Do you know what you can and can’t claim in your 2018 tax return? If not, then you should know what you can and can’t claim since it is tax time again in Australia. There are so many factors that you need to take into account when lodging your tax return in 2018. This article provides information on some of the most important factors to consider when lodging your tax return in 2018. This information will help you to lodge your tax return in a timely manner.
Important Records That You Require To Lodge Your Tax Return In 2018
Gathering the essential information is vital before you start doing your tax return in 2018. Here are some of the essential documents that you will require in order to complete your tax return in 2018.
Payment Summaries – This document will include the income that you may have received from your employer, Department of Veterans Affairs, Super Fund or government payments such as Centrelink.
Bank Statements – The bank statements will give details of the interest you have received for the financial year as well as the fees that you have paid during that period. Your bank will usually summarize this information for you – either at the bottom of your bank statement or online.
Managed Funds, Unit Trusts, and Share Statements – These documents are important since they give information on distributions and dividends you have received during the period. In fact, the dividends that you have decided to reinvest should be declared as income in your tax return.
Buying And Selling Investment Statements – These statements are important to calculate the capital gains and losses. If you have bought or sold any shares, you will be able to access this information via your online brokerage account. On the other hand, you can also get the information from your stockbroker or investment adviser.
Records From Rental Properties – You should gather information about the income received and expenses paid as well as any capital gains or losses in case you have sold a property, when it comes to completing your tax return. If you employ a property manager, you should be getting an annual tax statement that details all the income and expenses from the property.
Private Health Insurance Policy Statement – This information is important to complete the private health insurance section of your tax return.
Foreign Income – Details of foreign income including any foreign pensions.
Essential Income That You Need To Declare In Your Tax Return
If you want to do your own tax return, you can opt to use “myTax” and do it online. You can access “myTax” by going to the Australian Taxation Office (ATO) website.
** Please Note ** If you wait until mid August, the ATO will prefill most of the information in your tax return with the information they get from the banks, employers, and other government agencies. In that case, you just have to check if the information is correct and enter any deductions and submit the form.
Here is a list of income types that you should declare on your tax return.
. Employment income
. Business partnerships and trust income
. Government payments, super, pensions, and annuities
. Investment income such as interest, dividends, capital gains, and rent.
. Income received from crowdfunding such as donations received for a venture in which you made a profit.
. Foreign income
. Income received from the sharing economy such as Uber or Air BnB.
. Other income such as insurance payments, compensation, prizes, awards, and discounted shares that come under employee share schemes.
Tax Deductions That You Can Claim
You are entitled to claim deductions for some expenses when completing your tax return. Most of the deductions could be claimed from work-related expenses. A deduction will reduce the amount you pay in tax each year. That way you pay less tax in 2018. If you plan to claim a deduction for work-related expenses, you should fulfill one of these conditions:
. It should be directly related to earning your income
. You should have spent the money yourself and not been reimbursed in the process.
. You should have a proper record to prove that you have paid it.
If your expenses meet the above criteria, you can claim the following:
Vehicle and travel expenses – This doesn’t include the cost of travel between your home and office. If you use your car for work or work in different locations, you are entitled to claim for a deduction.
Laundry, clothing, and dry cleaning expenses – The uniform should be unique and distinctive to claim this deduction. In fact, the uniform should have the company logo or it should be specific to your occupation such as chef’s pants.
Donations and gifts – If given to organizations that are approved by the Australian ATO as deductible gift recipients.
Home office expenses – Home office expenses could include your computer, internet connection, phone, and other electronic devices. In fact, you will be permitted to claim only for the expenses that are related to work and not private use.
Investment income deductions including interest and dividends – some of the examples are account fees, interest, investing magazines and subscriptions, depreciation on your computer and internet access.
Self-deduction expenses – If the study course relates to your current job, you are entitled to claim for expenses such as course fees, textbooks, student union fees, internet, stationery, professional journals, home office expenses, and some travel.
Tools and other equipment – If you have purchased tools and equipment to help you earn the income, you may claim a deduction for some or all of the costs related to the tools and equipment. Some of the examples include protective gear such as sunscreens, sunglasses, and hats if you work outdoors, technical instruments, safety tools, and office equipment.
Other deductions – Other deductions may include union fees, income protection insurance, overtime meals, the cost of managing your tax affairs, and other expenses incurred during the course of earning your income.
** Please Note ** The ATOs “myDeductions” app will make record keeping much easier. This tool will allow you to record the deductions such as work-related expenses, interest, donations, gifts, and dividends. The app will also let you store receipts, photos, and record your car trips at the same time. This app could be used by sole traders as well as individuals. At tax time, you are able to send this information to your tax agent or upload it directly to “myTax.”
Tax Deductions That Are Not Allowed
The ATO is fully focused on helping the taxpayer gets his/her deductions right. At the same time, they will also look out for red flags in order to identify taxpayers who are doing the wrong thing when entering their tax information. Here is a list of deductions that you cannot claim on your tax return:
Traveling between home and work – This is considered private travel and cannot be claimed as a deduction.
Car expenses – Car expenses can’t be claimed unless you are transporting bulky tools or equipment that your employer needs you to use and you cannot leave the tools in the office. Car expenses that have been salary-sacrificed also can’t be claimed.
Meal expenses – Meal expenses can’t be claimed unless you were required to work away from home overnight.
Private travel – Personal travel portion of work-related travel can’t be claimed.
Everyday clothes – Clothes you buy to wear to work such as the black pants or a suit – even if your employer requires you to wear them to work – cannot be claimed.
Laundering of work clothes – In order to claim, you should be able to show how you calculated the cost.
Higher education loan program – Contributions charged through the HELP scheme cannot be claimed.
Self-education expenses – If the course is not directly connected to your current employment, you cannot claim it.
Phone and internet expenses – Any expense that is related to your private use cannot be claimed.
Tools and equipment that cost more than $300 – You can depreciate the cost over the next few years if required.
** Please Note ** You can use the ATO’s “Tax Time Quiz” to test your understanding of what you can and cannot claim when preparing your tax return. In case you are still not sure of what could be claimed and what cannot, you can always visit the ATO or work with a registered tax agent when preparing your tax return in 2018.
Lodging Your Tax Return In 2018
Use “myTax” to lodge your tax return in 2018 online. It is safe, secure, quick, and easy. Make sure you visit the ATO website to learn how to lodge your tax return online. If you are married, you will need the income and expense details of your spouse, too. That way you can make sure that your entitlements are correctly calculated. After you have lodged your tax return, make sure that you keep an eye on the “myGov” inbox for the tax receipt and notice of assessment.
** Please Note ** In order to lodge your tax return online, you should create a “myGov” account and link it to the ATO.
In case you decide to lodge your own tax return, you can do so until the 31st of October 2018. On the other hand, if you plan to use a registered tax agent or a different agent from last year, you should contact them before the 31st of October.
In case you decide to hire a professional to lodge your tax return in 2018, you should make sure to work with a registered tax agent in the area. You can easily check if the potential agent is registered by visiting the “tax and BAS agent register” at https://www.tpb.gov.au/search-register.
Make sure you hire a professional tax agent to lodge your tax return in 2018. There are hundreds of tax agents operating on the market, but all of these professionals are not created the same. That is why it is important that you do the necessary research when choosing the right professional for the job. That way you will save a lot of time and money in the process.
Whichever way you decide to lodge your tax return, you should remember that you are responsible for the claims you make. That is why you need to check if the deductions are legitimate and all the income is included in the return before the tax agent lodges your return.
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