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The end of the tax year is right around the corner and though you may be dreading 30 June, there are things you can do to feel better prepared and make the most of your tax deductions. Because this year has been different for many people in terms of their employment situation, there are changes to tax reporting that may affect you.

Here are some things to know about your income, deductions and home office expenses.

1. Your income

Generally speaking, your income is money you earn from your employer in salary or wages, or the income you earn as a self-employed person from your business. However, there are other items included in income that people often forget. When you file your taxes, be sure your reported income includes:

• Employment income
• Personal services income
• Crowdfunding income
• Sharing economy and tax income
• Investment income
• Government payments
• Termination payments
• Bank interest
• Prizes and awards
• Dividends
• Income from rental property
• Foreign income
• Capital gains
• Managed funds income
• Discounted shares under employee share schemes

2. Your deductions

Deductions are typically the least understood area of taxes. People often get confused about what they can and cannot deduct, which can result in missing out on important tax breaks.

To qualify as a deduction the expense must be directly related to earning your income; you must be able to prove the expense occurred, for example, with a receipt; and you cannot have been reimbursed by your employer for the expense. In the case of an expense that is both work and private, you can only claim a deduction for the portion that is related to work.

Items that may count as deductions:

• Vehicle expenses
• Travel expenses
• Clothing, laundry and dry-cleaning expenses
• Self-education expenses
• Home office expenses
• Tools and equipment expenses
• Overtime meals
• Union fees
• Client bad debts
• Protective items, equipment and products
• Income protection
• Personal super contributions
• Gifts and donations

There are more items here that you may be able to claim as a deduction.

3. Your home office expenses

Even if you are an employee, if you work from home you may be able to claim deductions related to the cost of working from your home. These include items such as additional electrical, phone, and internet expenses.

Among the things you can’t claim as deductions:

• Anything your employer pays for or reimburses you for;
• Any decline in value of items your employer provided;
• General household items your employer provides at work (such as snacks);
• Items related to your children and their education; and
• Occupancy expenses such as rent and mortgage (employees typically can’t claim these).

The Working from home expenses  can be claimed if you are working from home to fulfil your employment duties, if you also incur additional running expenses due to the fact that you work from home. In order to claim these expenses, it is essential to have records that show that these expenses incurred.

The Car Expenses , in order to claim the deductions of your vehicle that you own or lease, you will need to calculate the expense, you can do so through the two methods; cents per kilometers or you can use the logbook method. For the logbook method, if you have been using the same logbook for the past 5 years, then you will need to add a line in the logbook, which will consist your odometer reading as at 30/06/2023. You will then need to complete the first page of the logbook that shows the start and the end of the period odometer reading.

If you are working from home as an employee, you can use one of three methods for calculating your expenses.

The Fixed Rate Method allows you to claim a deduction for additional running expenses for working from home. In this case, you can claim 67 cents for each hour you worked from home, but you must have a dedicated work area and keep records of time worked, either throughout the year or over a representative four-week period. The fixed rate method for calculating your deduction for working from home expenses has been revised. This revised method is available from 1 July 2022.

The Actual cost method allows you to work out the deduction based on the actual costs incurred working from home. This includes electricity and gas, phone and internet, cleaning and consumables. The exact expenses you can deduct varies, depending on whether you have a dedicated work area.

Final thoughts

The end of financial year can feel overwhelming. However, with some information and organisation, it can be a lot less daunting. If you miss out on some deductions this year, make a note of them and keep track of them for next year. Consider speaking with an accountant so you can plan ahead and make the most of your deductions next year. We at S & H tax accountants can help to prepare and lodge tax returns.