Many people don’t take the time to understand what they can and can’t claim as a tax deduction. If you’re guilty of simply sliding a box full of receipts across your tax agent’s desk, now’s the time to learn which expenses you can claim as tax deductions this EOFY.
While most tax deductions are for work-related expenses, deductions can also be for things like insurance, investments, and rental property expenses. To help you get the most out of your tax return this financial year, we’ve put together a list of things that are tax deductible which may be available to you.
Income Protection Insurance
The ATO generally allows you to claim the costs of your income protection premiums for policies taken out separate to your Superannuation. If you have a combined policy (e.g. Life and Income Protection Insurance), you are permitted to claim a tax deduction for the portion of premiums paid for the Income Protection Insurance only.
Personal Super Contributions
If you’ve made non-concessional (after-tax) contributions during the year to a complying superannuation fund or a retirement savings account, you may be able to claim a deduction for these contributions. For example, this could include contributions you make from your bank account directly to your super fund.
Before you can claim a deduction for your personal super contributions, you must give your super fund a notice of intent to claim a tax deduction and received an acknowledgment from your fund, prior to lodging your tax return.
Profits or returns you make on your investments usually become part of your income for tax purposes. Many expenses relating to your investment(s) are tax deductible, including:
Dividends (income from shares) are considered income for tax purposes. You may be able to claim deductions for costs related to the dividend income, such as management fees and interest on money you borrowed to buy the shares.
Managed Investment Trusts
Tax deductions for managed investment trusts can include management fees, specialist journals and interest on money you borrowed to invest. If you made a prepayment of $1,000 or more in relation to your managed investment, there are special rules that may affect the amount you can deduct.
You may be able to claim expenses relating to your rental property but only for the period your property was rented or available for rent. This could include:
- Management, maintenance costs and interest on loans – these can generally be claimed immediately (i.e. deducted against your current year’s income).
- Borrowing expenses, depreciation and capital works spending – these can generally be deducted over a number of years.
With the EOFY fast approaching, now is the perfect time to start thinking about any expenses you incurred over the financial year that may be tax deductible. For a full breakdown on what you can and can’t claim this EOFY season, please visit the Australian Taxation Office (ATO) website.
The information and any advice in this article does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. When considering whether to acquire a financial product, before making any decision, you should obtain the relevant product disclosure statement.