The end of financial year is here and it's time to start lodging tax returns but you might be questioning what you can and cannot claim.
With working from home becoming more embedded in Australia and cost of living pressures still biting household budgets, you're probably looking to claim as much as possible to get an extra buck back.
But not everything is tax deductible. Here's a breakdown of what you can and can't claim.
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What can you claim?
Financial planner from Acumen Cameron McLean said the expenses that you can claim on your tax return have to be related to your work and earning money.
Some deductions are dependent on your job while others are more generic like working from home.
Working from home
For working from home expenses, the Australian Taxation Office says you can claim if you work from home to "fulfil your employment duties", incur additional running expenses like electricity, and – the kicker – have the records to prove it.
"The ATO needs you to be pretty specific," McLean said.
"They need you to know specifically how many days you're working, what part of the house gets used."
There are two ways to claim working-from-home expenses.
The first is the revised fixed rate method where you claim at 67 cents per hour, and separate the amount for expenses not covered like the value of depreciating assets such as a computer.
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This method can also be used if you don't need a dedicated home office.
The actual cost method is claiming the actual expenses incurred as a result of working from home.
But for any of these methods, you need to keep a record.
"They need you to know specifically how many days you're working, what part of the house gets used," McLean said.
"You want to keep track of that throughout the year."
Work clothing and dry cleaning
You can claim occupation-specific clothing – for example, a judge's robe.
"One example for a chef, a chef can claim things like laundry on the checkered pants they wear," McLean said.
But once again, you'll need to keep the receipts to prove this to the ATO in case they come knocking.
"You want to be prepared in case you're asked the question," McLean said.
Cars, transport and travel
You're able to claim transport expenses when travelling from your place of work to another place of work, for example meeting with a client, a work conference or going between jobs.
"If you look at claiming motor vehicle expenses, it helps keep a log book for three months to determine the portion you use your car for work," McLean said.
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Gifts and donations
You can claim a gift or donation to an organisation that is deemed a deductible gift recipient - basically if they've registered as a charity.
Crowdfunding campaigns aren't deductible but a donation to the RSCPA, for example, could be.
Education and training
You can claim self-education expenses if it's related to your work – for example, undertaking a course or seminar.
If it's gaining new qualifications in a different occupation, this isn't deductible.
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What can't you claim?
There's a plethora of things you can't claim, like personal grooming costs or gym fees, but some taxpayers take their chances.
McLean said some of the strangest things people have tried to claim include a man wanting to claim his daughter's wedding after "all the tax he's paid in his life".
Another example was a man wanting to claim socks and jocks because he couldn't work without them.
And a waitress even wanted to claim breast enhancement surgery.
Aside from these quirky attempts, the ATO is pretty clear in what you can and can't claim.
You can't claim a deduction for a watch or smartwatch, or gifts to family and friends, or the cost of food and drinks.
The full list of what you can and cannot claim on your tax return is available on the ATO's website.
How to get the most out of claiming?
McLean said Australians should start thinking about their deductions from July 1 at the start of the financial year to be prepared for the next tax return.
"Don't leave things til the last minute," he said.
He also said to get in touch with a financial adviser and accountant.
"Because there are different methods, the accountant is handy to make sure you use the right method that works for you," he said.
"A financial adviser is handy in the lead-up to the end of financial year.
"For example to look over super contributions, this is how much you contributed and this is how much you could make deductible."
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The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.
