Tax time is upon us, and with it comes the annual challenge of deciphering what expenses are deductible and which ones might raise eyebrows at the Australian Taxation Office (ATO). While it's tempting to maximize your refund, it's crucial to stay within the boundaries of what's permissible. Let's break down the essentials for the 2024–25 financial year.

What You Can Claim

Work-Related Expenses

To qualify, expenses must be directly related to earning your income, not reimbursed by your employer, and substantiated with records.

Home Office Expenses: If you work from home, you can claim additional running expenses such as electricity, internet, and phone costs. The ATO offers two methods:

• Fixed Rate Method: Claim 67 cents per hour worked from home, covering energy, internet, and phone expenses.
• Actual Cost Method: Calculate the actual expenses incurred, apportioned for work use. 

Vehicle and Travel Expenses: If you use your car for work (excluding commuting), you can claim expenses using either:

• Cents per Kilometre Method: A set rate per kilometre for work-related travel.
• Logbook Method: A detailed record of work vs. personal use over a 12-week period.  

Self-Education Expenses: Courses and training directly related to your current employment can be deductible. 

Tools and Equipment: Items necessary for your job, like tools or protective clothing, can be claimed.

Donations

Gifts of $2 or more to registered charities are deductible. Ensure you have receipts and that the charity is endorsed by the ATO.

Tax Agent Fees

Fees paid to a registered tax agent for preparing and lodging your tax return are deductible.  

Personal Superannuation Contributions

Voluntary contributions to your super fund may be deductible, provided:

• The contribution is received by your fund before 1 July 2025.
• You notify your fund of your intent to claim the deduction.  

What You Can’t Claim

Personal Expenses

Expenses that are private or domestic in nature, such as:

Entertainment and Leisure

Costs related to social functions, holidays, or entertainment are generally non-deductible, even if work-related discussions occur.

Non-Work-Related Education

Courses that do not have a direct connection to your current employment are not deductible.

Fines and Penalties

Any fines or penalties imposed under Australian law are not deductible. 

Common Misconceptions

Claiming Without Receipts: While you can claim up to $300 in work-related expenses without receipts, you must still be able to demonstrate how the expense was incurred.  

Home Office Furniture: Only the work-related portion of home office furniture can be claimed, and depreciation rules apply.

Double Dipping: Avoid claiming the same expense under multiple categories or methods. For instance, if you use the fixed rate method for home office expenses, you cannot separately claim internet or phone expenses. 

Final Tips

Maintain Accurate Records: Keep detailed records of all expenses, including receipts, invoices, and logbooks.

Use ATO Tools: The ATO provides calculators and guides to assist in determining deductible expenses.

Consult a Professional: When in doubt, seek advice from a registered tax agent to ensure compliance and maximize your return.