimum and maximum requirements for Receiving an allowance from your employer does not heel height and circumference – automatically entitle you to a deduction. You need to be able to you may claim a deduction for the purchase of these shoes. show you were away overnight, you spent the money and the travel was directly related to earning your income. You can’t claim a deduction for hairdressing, cosmetics, hair and skin care products, even though you may be paid an You can’t claim expenses for travelling between your home allowance for grooming and be expected to be well groomed. All and the place of departure. grooming products are private expenses. You can claim a deduction for the cost of rehydrating moisturisers and rehydrating hair conditioners used to combat the abnormal drying of skin and hair when working in the pressurised Meal expenses environment of an aircraft. You can claim a deduction for meals when you travel away from home overnight for work. You can claim a deduction for the cost of overtime meals on Other common deductible those occasions where: work-related expenses ■■ you worked overtime and took an overtime meal break, and ■■ your employer paid you an overtime meal allowance under an Other expenses you can claim a deduction for include: industrial law, award or agreement. ■■ luggage and bags used for work-related purposes You can’t claim a deduction for the cost of meals eaten during a ■■ the work-related portion of phone expenses normal working day as it is a private expense, even if you receive if you have to make phone calls or an allowance to cover the meal expense. send texts for work Carrier 12:34 PM Add expense 100% ■■ union and professional SNAP!! SAVE SNAP!! STORE association fees SAVE STORE Cost $45.00 ■■ professional publications Date 10/04/2018 Description ■■ visa application fees when you Travel expenses are required to enter a country Is this partly a private cost? Yes No as part of your job. What can you claim on your tax return? 100% OR $0.00 NAT 75034-05.2018 C096-00006 Car Other car expenses This is a general summary only. For more information, go to ato.gov.au/occupations
Information about common deductions, including record keeping The following pages contain guides for common deductions. ■■ Car expenses – what’s under the bonnet? ■■ Clothing and laundry – it pays to learn what you can claim at tax time ■■ Gifts and donations ■■ Record keeping – set the record straight ■■ Self-education expenses – it pays to learn what you can claim at tax time ■■ Travel expenses – what you need to know before you go
Car expenses What’s under the bonnet? If you use your own car for work purposes, you can claim a deduction using the cents per kilometre method or logbook method. If you use someone else’s car for work purposes, you can only claim for direct costs you pay for – such as fuel. You can claim a deduction for car expenses if: Remember you use your car in the course of you travel from your home to an You can’t claim a deduction performing your work duties alternative workplace and then for normal daily journeys between to your normal workplace home and work except in limited you attend work-related conferences you perform itinerant work. circumstances where you carry or meetings away from your bulky tools or equipment (such as normal workplace an extension ladder or cello) that: you travel directly between two your employer requires you to separate places of employment and use for work one of the places is not your home you cannot leave at work. you travel from your normal workplace If travel is partly private, you can to an alternative workplace and back only claim the work-related portion. to your normal workplace You can’t claim a deduction for car expenses that have been salary sacrificed. You can’t claim a deduction if you have been reimbursed for it. You can calculate your car expenses in two ways You can claim fuel and oil costs based on your actual receipts or you can estimate the expenses based on odometer records that show readings Cents per kilometre method Logbook method from the start and the end of the period You can claim a maximum of 5,000 Your claim is based on the business- you used the car during the year. business kilometres per car, using use percentage of expenses for the You need written evidence for all this method. car. other expenses for the car. Your claim is based on 68 cents Expenses include running costs Your vehicle is not considered a car per kilometre. and decline in value. You can’t claim if it is a motorcycle or a vehicle with a You don’t need written evidence but capital costs, such as the purchase carrying capacity of: you need to be able to show how you price of your car, the principal on any money borrowed to buy it and any one tonne or more, such as a worked out your business kilometres improvement costs (eg, adding paint utility truck or panel van (for example, by producing diary records of work-related trips). protection and tinted windows). nine passengers or more, To work out your business-use such as a minivan. percentage, you need a logbook Keep receipts for your actual expenses. and the odometer readings for the You cannot use the cents per kilometre logbook period. The logbook period method for these vehicles. While it is is a minimum continuous period not a requirement to keep a logbook, of 12 weeks. it is the easiest way to show how you have calculated your work-related use of the vehicle.
Keeping a logbook Your logbook must cover at least 12 continuous weeks. If you started using your car for work-related purposes less than 12 weeks before the end of the year, you can extend the 12-week period into the next financial year. If you are using the logbook method for two or more cars, keep a logbook for each car and make sure they cover the same period. Your 12 week logbook is valid for 5 years. However, if your circumstances change (eg, you change jobs) and the logbook is no longer representative, you will need to complete a new 12 week logbook. Your logbook can be electronic or paper. The example below has the details you need to keep. Car details Make: Holden Model: Barina Engine capacity: 2.4L Registration number: ABC 123 Odometer Odometer Total Journey reading at start Journey reading at end kilometres start date of journey end date of journey Reason for the journey travelled 27 August 2017 10,200km 27 August 2017 10,210km Private – take kids to school 10km 27 August 2017 10,210km 27 August 2017 10,230km Private – travel to work 20km 27 August 2017 10,230km 27 August 2017 10,245km Business – travel to offsite client meeting 15km 27 August 2017 10,245km 27 August 2017 10,260km Business – return to office 15km 27 August 2017 10,260km 27 August 2017 10,280km Private – travel from office to home 20km Calculate your work-related car use (Complete this section after 12 continuous weeks of logbook use) Logbook period (dd/mm/yy to dd/mm/yy) 01/09/17 to 21/11/17 a) Calculate the total number of kilometres travelled during the logbook period: 4,200km b) Calculate the number of kilometres you travelled in the course of earning your income during the logbook period: 1,470km c) Calculate the work-related use by dividing the amount at (b) by the amount at (a). Multiply this figure by 100. Your business use percentage is: 35% Once you’ve calculated your business use percentage, multiply it by your car expenses to figure out your claim. Car expenses can include running costs such as fuel, oil, and servicing, registration, insurance and vehicle depreciation. You can claim fuel and oil costs based on receipts or you can estimate the expenses based on odometer records that show readings from the start and end of the period you used the car during the year. You need written evidence for all other expenses for the car. The ATO app’s myDeductions tool can be used to record work-related car trips as well as any car expenses. You can share your myDeductions records directly with your agent at tax time. For more information, visit ato.gov.au/mydeductions. NAT 74998-06.2019 DE5998 For more information, speak with your tax agent or visit ato.gov.au/carexpenses
Clothing and laundry It pays to learn what you can claim at tax time You can claim a deduction for the cost of buying and cleaning: You can’t claim a deduction for the cost of occupation-specific clothing, protective clothing and purchasing or cleaning clothes you bought to wear unique, distinctive uniforms. for work that are not specific to your occupation, You can claim a deduction for occupation-specific such as black trousers and a white shirt, or a suit, clothing. This means it is specific to your occupation, even if your employer says this is compulsory. is not everyday in nature and allows the public to These items are conventional, not usually a easily recognise your occupation. specific type and not sufficiently distinctive or An example is the checked pants a chef wears. unique to your employer. You can claim a deduction for protective clothing and You can’t claim a deduction for ordinary clothes footwear you wear to protect yourself from the risk of illness (such as jeans, drill shirts, shorts, trousers, socks or injury posed by the activities you undertake to earn your or closed shoes) as they lack protective qualities income. The clothing must provide a sufficient degree of designed for the risks of your work. protection against that risk. Examples include: fire-resistant and sun-protection clothing hi-vis safety vests non-slip nurse’s shoes steel-capped boots overalls, smocks and aprons you wear to protect your ordinary clothes from soiling or damage. You can claim a deduction for a compulsory or non-compulsory uniform that is unique and distinctive to the organisation you work for. Clothing is: unique if it has been designed and made only for the employer distinctive if it has the employer's logo permanently attached and the clothing is not available to the public. A compulsory work uniform is a set of clothing that identifies A non-compulsory uniform is a set of clothing and you as an employee of an organisation with a strictly enforced accessory items (not protective or occupation-specific) that: policy that makes it compulsory for you to wear the uniform distinctly identifies a particular employer, product or service while you're at work. is not compulsory for employees to wear to work. You can claim a deduction for shoes, socks and stockings You can only claim expenses incurred for a where they are an essential part of a distinctive, compulsory non-compulsory work uniform if your employer uniform, and where their characteristics (colour, style and has registered the design with AusIndustry. type) are specified in your Shoes, socks and stockings can never form employer's uniform policy. part of a non-compulsory work uniform. You can claim a deduction You can’t claim a deduction for a single item for a single item of distinctive of non-compulsory uniform, such as a jumper. clothing, such as a jumper, if it's compulsory for you to wear it at work.
Situation Clothing Laundry Reason deductible deductible Your employer tells you to wear plain Conventional clothing that is not distinctive black pants and a black polo shirt to your employer Your employer tells you to wear Top Top plain black pants and supplies a You are required to wear the top and it is unique and top with a logo that is unique and distinctive to the organisation you work for distinctive to your employer Pants Black pants are everyday in nature and not sufficiently distinctive or unique to your employer – a colour requirement is not enough Your employer tells you to purchase Top Top Top and wear a specific top with a logo You are required to purchase the top and it is unique on it and plain black pants Pants Pants and distinctive to the organisation you work for Pants Black pants are everyday in nature and not sufficiently distinctive or unique to your employer – a colour requirement is not enough Your employer tells you to purchase Top Top Top and wear a specific top with a logo You are required to purchase the top and the logo makes on it and black pants from XYZ Pants Pants it unique and distinctive to the organisation you work for retail outlet Pants Black pants without a logo or other feature are not unique and distinctive to the organisation you work for, even if your employer requires you to purchase them You are required to purchase You are required to purchase a registered uniform that a uniform of a certain style is sufficiently distinctive and unique to your employer and colour that your employer registers, made up of a shirt with a logo and black pants Your employer tells you to You cannot claim for the cost of plain clothing you wear purchase and wear the latest line of at work, even if it’s clothing sold at the store you work clothes from the store you work at at and your employer requires you to wear it Records Allowances You must have written evidence, such as diary entries (to If you receive an allowance from your employer for be kept for a representative period of at least one month) and laundry expenses: receipts, for your laundry expenses if both of the following apply: you can only claim a deduction for the amount you The amount of your claim is greater than $150. actually spent, not simply the amount of your allowance Your total claim for work-related expenses exceeds $300. the allowance is assessable income, which you must include on your tax return. If you don’t need to provide written evidence for your laundry expenses, you may use a reasonable basis to work out your claim. If you wash, dry and iron your clothes yourself, we consider that a reasonable basis for working out your laundry (washing, drying and ironing) claim is: $1 per load if the load is made up only of work-related clothing 50 cents per load if you include other laundry items in the load. n74999-03.2018 For more information, speak with your tax agent or visit ato.gov.au/clothingandlaundry c079-00003
Gifts and donations When can I claim? You can claim a deduction for a donation you make to an organisation if the donation meets four conditions: You make it to a deductible gift recipient (DGR) It must truly be a donation. A donation is a voluntary transfer of money or property where you receive no material benefit or advantage* It must be money or property, which includes financial assets such as shares You have a record of the donation (eg a receipt). * If you receive a material benefit – that is if the donor receives something which has a monetary value from the DGR in return for their donation – it is considered a contribution, and extra conditions apply. Visit ato.gov.au/gift-or-contribution for more information. What is a DGR? What records Bucket donations A deductible gift recipient (DGR) is an do I need? If you made one or more donations You should keep records of all tax of $2 or more to bucket collections organisation or fund that can receive tax deductible gifts and contributions you conducted by an approved deductible gifts. make. organisation for natural disaster Not all charities are DGRs. For example, victims, you can claim a tax deduction in recent times there has been an influx of When you make a donation, the DGR will of up to $10 for the total of those crowdfunding campaigns. Many of these usually issue you with a receipt – but they contributions without a receipt. crowdfunding websites are not run by don’t have to. If this is the case, in some Further information is available DGRs. circumstances, you can still claim a tax on the ATO website. deduction by using other records, such as You can check whether your donation bank statements. was made to an endorsed DGR on the Australian Business Register website If a DGR issues a receipt for a deductible abn.business.gov.au/DgrListing.aspx. gift, the receipt must state: the name of the fund, authority or institution to which the donation has been made the DGR’s ABN (if any – some DGRs listed by name might not have an ABN) that the receipt is for a gift. If you give through a workplace giving program your payment summary or a written record from your employer is sufficient evidence.
When you can and Gifts and donations to can’t claim a deduction political parties and independent You may be able to claim a deduction when: candidates and members the gift or donation is $2 or more and you have a record of the donation In some circumstances, your gifts and donations to registered political parties and independent candidates may be claimed you donate property or shares, however special rules as a deduction. apply (see ato.gov.au/gifts-and-fundraising-rules) there are special circumstances under the Heritage Your gift or donation must be $2 or more and be money or and Cultural gift programs where donations can also property that you purchased during the 12 months before be deductible (see ato.gov.au/cultural-gifts making the donation. This includes if you pay a membership for more detail). subscription to a registered political party. You must also make the gift or donation as an individual, not in the course of carrying You can’t claim gifts or donations as a deduction when on a business, and it can’t be a testamentary donation. it is for: the purchase of raffle or art union tickets (eg RSL Art The most you can claim in an income year is: Union Prize home) $1,500 for contributions and gifts to political parties, and the purchase of fundraising items such as chocolates, badges and pens $1,500 for contributions and gifts to independent candidates Carrier 12:34 PM 100% the cost of attending fundraising dinners, even if the cost Add expense and members. exceeds the value of the dinner SNAP! SAVE! payments to school building funds made, for example, as To claim a deduction you must SNAP!! STORE an alternative to an increase in school fees keep a written record of your SAVE STORE Cost gifts to families and friends regardless of the reason donation. $45.00 Date 10/04/2018 donations made under a salary sacrifice arrangement To find out who is registered, Description Donation donations made under a will. go to: ato.gov.au/political-gifts. Is this partly a private cost? Yes No What can you claim on your tax return? 100% OR $0.00 Car Other car expenses NAT75017-05.2018 C069-00003 This is a general summary only. For more information, speak with your tax agent or visit ato.gov.au/gifts-and-donations
Set the record straight To claim a deduction for work-related expenses: you must have spent the money yourself and weren't reimbursed it must be directly related to earning your income you must have a record to prove it. You can only claim the work-related part of expenses. If an expense relates to both work and personal use, you must apportion use on a reasonable basis and only claim the work-related portion. Records Keeping you need to keep your records myDeductions If you claim work-related deductions You need to keep your records for The records you keep don’t have you must have records or be able to five years from the date you lodge to be in paper form. Records show how you calculated your claims. your tax return. made and stored electronically are Records are usually a receipt from the If you are claiming for the cost of a recognised as documents – this supplier of the goods or services. depreciating asset that you have includes photos of your receipts. The receipt must show the: used for work – eg a laptop – you Keeping track of your records on must keep purchase receipts and the go is easy with the ATO app name of supplier a depreciation schedule, or details myDeductions tool. amount of expense of how you calculated your claim In myDeductions you can keep nature of goods or services for decline in value, for five years records of: date the expense was paid following your final claim. date of the document. any work-related expenses As we may ask that you produce (including car trips) your records during the five years, interest and dividend deductions Record keeping it is important that you have sufficient exceptions evidence to support your claims. gifts or donations In some instances you may cost of managing tax affairs not need receipts, but you will Commissioner’s other deductions. still need to be able to show you discretion Then, at tax time, you can import the spent the money and how you If you are unable to obtain a receipt records into myTax or send them to calculated your claim. from a supplier, you can still claim a your agent. deduction if we are satisfied that the Exceptions to the record nature and quality of the evidence keeping rules are there to make shows that you: Download the app now – things simpler – they do not allow you to claim an automatic spent the money it’s free from your app store. deduction up to the specified are entitled to claim a deduction. For more information, amount where the money has Evidence can include bank statements visit ato.gov.au/mydeductions not been spent. or credit card statements which show the amount that was paid, and when For more information, and who it was paid to, as well as other speak with your tax agent or visit documents which outline the nature of ato.gov.au/keepingrecords the goods or services provided. Representative If you paid cash to a supplier periods and have no other documentation If your usual pattern of work use to support your claim, you will changes during the year, you may not have sufficient evidence to need to complete a new record. For claim a deduction. example, if you change job and the work use of your internet changes you need to complete a new diary.
How the record keeping rules apply to different expenses Car expenses Travel expenses The type of car expense records you need to keep depends on whether you use There are specific record keeping the cents per kilometre method or logbook method to calculate your claim. requirements for travel expenses, depending on: Method 1: Cents per kilometre whether your travel allowance is You don’t need receipts but you need to be able to show how you worked out your shown on your payment summary business kilometres (for example, by producing diary records of your work-related trips). whether your travel was domestic If you use the cents per kilometre method, your claim is based on a set rate or overseas (68c per kilometre from 1 July 2018) for each business kilometre travelled. You can claim a maximum of 5,000 kilometres per car. the length of your travel and your occupation. Travel records you should keep If you borrowed a car or used a vehicle other than a car (for example, a motor include: cycle or a vehicle with a carrying capacity over one tonne, such as a utility truck a travel diary or itinerary, if your or panel van) you cannot claim your expenses using either of the two methods. travel was for six nights or more Instead, you need to keep all your receipts (such as fuel and repairs), and claim receipts for all meals, airfares, the work-related portion of these costs as a travel expense, not a car expense. accommodation, car parking and tolls Method 2: Logbook an explanation of how the travel was work related, the number of Your claim must be based on the percentage of work use of your car. To work this out nights you slept away from home you need to keep a logbook. and the location. Your logbook must: If your travel allowance is shown on cover a minimum continuous period of 12 weeks and be broadly representative your payment summary and you want of your travel throughout the year to make a claim against it, you must include the purpose of every journey, odometer reading at the start and end have written evidence for the whole of each journey and total kilometres travelled during the period amount, not just the excess over the include odometer readings at the start and end of each income year. reasonable amount Your logbook is valid for five years, but you can start a new logbook at any time. If the work use of your car changes, you need to complete a new log book. Reasonable amounts for You can claim fuel and oil costs based on your actual receipts, or you can estimate accommodation, meals and the expenses based on odometer readings from the start and the end of the period incidentals are provided to make in which you used the car during the year. record keeping simpler, not to provide an automatic deduction You must keep: – you can only claim the original receipts for all other expenses for the car amount you spent. details of how you calculated your claim for decline in value for your car, Although you may not need including the effective life and the method used. records, you will still need If your claim relates to the transport of bulky tools and equipment, you will need: to show how you calculated a record of all work items carried your claim. the weight and size of all work items For more information, evidence that the items carried are essential to your work visit ato.gov.au/travelexpenses evidence that your employer provided no secure storage at the workplace. Remember to include on your tax return any allowances that you receive from your employer for car expenses. For more information visit ato.gov.au/carexpenses Clothing, laundry and dry-cleaning expenses If your laundry claim is Clothing under $150, you do not need You need to keep receipts to claim for the purchase of occupation-specific clothing, to keep records. protective clothing, or unique and distinctive uniforms. Although you may not need records, you will still need to Laundry be able to explain how you To claim a deduction for laundering occupation-specific clothing, protective clothing or unique calculated your claim. and distinctive uniforms, you must keep details of how you calculated your claim. Dry-cleaning For more information, If you use a dry-cleaning service for the clothes, you need to keep receipts. visit ato.gov.au/clothingandlaundry
How the record keeping rules apply to different expenses (continued) Phone and internet Claiming $50 or less Claiming more than $50 Bundled plans If the work use of your phone is incidental, To claim a deduction of more than If you have a bundled plan, you can keep and you are not claiming a deduction of $50 you must: a diary covering a representative four-week more than $50, you may make a claim keep all your phone and internet period showing how often you use each based on the following: bills for the year service for work. This pattern of work use can $0.25 for each work call made then be applied to the full working period. show how much is related to work. from your landline To determine your work use you can record: $0.75 for each work call made If your bills are itemised internet from your mobile Highlight all your work-related calls in a – the time you spent, or data used for $0.10 for each text message sent representative four-week period which can work purposes compared to your from your mobile. then be applied to the full period. private usage and that of all members of your household. phone – the number of work calls made as Unless you only use your phone a percentage of total calls and internet for work, you will have to – the amount of time spent on work calls determine the work-related portion of as a percentage of your total calls. your expenses. Keep a record of the calculation and only claim that amount. For more information, visit ato.gov.au/phoneandinternet Working Self-education Specific records from home expenses required for When claiming running costs for your You must keep receipts for all self- depreciating assets home office (such as electricity and education expenses, including course Some items, like a computer or car, home office equipment) the types of fees, text books, stationery and travel have a limited life expectancy (effective records you need to keep depends on expenses. life) and are expected to depreciate the method you use to work out your You must also be able to explain over time or decline in value. claim – fixed rate or actual costs. how the course directly related to your You must keep receipts that show the: employment at the time of study. Fixed rate name of supplier If you are claiming the portion of If you are using the fixed rate method cost of the asset a depreciating asset that you have (52c per hour from 1 July 2018), either nature of the asset used for self-education – eg a laptop keep records of your actual hours date you acquired the asset – you must keep receipts and a spent working at home for the year, depreciation schedule, or details of date of the document. or keep a diary for a representative how you calculated your claim for You also need to be able to show: four-week period to show your usual decline in value. pattern of working at home. the date you first started using the For more information, asset for work-related purposes Actual costs visit ato.gov.au/selfeducation the effective life of the asset (how If you are claiming the actual costs long an asset can be used for). If you have incurred, keep your receipts you have not adopted the effective for items you will claim outright (for life determined by us, you will need example, receipts for stationery or to show how you worked out the statements for electricity and gas). effective life. For more information, the method used to work out the visit ato.gov.au/workingfromhome decline in value how you have calculated the percentage of work use. The depreciation and capital allowances tool on ato.gov.au will help you claim a decline in value deduction for a depreciating asset and assist DE-573 you with some of these record keeping requirements. NAT 75108-05.2019 For more information, visit ato.gov.au/declineinvalue
Self-education expenses It pays to learn what you can claim at tax time When can you claim? When can’t you claim? Self-education expenses are deductible You cannot claim a deduction for when the course you undertake has a self-education for a course that: sufficient connection: relates only in a general way to your to your current employment and current employment or profession, maintains or improves the specific or skills or knowledge you require in your will enable you to get new employment current employment, or – such as moving from employment as results in – or is likely to result in – an a nurse to employment as a doctor. increase in your income from your current employment. Course expenses If your self-education is eligible, you may You can only claim a deduction for the However, you cannot claim the cost of be able to claim a deduction for your portion of these expenses that is directly the last stage of your travel from: expenses directly related to undertaking related to your eligible self-education. home to your place of education, the course. Depreciating assets and then to work General expenses You may be able to claim a deduction work to your place of education, Some general expenses you may be able for depreciating assets – assets that lose and then to your home. to claim include: value over time such as computers and printers – that you have bought and use tuition fees, if paid directly by you to study. You cannot claim the computer consumables following expenses related to Depreciating assets that cost more than (eg printer cartridges) your self-education: $300 are usually claimed over the life of textbooks the asset (decline in value). However, if tuition fees paid by someone you have a depreciating asset that cost else, including your employer, or trade, professional or $300 or less – you can get a deduction for for which you were reimbursed academic journals the full cost of the asset to the extent that repayments of loans you stationery you used it for study in the tax year you obtained under the Higher home office running costs bought it. (see Apportioning expenses). Education Loan Program Car expenses (HELP) loans, Student Financial internet usage (excluding Supplement Scheme (SFSS), connection fees) If you are undertaking a course that the Student Startup Loan (SSL) phone calls has a direct connection to your current or the Trade Support Loans employment, you can also claim the Program (TSL) postage cost of daily travel from your: home office occupancy student services and amenities fees home to your place expenses – such as rent, travel costs, including car expenses, of education and back mortgage interest, rates between home and the place of work to your place accommodation and meals education and between your workplace of education – except if you travel away and the place of education and back. from home for a short period fees payable on some Higher for study, such as to attend Education Loan Program (HELP) residential school. loans, but not the loan itself.
Apportioning Recording expenses your expenses Calculating Some expenses need to be apportioned Use our self-education expense calculator your between private purposes and use for self- (ato.gov.au/selfeducationcalc) to get an expenses education. Travel costs and depreciating estimate of your self-education deductions. In certain circumstances, you may assets are good examples of expenses that It also provides information on your claim have to reduce your self-education may need to be apportioned. eligibility. expenses by up to $250 to work out Use of equipment Records you need to keep may include your deduction. receipts or other documents showing If you use equipment such as computers The Self-education expenses expenses such as: and printers both privately and for study, calculator (ato.gov.au/ you must apportion the expense based on course fees selfeducationcalc) on the ATO the percentage you use the equipment for website works this out for you. textbooks study. stationery For example, if a computer is used 50% of the time for study and 50% for private decline in value of, and repairs to, purposes, you can only claim half of the depreciating assets. Carrier 12:34 PM Add expense 100% cost of the computer as a deduction. (For You must also keep receipts, documents or SNAP!! more information on asset expenses, see SNAP!! SAVE STORE diary entries for travel expenses. SAVE the Depreciating assets section on the STORE Cost $45.00 previous page). The ATO app’s myDeductions tool Date 10/04/2018 (ato.gov.au/myDeductions) can be used Description Travel expenses to record your self-education expenses. Is this partly a private cost? Yes No What can you claim on your tax return? 100% OR $0.00 Car Other car expenses NAT 75044-05.2018 C137-49846 This is a general summary only. For more information, speak with your tax agent or visit ato.gov.au/selfeducation
Travel expenses What you need to know before you go Travel expenses include: Transport expenses are deductible when you travel in the course of performing your duties. This includes the cost of driving your car, flying, catching a train, taxi or bus. Accommodation, meals and incidental expenses are deductible when you travel in the course of performing your duties AND are required to be away from home overnight. Things to remember Examples of when you need to You need to keep receipts – or other apportion your expenses written evidence – for your travel You take your partner or children away with you when you travel for work. You expenses. There are some exceptions cannot claim the cost of any travel expenses you incur for them. For example, for expenses on accommodation, if you pay for a two bedroom apartment to accommodate your children, you meals and incidental expenses. can only claim a deduction for the cost you would have incurred on a one You need to apportion your expenses bedroom apartment had you travelled alone. if they are partly private in nature. If You fly to Perth for a seven day work conference and add on a return trip to you travel on a work trip, you may Broome for 4 days. You can only claim your flights to and from Perth. You not be required to apportion your can only claim the accommodation, meals and incidental expenses that you costs where there is a minor private incurred during the seven days of work-related travel. component that is merely incidental to the work. You are in the process of booking a holiday to Sydney to see an art exhibit when your employer asks if you’d like to attend a three day work-related If you travel away from home for six conference in Sydney which coincidently is to be held from the Monday or more nights in a row, you need to following your planned holiday. You change your travel arrangements to include keep travel records – such as a travel the additional time in Sydney. In total, you spend three days in Sydney for diary. This is in addition to keeping private purposes followed by three days at the conference. You must apportion receipts for your expenses. your flights for the private component of your trip (50%) and only claim the Receiving a travel allowance from accommodation, meals and incidental expenses you incur during the three your employer does not automatically days of work-related travel. entitle you to a deduction. You fly to London for a 10 day international, work-related conference. You stay If any travel expenses are reimbursed, over for an extra two days to do some sightseeing. While you cannot claim you cannot claim a deduction for them. the cost of accommodation and meals for the two days of private travel, the private component of the trip is merely incidental and so you can claim the full You generally can’t claim for normal cost of your airfares. daily trips between home and work – this is private travel. You are holidaying in Cairns when you become aware of a work-related seminar which runs for half a day. You can You can’t claim accommodation, claim the cost of attending the seminar, meals and incidental expenses you but you cannot claim your airfares to and incur in the course of relocating or from Cairns, or accommodation whilst living away from home. in Cairns, as the primary purpose of the travel is private.
TAXI Record keeping exception for Travel diary accommodation, meals and A travel diary is a record of your travel movements and activities incidental expenses you undertake during your travel. It will help you work out the work-related and private elements of your trip. You must always keep records of your expenses, however you don’t have to keep all your receipts if: You will need a travel diary for each trip you take away from home for six or more nights in a row. There are a couple of you received an allowance from your employer for the exceptions. expenses, and These are: your deduction is less than the Commissioner’s reasonable You travel within Australia and meet the requirements for the amount. To find this year’s amount, visit our legal database record keeping exception (shown left), or (ato.gov.au/law) or ‘ask Alex’ on ato.gov.au You are a crew member on an international flight and you If you claim a deduction for more than the Commissioner’s claim a deduction for less than the allowance you received. reasonable amount you need to keep receipts for all expenses, not just for the amount over the Commissioner’s reasonable You should record your movements and activities in whatever amount. diary/journal you use. It can be paper or electronic. It must be in English. Even if you are not required to keep receipts, you must be able to explain your claim and show you spent the amounts, eg show You must record your travel movements and activities before your work diary, that you received and correctly declared your they end, or as soon as possible afterwards. You need to state: travel allowance, and bank statements. where you were what you were doing the times the activities started and ended. This is an example of a travel diary, which is kept in addition to a log book for car expenses: October 2017 9 Monday 10 Tuesday 11 Wednesday 12 Thursday 6am travel to Wangaratta. 9:30am to 5:30pm sales 9:30am to 5:30pm sales 8am travel to Shepparton. Arrive 9am. conference Wangaratta. conference Wangaratta. Arrive 9:15am. 9:30am to 5:30pm sales Overnight conference Overnight conference 10am meet Mr Smith for conference Wangaratta. centre. centre. display meeting. Overnight conference 1pm to 5pm Shepparton centre. store review. Overnight Shepparton hotel. 13 Friday 14 Saturday 15 Sunday 6am travel to Echuca. 7am travel to Bendigo. 8am State Rep breakfast Carrier 12:34 PM 100% Arrive 7am. Arrive 8:30am. conference. Finish 10am. Add expense 8am to 12noon Echuca 9am to 6pm State Rep 10am travel home SNAP!! SAVE store review. meeting. to Melbourne. Arrive SNAP!! STORE 12:30pm to 12:45pm 6pm Dinner with State 12:30pm. SAVE STORE Cost drive to Moama store. Reps. $45.00 1pm to 5pm Moama store Overnight Bendigo Motor Date 10/04/2018 review. Inn. Description Travel expenses Overnight Moama hotel. Is this partly a private cost? Yes No NAT 75010-05.2018 C072-00002 What can you claim on your tax return? 100% OR $0.00 Car Other car expenses This is a general summary only. For more information, speak with your tax agent or visit ato.gov.au/travelexpenses
Income you need to declare The following pages contain guides on income you need to declare. ■■ Including all your income is important ■■ Residency for tax purposes ■■ Foreign income
Including all your income is important When you complete your tax return you need to declare all your income to the ATO. For many this is simply a matter of entering the income listed on your payment summary or income statement. But what if you have multiple streams of income? If you wait until August to lodge online ■■ Interest with myTax or via a registered tax agent, If you receive interest, you must declare information provided to us by your employers, it as income. This includes interest from all banks, government agencies and other third of your financial institution accounts and parties is pre-filled into your tax return. It is term deposits. still your responsibility to ensure all income ■■ Capital gains is included. If you make a capital gain or loss from the Below are some of the forms of income that disposal of an asset, such as real estate, people commonly forget to declare. shares, managed investments or cryptocurrency, it must be recorded in ■■ Foreign income your tax return. If you’re an Australian resident for tax ■■ Sharing economy purposes, you are taxed on your Money you earn from the sharing economy worldwide income, so you must declare needs to be reported in your tax return. any foreign income in your income tax Sharing economy activities can include return. This includes things such as foreign ride-sourcing (eg through platforms such pensions, foreign employment income and as Uber or Taxify), renting out a room or capital gains on overseas assets. house (eg through platforms such as ■■ Second job Airbnb or HomeAway), caravan or car You need to make sure all of your sharing, and renting out a car space. employment income is included on your Remember to keep records of all income tax return, regardless of whether you have you earn and declare it in your tax return. one job or more, are full-time, part-time or casual. ■■ Employee share scheme (ESS) If you participate in an ESS to receive discounted shares or rights to acquire shares, you must declare the discount you received as income on your tax return.
Residency for tax purposes To understand your tax situation, you need to know if you are a resident for tax purposes. Residency for tax purposes may be different to your residency status for other purposes.You may be a resident for tax purposes even if you’re not an Australian citizen or a permanent resident for immigration purposes. Residency and tax As an individual you will fit into one of the following three categories. Australian resident for tax purposes Foreign residents Temporary residents If you satisfy any of the below residency If you do not satisfy any of the residency You will be a ‘temporary resident’ if you tests, you are an Australian resident for tests below, you are a foreign resident. hold a temporary visa and neither you or tax purposes. As a foreign resident, you have no tax-free your spouse is an Australian resident within This means you have to declare all of your threshold and do not pay the Medicare levy. the meaning of the Social Security Act worldwide income even if you have already 1991 (that is, not an Australian citizen or You must still declare any income derived paid tax on it overseas. permanent resident). in Australia, including any capital gains A foreign income tax offset is generally on taxable Australian property in your As a temporary resident, you only need to available to reduce the Australian tax on Australian tax return. declare income derived in Australia, plus the same income. any income earned from employment or If you have a Higher Education Loan services performed overseas while your Program or Trade Support Loan debt, you are a temporary resident of Australia. are required to declare your worldwide income or lodge a non-lodgment advice. Other foreign income and capital gains do not have to be declared. There are separate rules for working holiday makers and individuals who are dual residents, see below for more details. Residency tests There are four tests used to determine if you are an Australian resident for tax purposes. You will be an Australian resident if you meet any one of these tests. You can use our online tool to assess your circumstances, visit ato.gov.au/residencytests The resides test The domicile test The 183 day test The Commonwealth Under this test, you are a Under this test, you are a You will be a resident under superannuation resident of Australia if you resident of Australia if your this test if you spend over half fund test reside in Australia according domicile is in Australia, unless the year in Australia, unless it This test only applies to to the ordinary meaning of the Commissioner is satisfied is established that your ‘usual certain Australian Government ‘reside’ – which means ‘to that your ‘permanent place of place of abode’ is outside employees who are eligible dwell permanently, or for abode’ is outside Australia. Australia and you have no to contribute to the Public considerable time, to have a A domicile is a place that intention of taking up Sector Superannuation Scheme settled or usual abode, and to is considered to be your residence here. (PSS) or the Commonwealth live in a particular place’. permanent home by law. For If you have already taken up Superannuation Scheme (CSS). Some of the factors that can example, it may be a domicile residence in Australia, this If this is the case, you (and your be used to determine residency by origin (where you were born) test will not generally apply spouse and children under 16) status include physical or by choice (where you have regardless of the number of are considered to be a resident presence, intention and changed your home with the days you spend overseas. of Australia regardless of any purpose, family and business/ intent of making it permanent). other factors. In practice, this test only employment ties, maintenance A permanent place of abode applies to individuals arriving and location of assets, social should have a degree of in Australia. and living arrangements. permanence and can be contrasted with a temporary or transitory place of abode.
Examples Emily – teaching in Japan Bronwyn – an extended job overseas Facts Facts Emily leaves Australia to work in Japan as a teacher of English. Bronwyn, an Australian resident, has received a job offer She has a one-year contract, after which she plans to tour to work overseas for three years, with the option to extend China and other parts of Asia before returning to Australia for another three years. to resume work here. Bronwyn, her husband and three children decide to make During her time in Japan, she lives with a family who treat the move. her as one of their own. They retain their property in Australia, as they intend to She rents out her property in Australia during her absence. return one day. Emily is single. Her parents live interstate, and her brother The house will be rented out during their absence. has moved to France. Bronwyn is uncertain whether she will extend the option Outcome: why is Emily considered an Australian resident? to stay after three years, and will decide later, depending on how the family like the life there. Even though Emily is residing in Japan, under the domicile test: her domicile is in Australia (a resident who has always lived While overseas, they will rent a house with an accommodation allowance provided under her contract. in Australia will generally retain a domicile here when they are absent overseas, unless they choose to permanently Outcome: why is Bronwyn considered a foreign resident? migrate to another country) The resides test is not satisfied because the length of Bronwyn’s her permanent place of abode remains in Australia. physical absence from Australia and the surrounding circumstances (such as establishing a home overseas with her family and renting out her family home in Australia) are not consistent with residing in Australia, even though she has retained the family home in Australia. The domicile test is not satisfied because: her permanent place of abode is outside Australia due to – the length of time she has committed to spending overseas – establishment of a home overseas, and – her family accompanying her the fact that she will not be selling the home in Australia, although relevant, is not persuasive enough to overcome the finding on the basis of the other factors it is arguable that she has abandoned her home in Australia for the duration of her stay, by renting it out. These examples are intended as a guide. Residency determinations depend on your individual circumstances. More examples are available at ato.gov.au/residencyexamples Dual residents Working holidaymakers You are considered to be a dual resident if you are a resident of Australia for domestic If you come to Australia for a working income tax law purposes, and a resident of another country for the purpose of that other holiday under visa subclass 417 country’s tax laws. Where Australia has a double tax treaty with a foreign country, a treaty or 462, you have fixed tax rates tie breaker test would usually determine which country has the right to tax Australian regardless of your residency status. and foreign sourced income. For more information, visit For more information, visit ato.gov.au/taxtreaties ato.gov.au/whm DE-5543 NAT 75127-5.2019 This is a general summary only For more information, speak with your registered tax agent, phone us on 13 28 61 or visit ato.gov.au/residencyandtax
Foreign income If you’ve derived income from overseas, you will need to declare it. If you’re an Australian resident and you’ve derived income from overseas, you need to declare it in your Australian tax return. To determine if you’re an Australian resident for tax purposes, refer to ato.gov.au/residencyandtax Types of foreign income Income from employment and Income from Capital gains on personal services assets and investments overseas assets If you have worked overseas or provided If you own assets or investments overseas If you own an asset overseas, you may your services to an organisation located you will need to declare all relevant returns have to pay Australian tax when you sell outside of Australia, you will need to as if they were in Australia. the asset. You need to keep appropriate declare all relevant income as if it were This may include: records. earned in Australia. If you acquired an overseas asset prior interest from bank deposits or bonds This may include: to becoming an Australian resident, you dividends from shares salary and wages are taken to have acquired the asset at royalties from intellectual property the time you became a resident. directors fees rental income from real estate Similarly, if you cease being an Australian consultancy fees pensions, annuities and lump sums resident while holding an overseas asset, business income from managed funds you are deemed to have disposed of that any other remuneration. income streams from super funds asset at the time you cease being a resident. There are some specific circumstances some foreign government pensions. To accurately calculate the capital gain or in which foreign salary is exempt, loss, ensure you keep a record of the value for more information go to of your asset at these times. ato.gov.au/exemptforeignemployment This is a complex area of tax law and certain exemptions may apply. What you need to remember Tax paid on Converting foreign income Apportioning foreign income income overseas to Australian dollars across multiple tax returns If you have already paid tax in the country All foreign income and tax offsets Unlike Australia, most countries do not that you derived the income, you may be must be converted to Australian dollars have an income year ending 30 June. entitled to a foreign income tax offset credit. in your Australian tax return. This means foreign income amounts To be eligible you must: Depending on your circumstances and reported overseas and the associated tax have paid the tax on the the type of income, you will need to use offsets may need to be reported across income overseas either the specific prevailing exchange multiple Australian tax returns. rate or the average exchange rate, visit You will need to determine which Australian have records to prove that the ato.gov.au/convertforeignincome tax years the amounts should be reported tax has been paid. in and apportion accordingly. The offset amount you are entitled to will not always be the same as the amount of tax paid overseas. If you are claiming more than $1,000 you will need to complete the foreign income tax offset limit calculation to determine your entitlement. DE-2587 NAT 75126-3.2019 This is a general summary only For more information, speak with your registered tax agent, phone us on 13 28 61 or visit ato.gov.au/foreignincome
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