What Deductions To Look For?

Work uniforms

If you wear a uniform to work, you can claim the cost, providing it follows the ATO guidelines. The uniform must be distinctive, such as one that has your employer’s logo permanently attached to it. It must either be a non-compulsory uniform that your employer has registered with AusIndustry or a compulsory uniform that can be a set of clothing or a single item that identifies you as an employee of an organisation.

You can also claim the cost of:

  • occupation-specific clothing which allows people to easily recognise your occupation, such as the checked pants a chef wears when working, and which are not for everyday use;
  • protective clothing and footwear to protect you from the risk of illness or injury, or to prevent damage to your ordinary clothes, caused by your work or work environment.

You can claim the cost of renting, repairing and cleaning any of the above work-related clothing.

Stay in it for the long-haul

If you have purchased assets (such as shares or managed funds) during the market downturn and they have risen in value, you might rethink selling them. Otherwise, you may have to pay a lot of CGT.

A way to trim CGT is to hold on to the investment for more than 12 months. Since 21 September 1999, individual investors have been entitled to claim a 50 percent discount on capital gains that they make on assets held for longer than a year.

Government co-contributions

If you are an Australian resident and earn below $61,920 a year, you may be eligible for the Government Co-contribution to super. To claim your Co-contribution you will need to make a personal, after-tax contribution to your super before 30 June 2011, and the government will kick in some extra cash towards your retirement. This may be up to $1,000 in a financial year.

Delay any income

Thinking of selling off a profitable asset, such as shares or property? It may be worth deferring this sale until after 30 June 2011. In doing so, you will delay incurring CGT for another financial year. So while you will still need to pay the CGT eventually, freeing up short-term cash flow may be beneficial depending on your circumstances.

Capital loss to offset tax

Selling poor performing assets that no longer suit your circumstances before 30 June 2011 is another option. By selling a poor performing asset (i.e., an asset where the value has decreased) and thus incurring a capital loss, you may be able to offset a realised capital gain from another asset in the same financial year, allowing you to manage your Capital Gains Tax liability. If you don’t have a capital gain to offset you can carry forward your loss into future financial years. It may also free up money for more suitable investment opportunities.

Personal deductible contributions

People may find themselves in a situation where they can significantly boost their retirement savings, as well as reducing their taxable income. The simplification of and changes to deductible personal contribution limits is one such opportunity. The new caps allow deductible contributions of $25,000 per year for under 50s, and until 30 June 2012 up to $50,000 per year for those aged 50-plus.

Split super with your spouse

If your spouse is on a low income, you could receive a tax offset for making a contribution to your spouse’s super fund – as long as their assessable income (including reportable fringe benefits) is less than $13,800.
However, to claim the maximum offset of $540, your spouse must earn $10,800 or less and you need to contribute $3,000 to their super in the same financial year. Because it’s a tax offset, you’ll make a direct saving against your income tax liability.

Employer superannuation contributions

If you have employees and make super contributions on their behalf, make sure you have deposited these prior to 30 June. This will ensure you can claim the tax deduction your business is allowed. If payments are made post 30 June you won’t be able to claim the tax deduction in the current financial year.

Medical expenses

Taxpayers whose net medical expenses exceed the current threshold of $2,000 for the year may be able to claim medical expenses. The offset is calculated as 20 percent of the excess of net medical expenses over the threshold. Your Medicare financial tax statement will help you claim the offset in your tax return. The statement shows you how much you have paid for medical expenses and how much you have claimed back from Medicare.


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