Top 10 Tax Myths Busted
Myth: Everyone is entitled to claim $150 for clothing and laundry, 5000 kms for motor vehicle expenses and $300 for work-related expenses - even if they have not spent the money.
Fact: In certain circumstances the record-keeping exemptions alleviate the need to keep all receipts. However, tax payers are not automatically entitled to receive these deductions. Although you don't need receipts of up to $150 for laundry, 5000 kms, and work related expenses under $300, you still have to had spent the money and it be related to earning your income. You must be able to explain how you calculated your claim.
Myth: I can use my bank or credit card statement as a receipt
Fact: The only time receipts are unnecessary are when record-keeping exceptions apply. In order to claim a tax deduction for all other expenses you must be able to show that the money was spent, what it was spent on, who was the supplier and when the purchase occurred. Bank and Credit card statements don't usually contain all the appropriate information and therefore are inadequate to use when claiming a tax deduction.
Myth: If I work outside I am able to claim makeup that contains sunscreen
Fact: Unfortunately cosmetics are usually classed as a private expense, even when it contains sun protection. However, it may be deductible if the products primary purpose is for sunscreen (ie, contains a high SPF rating) and the cosmetic component is incidental.
Myth: It is a requirement of my work that I am fit, therefore I can claim my gym membership
Fact: To be eligible to claim your gym membership as a tax deduction, your job would have to depend on you maintaining a very high level of fitness, where the tax payer is regularly tested. There are only a small proportion of jobs that require this level of fitness (ie, special operations in the Australia Defence Force).
Myth: If I add a conference or a few days work to my holiday then I can claim ALL of my travel expenses
Fact: Travel expenses must be apportioned between private and work-related components. The total amount of the holiday cannot be claimed.
Myth: My work clothes are deductible because my boss specified a certain colour must be worn
Fact: Unless your work uniform is unique and distinct to your employer (ie, has company logo on it), or protective or occupational specific clothing that you were required to wear to earn your income, then you will not be able to claim it. Plain clothes, such as black pants are not deductible even when your boss expresses they're compulsory.
Myth: Netflix and Foxtel subscriptions are deductible because I need to keep up to date for work
Fact: You will need to demonstrate a strong connection between earning your income and the subscription. Subscription costs are to be apportioned between business and private usage and only the work related portion is to be claimed.
Myth: I need to get to work to earn income so I can claim my home-to-work travel expenses
Fact: Home to work travel is classed as private as your boss does not pay you until you get to work. Limited circumstances exist to make a claim for those who transport bulky company equipment.
Myth: I can claim my personal phone calls because I use that number for work related calls as well
Fact: Telephone accounts will need to be apportioned between business and private usage and only work-related calls are claimable.
Myth: Tax agents are responsible for my claims
Fact: YOU are ultimately responsible for ensuring the information in your return, including the deductions you claim is correct, not the tax agent used. Responsibility cannot be transferred to your agent, so it is important that complete and accurate information is given.
Source: Australian Tax Office