If you want to claim a Tax Deduction, you need to keep records that the Australian Taxation Office (ATO) will accept as a legitimate expense.
Deductions are usually expenses that are:
1. Work-related items like:
- utilities like phone, computers, internet costs
- conference/ seminar fees
- your home office equipment depreciation costs
- training or self-education related to work
- Tools of Trade and used for work. Tools or Items costing over $300 will normally be required to be depreciated.
- travel, including accommodation, taxis and airfares
- car expenses
2. Gifts or donations
3. Income protection insurance
Can Items Qualify as Tax Deductible Even Without a Proper Receipt
ATO allows deductible items for small ticket items that cost up to a total of $100 without a regular receipt. You need to make sure that these expenses fall in the following categories:
- they are directly related and needed for work
- you paid for it yourself, and have not been reimbursed by your company
- if you’re a business owner, you incurred these costs while earning an income
What does the ATO Allow?
If you claim a deduction which also is used for private purposes, such as a mobile phone or internet, you must have records to show how you calculated your claims. Most providers can supply a detailed usage history which can them be summarized for Tax purposes
The Best records are usually an receipt from the supplier of the goods or services which show :
- Name of the supplier
- Amount of the expense
- Nature of the goods or services
- The date the expense was paid
- Date of the document.
You need to keep these for five years from when you lodge your tax return in case the ATO ask you to substantiate your claims.
The ATO may also request the following as proof of purchase or payment:
1. Bank or credit card statements
2. A diary
3. Logbook to record personal or business deduction for:
- membership fees
- office stationery
4. Email receipts
5. BPAY reference numbers
6. PAYG payment summaries
7. A pay slip
The Taxation office also accepts other types of records, as long as all the following information is indicated on it:
- The name of the supplier
- Nature of the goods or services supplied
- The date the transaction took place
It is normal for the supplier to provide this document evidencing the expense.
ATO does not accept:
- written explanations that say that you paid in cash
- a price tag but without any evidence that you purchased the item related to the tag
- a brochure or a catalogue with an item price
For more detailed information, visit ATO’s official site and learn about the records you need to keep.