As the financial year draws to a close in Australia, many taxpayers may be leaving hundreds, or even thousands, of dollars unclaimed. While most are aware of the primary deductions, some of the lesser-known expenses often go overlooked. According to financial expert Kiki, known for her online presence Tax Tips and Tricks, understanding and claiming these overlooked write-offs could significantly increase the amount of your refund.
A recent study conducted by Xero revealed that over 51% of Australians are confused about what they can and cannot deduct on their returns. Despite this, 58% of taxpayers have made purchases over the past year with the expectation of claiming them. Kiki emphasizes the importance of being thorough and proactive when it comes to tax benefits, particularly those that are easy to forget but can make a substantial difference.
Subscriptions: A Hidden Financial Deduction
One of the most commonly overlooked deductions is the cost of professional subscriptions. Although it might seem insignificant, subscriptions to journals, magazines, and online tools essential for one’s career can be claimed on tax returns. This includes services like LinkedIn Premium and other industry-specific content that assist individuals in performing their duties more effectively.
Tax expert Kiki also pointed out that even subscriptions to tools such as ChatGPT can be claimed, provided they are used for work-related purposes. However, she cautions that personal use should be separated from professional use to ensure the deduction is legitimate. It’s important to note that while many individuals use streaming services like Netflix, these are generally not deductible unless they are directly related to the work at hand.
Rental Property Expenses: A Key Area for Landlords
For Australians who own rental properties, there are a number of tax-deductible expenses they often overlook. These can include management fees, depreciation reports, repairs, and regular maintenance such as pest control and gardening. Many landlords fail to claim the costs of essential services like end-of-lease cleaning or smoke alarm servicing, which are all deductible.
Kiki advises property owners to act before June 30 to maximize their claims, particularly for depreciation reports, which need to be paid for within the financial year to qualify for deductions. Landlords can also claim letting fees and finance costs associated with their properties, reducing their taxable income and boosting their potential refund.
Professional Fees: Claiming Tax Preparation Costs
Another commonly overlooked expense is the cost of professional services used to file returns. Australians who pay for financial advice or hire an accountant to assist with their submissions can claim the full cost of these services as a deduction. This is especially relevant for those who find the tax process complex and prefer expert assistance to ensure they are maximizing their potential claims.
Financial consultant Kiki explained that any fees paid to accountants or advisors in the year that the services are provided can be deducted. This can help lower the overall taxable income, potentially increasing the refund at the conclusion of the financial year.
The Confusion Surrounding Financial Deductions
Despite the clear benefits of claiming these deductions, the uncertainty surrounding what can and cannot be claimed remains a major issue for many Australians. Research from Xero revealed that a significant number of taxpayers are unclear about the specifics of their entitlements. This confusion is likely amplified by the constantly changing landscape of tax laws and the fine line between personal and work-related expenses.
The fact that so many individuals make purchases expecting to claim them, only to miss out on the deductions, highlights the need for better guidance and more transparent communication from the ATO.
The Importance of Proactive Financial Planning
Tax professionals emphasize the significance of proactive financial planning and maintaining thorough records throughout the year. Many deductions can only be claimed if the taxpayer has kept accurate documentation and receipts. This is particularly important for business owners and individuals who incur expenses related to their profession or rental properties.
By staying organized and well-informed, taxpayers can ensure they don’t miss out on any available benefits. Kiki advises individuals to review all possible deductions, even the smaller ones, as they can accumulate over time and lead to a larger refund at the end of the financial year.
