Avi Lipa

Easy to understand guide for Claiming TAX deductions 2022 - 2023, As an Employee..

Did you know that you may be able to claim deductions for work-related expenses you incurred while performing your job as an employee?

In the 2022-23 tax year, you may be eligible to claim deductions for work-related expenses incurred during your employment if :

You received a bill or invoice for an expense, and you were liable for it (even if the payment was made after 30 June 2023).
You paid for an expense without receiving a bill or invoice, but you were charged for it as part of your job duties."

These expenses include:

car expenses, including fuel costs and maintenance
travel costs
clothing expenses
education expenses
union fees
home computer and phone expenses
tools and equipment expenses
journals and trade magazines.

Can you claim any deductions that are not work-related? YES!

interest and dividend deductions for investments
deductions for gifts and donations
a deduction for the cost of managing your tax affairs.

Goods and services tax

Goods and Services Tax (GST) is included in your expenses, making it a part of any deduction you claim. For instance, if you paid $440 for union fees, which includes $40 GST, your deduction would be for the full $440.

BASIC RULES

To claim a deduction for a work-related expense incurred during the tax period of 2022-2023:

you must have personally spent the money and aren't reimbursed for it
the expense must be directly related to earning your income
you must possess a record to prove the expense.

🔴 NOTE: The expense must NOT be private, domestic or capital in nature. For example, the costs of normal travel to and from work, and buying lunch each day are private expenses.

WHAT CAN BE CLAIMED?

If you incurred an expense:

both work-related and private or domestic in nature, you can claim a deduction only for the work-related portion of the expense.
that was capital in nature, you may be able to claim a deduction for the you decline in value of the depreciating asset acquired.
for services paid in advance, you need to work out what part of the expense is deductible in 2022–23.

You cannot claim a deduction for an expense if any of the following applied:

someone else paid the expense
you were, or will be, reimbursed for the expense
the payment or reimbursement is a fringe benefit (including an exempt benefit).

If you were partially reimbursed for the expense, you can only claim the part that was not reimbursed.

REMINDERS

PROVIDE RECORDS

To claim deductions, you must provide written evidence to support your claims if the total amount exceeds $300. The records should verify the entire claimed amount, not just the portion over $300. However, car and meal allowances, award transport payments allowance, and travel allowance expenses have specific rules for written evidence, which are detailed in the relevant items.

If the total deduction amount is $300 or less, written evidence is not required, but you should be able to demonstrate how you calculated your claims.

FOR ADVANCE EXPENDITURES

If you have made a prepayment of $1,000 or more for a service, and that service spans over 12 months or beyond 30 June 2024 (e.g., a professional journal subscription), you can only claim the portion relevant to the 2022-23 tax year. Additionally, you can also claim the proportion of any pre-paid expenses from a previous year that pertain to the 2022-23 tax year.

The "Deductions for Prepaid Expenses 2023" guidelines will help you determine the deductions you can claim for expenses incurred for services to be provided in a later income year.

ALLOWANCES

If you received an allowance that you showed at item 2 on your tax return, you can claim a deduction for your expenses covered by the allowance but only if you:

- actually incurred those expenses in producing your employment income

- meet the basic rules discussed above.

Example, if you received a tools allowance of $500 and your tool expenses were $300:

- the whole allowance of $500 is included at question 2 on your tax return

- you claim a deduction of $300 at question D5.

DECLINE IN VALUE OF DEPRECIATING ASSET

If you used a depreciating asset to generate income reported on your tax return in 2022-23, you might be eligible to claim a deduction for its decline in value. A depreciating asset is one that has a limited effective life and is expected to decrease in value over time, such as tools, reference books, computers, and office furniture.

The decline in value of the depreciating asset is calculated based on its effective life. You can estimate the effective life yourself or use the Commissioner's determinations available in TR 2022/1 "Income tax: effective life of depreciating assets" (applicable from 1 July 2022) for assistance.

Additionally, you may be eligible for an immediate deduction for the full cost of depreciating assets that cost $300 or less, subject to certain conditions being met.

FOREIGN EMPLOYMENT

If you have foreign employment income shown on your PAYG payment summary or income statement, you can claim applicable deductions for that income in questions D1 to D6. Remember to convert all foreign deductions into Australian dollars before filling out this section.

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