Deductions

Tax Deductions

Tax deductions are items of expenditure that reduce assessable income.

There is one basic rule governing the eligibility of a tax deduction; that is the expense must be incurred in relation to earning income. A simple way to assess whether an expense is a tax deduction is to examine the nature of the expense or the timing of the expense. For instance, an expense that is of a personal nature is not considered an eligible tax deduction. An expense that occurs during the working day that is related to earning income is likely to be a tax deduction, such as paying for a taxi to meet a client. Travelling to and from your place of work of course is not!

Examples of Common Tax Deductions

Work Related Deductions

• ◊ Motor vehicle expenses
• ◊ Other travel expenses
• ◊ Uniform expenses
• ◊ Self-education expenses
• ◊ Maintaining tools and equipment
• ◊ Maintaining a home-office / workshop / studio
• ◊ Computer expenses
• ◊ Professional library etc.

Business Related Deductions

Business deductions are those expenses that relate to the everyday running of a business. Some examples are:

• ◊ Wages paid to employees
• ◊ Advertising
• ◊ Rent paid for lease of business premises
• ◊ Electricity
• ◊ Postage and stationery
• ◊ Accountancy fees
• ◊ Depreciation on items of equipment used for income producing purposes
• ◊ Telephone
• ◊ Motor vehicle
• ◊ Superannuation
• ◊ Rubbish removal
• ◊ Cleaning, etc.

Investment Related Deductions

Rental Property Tax Deductions:-

• ◊ Agent fees / commission
• ◊ Repairs and maintenance
• ◊ Depreciation on items of equipment used for rental property income purposes
• ◊ Capital Allowance on Building Costs
• ◊ Interest Costs on finance for purchase of property
• ◊ Borrowing Costs
• ◊ Advertising for tenants
• ◊ Accountancy fees / legal fees
• ◊ Body corporate fees
• ◊ Telephone
• ◊ Insurance
• ◊ Water rates
• ◊ Land tax
• ◊ Cleaning etc.

Investing in Shares, Options, Term Deposits, other interest bearing securities, pensions, annuities, etc :

• ◊ Commission / brokerage on sale of shares etc
• ◊ Stamp duty
• ◊ Professional publications / subscriptions
• ◊ Management fees
• ◊ Account keeping fees
• ◊ Interest on margin loans
• ◊ Investment advice expenses
• ◊ Australian film industry investments
• ◊ Undeducted purchase price of an Australian or foreign pension or annuity
• ◊ Superannuation contributions for self-employed

Donation or Charitable Deductions

A deduction may be claimed for a donation of $2 or more to any eligible organisation. To claim a deduction you must not have received something for the donation, i.e. a key ring, badge, raffle ticket, sticker, etc.

Tax Affairs Related Deductions

• ◊ Accountants fees
• ◊ Legal fees for tax related matters
• ◊ Financial advice fees