Every industry has its differences (or perks!) when it comes to tax time and sales is no exception. So, we asked Sales HQ's #1 Accountant for their top tips to help #teamsaleshq get the most out of their 2019 tax return.
Introducing Lawrence Lu! Lawrence is a Chartered Accountant and all-round great human who has kindly offered to share his insights. Check out his top 7 tips for getting the most out of your 2019 tax return.
Have you ever used your car to get to client meetings? Or perhaps you need to drive between offices from time to time for work meetings? Did you know, without a logbook you can claim up to $3,400 as motor vehicle expenses in the 2019 financial year? It's calculated as $0.68 per kilometre, up to 5000kms, so you just need to work out the number of kilometres you've racked up over the tax year and the rest is simple!
However, if the business use percentage of your car is high (say 70% or above) it's worth having a valid logbook to maximise the claim. I recommend keeping a logbook throughout the year to make your life easy when it comes to tax time but it's not necessary for small claims.
You can also claim vehicle and other travel expenses (e.g. public transport, Uber, etc.) that you incur in the course of performing your work duties, such as meeting clients, attending to work-related conferences and work meetings, etc. the biggest mistake people often make is to claim expenses incurred on direct trips between home and work. They are considered as private travel, and therefore no deduction is allowed!
If you work in sales there's a high chance you will incur expenses for clients meals or meeting expenses from time to time. As a rule of thumb, these are treated as entertainment expenses by the tax office and therefore they are normally not tax deductible.
However, gifts made to former or current clients, on the other hand, are tax deductible provided they are incurred for the purpose of producing future assessable income. More information can be found here (see Taxation Determination issued by the tax office – TD2016/14).
For those working in client facing sales roles, it's likely you have been asked to wear a uniform of some kind. The purchase and/or cleaning charges for these items are considered tax deductable so make sure you keep track of these expenses. Small weekly dry-cleaning bills add up over a year! ‘Work Clothing & Uniforms’ includes suits, shirts, pants, jackets or items which have a business logo.
Mobile phones and its related expenses are tax deductible if they are incurred for work-related purposes. If you use your mobile phone for both work and private purposes, you will be able to claim the portion of your phone bill which has been used for work related purposes only. If you’re unsure of the percentage an easy way to work it out is to have a look at your last few phone bills and split out the work and personal calls/texts and average the % of usage from there.
An employee, who is on overnight business travel, normally receives a travel allowance. Such payment needs to be declared in your tax return as income. On the other hand, out-of-pocket expenses associated with overnight work travel, such as accommodation, meal and other incidental expenses, can be claimed as tax deduction in the tax return. The record-keeping requirements are quite complex as they depend on a number of factors, it would be best to seek for clarification from your accountant.
If you work from home regularly, you may be able to claim running expenses incurred in your home office, such as phone, internet expense, depreciation on work-related items (e.g. computers, mobile phones, etc.).
If you are running a business from home and it becomes the principal place of business, then you can also claim occupancy expenses, such as rent, interest on mortgage, rates, etc. However, it may attract capital gain tax at the time of disposal of your residential property.
Work-related percentage should be applied to all the expenses to calculate how much they can be claimed. The common method of working it out is the floor area of the home office divided by that of your whole home.
The amount of the deduction will depend on the extent you use the bag for work purposes.
Note: You can't claim a deduction, if you use the bag predominantly for personal purposes, such as carrying your lunch and beauty and hygiene products. This is private use.
TAX TIP! Receipt keeping
A valid receipt should be kept in order to claim a tax deduction. Generally speaking, it should be retained for at least five yearsfrom the due date for lodgement of the tax return in which the deduction is claimed.
Want to know more? Reach out to Lawrence for more information or tax advice!
Lawrence Lu is a member a Chartered Accountants Australia and New Zealand (CAANZ). He is the director WL Advisory – Chartered Accountants specialising in accounting, tax and a wide range of business advisory services for individuals and small to medium businesses across Australia.