How to Deduct Taxes in Australia in 2023?

Tax advisors are up with beneficial tax advice for 2023 for Australian business owners. Go through the details to be clear for your own benefit.

To stay financially in control for 2023, you will have to be on top of your taxes throughout the year, even if tax time is still weeks off. In fact, if you are lodging taxes or filing income tax returns by yourself or taking help from tax agents, you should know how to make some money from tax deductions when the tax time has set in.

So, better is to follow the tax advice the tax advisors have for the business operators in Hobart about the tax deductions for securing a handsome amount in the tax time.

Tax Deductions: What Should You Be Careful About?

Tax deductions, in Australia, are for lowering the total amount of taxable income by offsetting it with the necessary out-of-pocket expenses done during the financial year. The overall implication is enough deductions can be claimed for reducing the taxable income, thereby securing a good deal tax refund.

But this process is not true for any old expenses, there are criteria for tax deductions –

a. The expenses should be directly work–related or the activities generating income

b. The employer should not have already reimbursed the expenses.

c. Correct receipts and bank statements should be retained as evidence.

Home internet serves both personal and work-from-home purposes, so it is into the grey–area category expense. So, you will have to work out to state the amount of the expense exactly related to the income-generating activity.

What Can be Claimed As the Tax Deduction in Australia?

A few deductions are not applicable to everyone, since these are industry–specific or contain a set of criteria to be met. Retaining a set of applicable receipts to back up these deductions. Rather, the ATO has listed a complete range of industry–specific deductions on its website stating all the details related to deductions for occupation or industry.

1. Bag That You Carry

If the bag is used for the official purpose of carrying phones, laptops, and office stationery used at the office — then these costs can be deducted from the taxable income. But it is applicable whether for a backpack, handbag or satchel.

But the bag should be used only for work purposes — here the luxury handbag might not fit the deal.

2. COVID -19 Test Expenses

In the 2023 tax season, COVID-19 expenses can be still claimed, but under certain conditions. It is applicable to the people in need of negative RATs, PCRs and masks for attending their workplace during some time of the 2022–2023 financial year. These include medical practitioners, retail, hospitality workers, cleaners, office workers, beauticians and hairdressers.

Certainly, the purchase proof of these items should be produced for claiming a part of the money spent for self–protection as well as a workplace at the pharmacy.

As the mandatory isolation period ends, these expenses can be claimed only for the financial year period where testing had been mandated. Check here closer to tax time to know if ATO has made any updates.

3. Income Protection Insurance

Paying for Income Protection Insurance qualifies you for deductible premiums during tax time. But it excludes life insurance, trauma insurance, critical care insurance and policies paid for super contributions.

4. Professional Memberships and Subscriptions (That Also Includes the Union Fees)

When you have to pay a subscription or membership fee to the professional or trade association, or else even to a trade union, then claiming the membership as a deduction from taxation income makes sense.

5. Education or Courses

Self–education course directly work-related expenses are also included in the tax-deductible expense category. Nevertheless, formal qualifications meeting the stated criteria are a must, to be eligible –

a. The course has to upgrade the skills and knowledge needed for the given work.

b. The resulting qualification should result in or lead to a rise in income.

c. Handful ways are existing to factor in education expenses as tax deductible, which are –

• Accommodation and meals, if you stay away from home, overnight
• Tuition and course fees
• Equipment purchases of less than $300
• Equipment repairs
• Travel expenses related to reaching and from your course
• Using the internet (but connection fees are excluded)
• Stationery
• Parking fees
• Fees for student services and amenities
• Student union fees
• Textbooks

6. Working Tools and Equipment

There are industries, where the cost of tools and equipment, along with the repairing and maintenance cost can be claimed as a tax deduction.

For instance, the cleaner can deduct the steam cleaner or vacuum cleaner’s cost only if the employer has not supplied it. Indeed, terms and conditions are applicable to these deductions, so first check the ATO’s website to know the industry and occupation-specific criteria.

7. Home Office Expenses

Workers have to set up home offices a lot more due to the effects of the lockdown. So, if you are working from home and paying for phones, computers and such work-related devices; then these expenses are entitled to tax deductions. Upto $300, deductions for home office equipment like computers can be claimed.

8. Laundry, Dry–Cleaning and Clothing

You might have to wear a suit to your workplace, and might have paid for the same. Or else if you have to wear the clothing your employer sells, then the expenses pertaining to the employer’s dress code are tax deductible.

9. Performing Arts Equipment and Courses

The art industry experts (like actors, dancers, magicians, musicians and circus performers) can claim a list of surprising deductions.

While magicians can claim tax deductions for new equipment, actors claim on upgrading their skills by taking up specialist acting lessons. Musicians claim deductions on new instruments or gear related to work.

As long as the expenses related to work performance can be proved, deductions can be claimed.

Australians can start lodging their tax returns for the financial year on 1st July 2023. Generally, the ATO begins processing tax returns for the year on the next week, with the payments entering shortly afterwards. Payments are mostly received within 2 weeks. All the taxes should be filed by 31st October 2023.