Receipts, whether you’re collecting them in your wallet, a shoe box or electronically, by the end of a financial year, there always seems to be a large amount of them. Not wanting to miss out on deductions, you may cram receipts into files or, worse still, consider them an afterthought and scramble to find the information you need when the EOFY rolls through. It’s time to get the record straight on what you need to keep records of.
Below are six common deduction areas that are often met with confusion when it comes to what information needs to be kept. However, keep in mind that if you’re in doubt, it’s better to err on the side of caution and keep too much information, rather than too little.
EXPENSE AREA: Car
Should I keep my receipts? It depends…
Why: There are two main methods to calculate car expenses for your tax return, the cents per kilometer and the logbook method.
Method 1: Cents per Kilometer (No need for receipts)
If you’re calculating using the cents per kilometer method to calculate your deduction, you won’t need to keep any receipts of fuel or maintenance purchases as this is factored into the overall cost per travelled. From 1 July 2018, you can claim 68c per kilometer for work related travel up to 5,000 kilometers per car.
Method 2: Logbook Method (Yes, plus a logbook)
The second method looks at the percentage of work use that you use your car for and requires you to keep original receipts for your car expenses, such as fuel and oil. For this method, you are also required to maintain other information including a logbook with minimum of a 12-week continuous period to represent your travel throughout the year to support your claim.
EXPENSE AREA: Travel
Should I keep my receipts? Absolutely
Why: If you’re traveling for work, keeping your receipts is a must for tax time claiming. Receipts for meals, airfares, accommodation, car parking, hire cars and tolls should be kept, as well as a travel diary or itinerary if your travel was for six or more nights and an explanation of how the travel was work related. If in doubt with a travel-related expense, file a copy of your receipt – chances are that you will need it.
EXPENSE AREA: Clothing, Laundry & Dry Cleaning
Should I keep my receipts? It depends (Under $150 = no; above $150 = yes)
Why: You can claim clothing, laundry and dry-cleaning expenses with your tax return if your items are occupation specific, protective clothing or are a unique and distinctive uniform with logo.
You can claim under $150 of deductions in this area without the need for receipts, however, if you get audited you will still need to provide evidence of how you’ve come to the dollar amount claimed.
EXPENSE AREA: Phone & Internet
Should I keep my receipts? Yes, if you’re claiming $50 or more
Why: If you’re claiming under $50 for phone and internet deduction then you can calculate the dollar amount based on the below work-related communication amounts:
- $0.25 for each call from your landline
- $0.75 for each call made from your mobile
- $0.10 for each text message sent from your mobile.
If you’re looking to claim more than $50 you will need to keep all phone and internet bills for a year and a breakdown of how much of that is work related. If your bills are itemized, you will need to highlight all work-related calls in a four-week period which you can use to predict a full year. If you have a bundled plan, you can will need to keep a diary of a representative 4-week period to show your work internet and phone use breakdown.
EXPENSE AREA: Working From Home
Should I keep my receipts? It depends
Why: If you don’t have a designated working space, you can claim phone and internet expenses (see above) as well as the decline in value of work tools which are over the value of $300.00 (such as your computer or laptop). This is assuming that you aren’t already being reimbursed by your employer.
However, if you do have a dedicated working area, like car expense, it depends on which method of claiming that you choose as to if you need to keep receipts or not. There are two methods to calculate your claim amount.
Method 1: fixed rate (no receipts, but you will need a logbook)
This method for claiming allows you to claim a fixed rate of 45c per hour for working at home expenses. You do need to keep a logbook for at least a four-week period that is representative for your year to support your tax claim. Also, if you are using this method to calculate your running expenses, you may not be able to claim the decline in value for work tools over the value of $300.00.
Method 2: Actual Expenses (yes, keep your receipts)
This option requires you to document the total expenses for the essential items that you wish to claim on and work out the floor area of your total home, plus percentage of the year that you used the space exclusively for work purposes. Plus, with the Actual Expenses method, you can also claim the decline in value for your work tools.
EXPENSE AREA: Self-Education
Should I keep my receipts? Yes
Why: To claim on self-education, firstly, what you are studying must relate to your current employment. If you meet the study/current career criteria, then you will need to keep any receipts relating to your study, such as course fees, text books, stationery, travel expenses and any deprecating asset schedules (for items like laptops) to be able to claim.
There are many more expense areas that may require you to maintain receipts and records to be able to make tax deduction claims with, such as donations and depreciating assets. If you aren’t sure what you need to keep, it’s best to check with an accountant so no deduction opportunities are missed. Book in with our team today to discover areas that you could claim within by contacting us today.
