David Douglas Accountants

RECEIPTS AND RECORD KEEPING FOR TAX

 

TAX RECEIPTS

Written evidence (receipts, invoices, etc.) must be kept for 5 years from the lodgement of the relevant income tax return. You must keep receipts and bank statements.

Tax Receipts must have:

1. Date of invoice / receipt
2. Date the expenses were incurred
3. Business name
4. Nature of goods or services
5. Amount in $AUS.

 

TAX RECEIPTS SUBSTANTIATION EXCEPTIONS

$150 tax receipt exception for laundry or you may use a reasonable basis to calculate the amount e.g. $1 per load for work related clothing.

$300 tax receipt exception for work expenses. This includes $150 for laundry but does not include allowances or motor vehicle tax set rate per kilometre method.

$200 tax receipt exception for expenses less than $10. This is on top of the $300 exception. This usually applies to small tools, office stationery and sundry expenses. You must keep a diary note of the expense.

Home Office tax receipt exception for 52c or COVID 80c per hour. You must keep a diary of hours per week for 4 weeks.

 

Work related uniforms, protective clothing and laundry

Laundry

Laundry: You may claim up to $150 without receipts or less or you may use a reasonable basis to calculate the amount e.g. $1 per load for work related clothing.

Dry cleaning without receipts may fall under items that cost less than $10 up to $200. Sometimes if you use a regular dry cleaner they may be able to give you an annual tax receipts based on their records.

 

Protective clothing

Protective clothing are generally tax deductible if it is designed to protect:

Steel capped boots, high visibility shirts, fluro trousers, fire proof clothing, non-slip safety shoes, aprons, etc.

 

Conventional clothing

Conventional clothing is not deductible e.g. King Gee drill pants, jeans, etc unless they have a logo or a fluro strip sewn on for safety.

 

Strictly enforced uniforms

Strictly enforced uniforms are usually deductible as well as accessories such as stockings, footwear, socks and jumpers unless it is conventional clothing.

 

Non compulsory uniforms

Non compulsory uniforms are usually not tax deductible unless they are registered with AusIndustry or they have a logo.

Google ATO protective clothing and uniforms

 

HOME OFFICE

Method 1

You may claim home office electricity based on floor area e.g. 5%. x $400 (electricity bill per quarter) x 4 = $80.

Furniture, desks, fax machines, filing cabinets, book shelves, pictures, carpets, blinds, etc may be depreciated at usually 20%.

Depreciable Items < $300 may be 100% depreciated.

E.g. desk $250 x 100%, chair $120 x 100%, carpet $1,000 x 20%, blinds $600 x 20% = $690

Method 2

You may use the ATO 52c or COVID 80c per hour rate to claim electricity, gas and depreciation of furniture. You must keep a 4 week diary.

E.g. 52c x 20 hours per week x 52 weeks = $540.80

 

WORK EXPENSES

iPhone, mobiles & home phone

Computers - iPad, Macs, laptops & desktops

Computer supplies

Stationery - Cartridges, diaries, pens & office sundry

Internet

 

PRIVATE USE APPORTIONMENT

If there is private use (other than incidental use) a 28 day diary is required each financial year or where the work % changes by more than 10%.

A diary can be a simple A4 pad with a line in the middle with work & private on opposite sides.

You must have a letter from your employer saying why you need to work at home and use your mobile.

 

TOOLS

Tools are usually 100% deductible except for the following:

For employees if a tool costs > $300 you must depreciate it usually at 20% per year. e.g. nail guns, drills, etc.

For ABN businesses the 'General Small Business Pool' may depreciate tools < $6,500 at 100% per year.

From 1 July 2019 tools < $150,000 may depreciate at 100%.

From 1 July 2019 Motor Vehicles upto $57,581 may be depreciated at 100%.

You do not need receipts for up to $200 of items that cost less than $10. The $200 is the maximum for the whole tax return.

 

SUN PROTECTION AND SUN GLASSES

Includes sun glasses, sun screens and hats.

You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return.

 

TOLLS & PARKING

You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return.

 

LICENCES

The licence or renewal expenses must relate to your current income producing activity not income that will be made in the future.

The initial cost of some licences may not be a tax deduction. e.g. the initial cost of obtaining a truck, earth moving or heavy machinery license as the expense has occurred at a point too soon.

 

COURSES

Courses include fees (but not HECS), books, laptops, internet, stationery, home office expenses, some travel to a place of education.

You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return.

The course must relate to your current income producing activity, not income that will be made in the future. e.g. Medical School expenses are not a tax deduction for a doctors income in the future.

If your course is run by a university, TAFE or college you must reduce your expenses by the first $250.

 

SECURITY/CRIMINAL CHECKS ATO TR 98/6 PARA 177

Security checks are usually not deductible as the expense happens at a point too soon before the income is earned.

Renewal of criminal checks may be deductible as you are currently earning income e. g school teacher's blue cards.

The ATO allows the preparation of resumes and travel to attend an interview as a tax deduction against Centrelink income.

 

 

DISCLAIMER

The information provided in the above documents is not intended to be, nor should it be construed as tax advice. Any specific recommendation for a client can only be done after their individual circumstances have been determined by David Douglas Accountants.