With EOFY rapidly approaching, now’s a great time to do some tax planning. We spoke with Dr Adrian Raftery, principal of Mr Taxman and author of ‘101 Ways to Save Money on Your Tax – Legally!’, to discover some surprising deductions you could claim for your business. Read on to learn about how to claim them and maximise your tax refund (or reduce your tax bill) this year.
1. Home-office renovations
“More workers these days are conducting their work at least some days from home, especially since the start of the COVID-19 pandemic, however many are unaware of just how much they can claim as a deduction for costs incurred in running the home office. While most are aware that they can use the Australian Taxation Office’s (ATO) shortcut method of 80 cents per hour, it will probably be significantly less than either the actual or fixed costs methods that are also available,” says Dr Raftery.
These methods include the actual deductions for the work-related portion of home telephone, internet, stationery, printers, computer equipment, and consumables together with a claim for electricity, gas but also the depreciation of home-based furniture including filing cabinets and any improvements done to the home office.
“If your business is registered for GST, you can claim the 10% GST credit first up and get an immediate write-off for the balance in your tax return via the Temporary Full Expensing rules,” adds Dr Raftery.
2. Small Business Technology Investment Boost
“While the ability to claim for work-related and business-related technology has been well-documented in recent times, another thing to consider is the new Technology Investment Boost which was announced in the 2022-23 Federal Budget.
“Small businesses with aggregated annual turnover of less than $50 million will now be able to deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support their digital adoption. These purchases include the first $100,000 spent each year on items such as computers, laptops, monitors, portable payment devices, cyber security systems or subscriptions to cloud-based services, effective from 29 March 2022. Make sure your bookkeeper separately records technology as an item in your books”, advises Dr Raftery.
3. COVID-19 and sun protection
“An often-forgotten claim over the past decade has been sun protection for those working outside, such as sunscreen, sunglasses, hats and even certain make-up with a significant sun protection component. In addition, the cost of hygiene essentials such as face masks, hand sanitiser, anti-bacterial sprays, shoe covers and gloves can be claimed if you purchased these for your protection against COVID-19 in the workplace.
“However, you cannot claim these costs if purchased for your home or other personal purposes such as shopping and entertainment. The Australian Government recently extended the deductibility of COVID-19 protection to include the cost of Rapid Antigen Tests (RATs) if it is a condition of work and your employer does not reimburse you for them. So start keeping all those receipts!” informs Dr Raftery.
4. Lighting and photo equipment
“Zoom and Microsoft Teams calls have become a part of everyday working life since COVID-19 lockdowns began. Initially considered a novelty, having your room as a backdrop is now seen as unprofessional, especially if it is unkempt.
“The smart business professionals are investing in lighting and other photo equipment to improve their appearance and sound better during online meetings. Increasingly, workers and businesses are claiming tax deductions for online meetings and marketing equipment, including LED lights, microphones, headphones, desktop speakers, second monitors (including monitor arms), and small backdrops that can be set up behind a person’s chair,” explains Dr Raftery.
5. Dogs
As workers continue to work from home at least some of the time and pet ownership reaches a record high, more people are trying to claim dog expenses for home security.
“Unfortunately, the ATO will only allow security guards to claim for guard dogs if they’re not family pets. And let’s be honest, Cavoodle puppies are more likely to lick the bandits to death than provide adequate security!” says Dr Raftery.
6. Garden gnomes
”Garden gnomes hardly seem like your typical tax deduction, but you’d be surprised to know that if you have an investment property, you can immediately write-off items under $300 including garden gnomes, wheelie bins and solar lights,” says Dr Raftery.
7. Handbags and shoes
In a previous announcement, the ATO stated that you may be able to claim a deduction for a handbag, provided you could demonstrate it was being used for work purposes. This means that using your handbag, briefcase or satchel to carry iPads, phones, stationery and other work-related items.
However, Dr Raftery advises against claiming a deduction on the portion that is it being used for personal purposes. Additionally, handbags over $300 will need to be depreciated over its effective life.
“Likewise, shoes could potentially be claimable items, dependent on your occupation. For example, nurses can claim for non-slip shoes and support stockings, while steel-capped boots and rubber boots are an obvious deduction for those in the trade industry. Even flight attendants are eligible to claim for a second pair of shoes that are the same as their uniform but more comfortable. The ATO considers these items to meet the definition of protective clothing along with safety vests, gloves, and aprons worn to avoid damage to ordinary clothes during your income-earning activities,” says Dr Raftery.
Take advantage of the Temporary Full Expensing concession this tax time by shopping our EOFY sale or shop from our extended range of office products, technology and furniture essentials.
Disclaimer: This information is of a general nature only and does not constitute professional advice. You must seek professional advice in relation to your particular circumstances before acting.
