Tax Deductions

2009-2010 Tax Return Checklist
Are you claiming all your deductions?

We have had requested by members to assist with recommendations on what deductions they are entitled to claim this year. It should be understood that the issue of taxation is within the jurisdiction of a qualified accountant and you should seek proper advice from a qualified tax professional for the correct lodgement of Tax Returns. The information provided below however, is intended to assist you only in making sure the relevant provisions are taken advantage of and to ensure that your full entitlements are presented to your taxation officer. The following checklist is appropriate for individuals, owner operators and small business of one or two operators. If you are a larger business please refer to your accountant for a more in-depth list.

CHECK LIST FOR INDIVIDUALS AND SMALL BUSINESS OPERATORS
As personal income tax rates are set to decrease from 1st July 2010, there may be an additional advance to be had by accelerating any income tax deductions into the current income year. The following are the 2009/2010 relevant tax rates for individual taxpayer’s income:

COMMON WORK-RELATED CLAIMS MADE BY INDIVIDUALS
The following outlines common types of deductible expenses claimed by individual taxpayers, such as employees, plus some strategies that can be adopted to increase deductions for the 2009/2010 income year.

A. DEPRECIABLE PLANT costing $300 or less
Salary and wage earners will generally be entitled to an immediate deduction if plant costing $300 or less is purchased before 1 July 2010. Some purchases you may consider include:

  • Fax machines
  • Books and Trade Journals
  • Briefcases/luggage or suitcases
  • Calculators or electronic organisers
  • Software
  • Stationary
  • Tools of the trade

B. CLOTHING EXPENSES

Purchase of pay for work-related clothing expenses prior to the end of the income year, such as:

  • Compulsory uniforms and occupation specific and protective clothing.
  • Work related dry cleaning, laundry and repair expenses.

C. SELF EDUCATION EXPENSES

Consider pre-paying the following self-education items before the end of the income year:

  • Course fees (but not HECS-HELP fees)
  • Tutorial fees and student union fees
  • Interest on borrowings used to pay for any deductible self-education expenses.

Also bring forward purchases of stationery and textbooks (i.e. those not required to be depreciated).

D. OTHER WORK RELATED EXPENSES

As an employee you can pre-pay any of the following expenses prior to 1 July 2010:

  • Subscriptions to trade journals
  • Membership to business associations
  • Magazine and newspaper subscriptions
  • Seminar and Conferences
  • Income protection insurance (excluding death and total/permanent disability).

INFORMATION REQUIRED FOR YOUR TAX RETURN FOR INDIVIDUALS OR SOLE TRADERS
When preparing for your tax return please check the following and present your receipts and payment summaries to your accountant:

  • Payment summaries for salaries and wages
  • Lump sun and termination payments (if applicable)
  • Government pensions and allowances
  • Other pensions and/or annuities
  • Allowances (e.g. etertainment, car, tools)
  • Interest, rent and dividends
  • Any distributions from partnerships or trusts
  • Detail of any assets sold that wre either used for income earning purposes or which may be caught by capital gains tax.

ADDITIONAL DEDUCTIONS

  • Award transport allowance claims
  • Bank and government charges on deposits of income and deductible expenses
  • Bridge/Road tolls (travelling on business)
  • Car Parking (when travelling on business)
  • Conventions, Conference and Seminars
  • Depreciation of working tools, portion of home computer
  • Gifts or donations
  • Home office running expenses – cleaning cooling and heating, phone, lighting and depreciation of furniture.
  • Interest and dividend deductions – account keeping fees, ongoing management fees, interest on borrowings to acquire shares
  • Advice relating to changing investments (but not setting them up).
  • Interest on loans to purchase equipment or income earning investments.
  • Motor vehicle expenses (business/work related)
  • Overtime meal allowance
  • Superannuantion contributions by sole traders or substantially unsupported taxpayers
  • Sun protection items
  • Tax agent fees
  • Telephone expenses (business)
  • Tools of the trade
  • Rental property expenses including: Advertising expenses, council/water rates, insurance, interest, land tax, legal expenses, management fees, genuine repairs and maintenance, telephone expenses

BUDGET 2010
The following are some of the key tax measures announced in last month’s Federal Budget that are relevant from July 2010. Other tax measures announced in the Budget related to future years from 2012 and over and for this reason are not included in this report.

INCREASE IN THE NET MEDICAL EXPENSES TAX OFFSET CLAIM THRESHOLD
Fro 1 July 2010 the Government will increase the threshold above which a taxpayer may claim the 20% net medical expenses tax offset from $1,500 to $2,000 and will commence annually indexing the threshold to the CPI from 1 July 2011.

SUPERANNUATION CLEARING HOUSE: REGISTRATION DETAILS
Eligible small businesses, with fewer than 20 staff, are now able to register online to use the Government’s free Small Business Superannuation Clearing House by visiting www.medicareaustralia.gov.au/super.

The service, which commences from 1 July 2010 enables small businesses to pay their employees’ superannuation to a single location in one electronic transaction. The Clearing House will then send the contributions to the appropriate superannuation fund and employers will be able to access a record of their contribution history whenever it’s needed.

CHANGES TO THE SUPER CO-CONTRIBUTION
The Government has announced the following two changes to the superannuation co-contribution:

  • The matching rate for the co-contribution will be permanently retained at 100% or $1 for each $1 contributed (rather than 150% or $1.50), which means that the maximum co-contribution that is payable on an individual’s eligible personal non-concessional superannuation contributions will stay at $1,000 (rather than $1,500) and,
  • The income thresholds for the superannuation co-contribution will be frozen for 2010/2011 and 2011/2012, meaning that the maximum co-contribution (of up to $1,000) will continue to only be available to people with incomes of up to $31,920 (the amount available then phases out for incomes up to $61,920).

This means that Super fund members who are eligible to receive the Government’s super co-contribution need to ensure they make their contributions before 30th June 2010 if they want to receive their entitlement for the 2009/10 income year. To be eligible to receive a co-contribution, a taxpayer’s total income must be less than $61,920 and at least 10% of that total income must be from employment e.g. salaries and wages, or business activities.

We trust this information will allow you to ensure you prepare adequately for this year’s tax return. We suggest that you discuss this with your registered taxation professional for any further requirements.

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