Nothing is more certain in life than death and taxes. Here’s how you can get the edge on some of the most common expense claims when it comes to your tax return.
While it’s too late for this year, the whole process can be made easier if business owners make sure to note their expenses as they arise, according to Murray Warner, director of business development in the Asia-Pacific region for Concur, a travel management service provider.
“Automated technology is making it easier for Australian employees to track expenses and claim tax refunds or company reimbursement,” said Mr Warner.
“No longer do they need to rely on hundreds of paper receipts.
“This not only expedites the reimbursement process but it also makes it much easier for people to claim what they’re entitled to at tax time.”
Paul Mather, a registered tax agent and director of FBT Payroll & Salary Packaging Solutions, agreed with Mr Warner.
“When it comes to tax time, we urge employees to record expenses throughout the year rather than having a big job to complete when lodging a tax return,” said Mr Mather.
“The end-of-financial-year flurry of activity makes mistakes more likely, which can result in penalties from the Tax Office or lead to under-claiming.
“Employees should also do their homework and make sure they’re claiming the right expenses to avoid over- or under-claiming.”
Mr Warner added: “Employees often leave their expenses right until the end, which can become a bit of a mess when lodging a return.
“With all the technology companies are deploying, employees no longer have to go through hundreds of paper receipts.
“They can keep a record of the receipt they have uploaded using their mobile phones. This means expenses are kept safely in one place for easy reference at tax time.”
Concur and FBT Payroll and Salary Packaging Solutions identified five areas for business owners to think about when claiming their tax returns:
Business owners can claim on a cents-per-kilometre basis.
According to the ATO, business owners can claim 66 cents per kilometre for up to 5,000 kilometres worth of business-related travel.
Written evidence isn’t required, but working/calculations may need to be shown.
Business owners can claim their calls, under certain guidelines.
Records of business-related phone calls for a four-week representative period must be kept for claims larger than $50.
Employees can’t make claims, however, if business owners provide them with phones especially for work, or if business owners reimburse employees for work-related phone usage.
Home internet connection
Home internet usage can be tax-deductible, within reason.
Estimated usage can be accepted, as long as the phone has actually been used for work-related purposes.
Frequent flyer points
Frequent flyer points, when redeemed as a flight reward, come under the fringe benefits tax. They are only tax-deductible when a flight is work-related, or when a flight reward is delivered to an employee under an arrangement that results from business spending.
Receiving the points themselves, however, does not incur any tax.
The Tax Office allows employees to redeem up to 250,000 points per year tax-free. Any excess may be taxed.
Any expenses for the sake of work may be claimed, such as electronic devices required for work purposes.
Even if a business owner works from home, this doesn’t extend to occupancy expenses, such as rent, mortgage interest, council rates or house insurance premiums.
- Opinion: Religion and business – should they mix?
By Adam Zuchetti
- Analysis: Employer/employee divide constraining growth
By Adam Zuchetti
- Helping employees back to work after illness or injury
By Adam Zuchetti