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Missing these forgotten deductions can cost you thousands at tax time

Jul 14, 2017

TAX time moves up a gear this weekend and many Australians are missing out on big money by forgetting deductions they are entitled to claim.

Yesterday was the deadline for employers to deliver payment summaries to their workers, and many can now work on chasing a refund, which averages about $2500 for the 80 per cent of individuals who receive one.

However, tax specialists say many deductions are often forgotten — effectively giving the Australian Taxation Office your extra money.

RELATED: How to bag a modern tax deduction

Deakin University department of accounting associate professor Adrian Raftery said while the ATO was good at catching people who did not declare all their income, it would not inform you if your deductions were too low.

“Wouldn’t that be amazing if they did? Ripley’s Believe it or Not stuff right there. ‘Hey honey, the ATO just called me to say that I should have claimed some more and they are going to send me a cheque’,” he said.

Deakin University’s Adrian Raftery says many tax deductions are missed, and the ATO cannot tell you.

Dr Raftery said the ATO was not deliberately avoiding telling you about forgotten tax deductions — it simply did not have the systems to detect under-claiming.

So the responsibility is on you, and here are 10 common tax deductions that are often forgotten.


Australians are working from home more than ever, and many don’t realise they can claim a portion of their electricity and gas costs related to home office use. The ATO makes this simple to claim by allowing a deduction of 45c per hour for home office energy. You will need to be able to justify your claim.


“This is a legitimate tax deduction that most forget about because it is tucked inside a life or health insurance policy,” Dr Raftery said. However, if your income protection insurance is paid within your superannuation fund a tax deduction cannot be claimed.


“It amazed me over the years just how many people would forget this claim, which was invariably their biggest legitimate tax deduction,” Dr Raftery said.

Interest deductions can be made for both rental property loans and other loans for investments such as shares and managed funds. senior tax agent Liz Russell says work-related phone and car use is tax-deductible.

4 WORK-RELATED CAR USE senior tax agent Liz Russell said while you could not claim car costs for travel to and from work, other tax-deductible work-related motor vehicle use was often forgotten. “If you have to visit a client or drop something off or visit another site, you can claim that,” she said.

A written logbook is unnecessary if you travel less than 5000km and are happy to claim the 66c per kilometre ATO-allowed deduction — as long as you can show how you worked it out. This deduction alone could be worth up to $3300, equating to a $1000-plus refund for most taxpayers.


Dr Raftery said people who made detailed car deductions using the logbook method usually kept receipts for petrol, insurance, registration and servicing.

“But invariably they forget to claim depreciation on their car — usually 25 per cent of the written down value at the start of the year — as well as any interest on borrowings that they may have had,” he said. Dr Raftery said depreciation of rental property building costs and the assets inside it was another big deduction regularly missed.


Ms Russell said work-related use of your mobile phone was tax-deductible, and a proportion of phone plan charges could often be claimed. “It’s a matter of keeping records in a diary,” she said. “It takes a little time to work out, but is reflected in an increased deduction at the end of the year.”


Ms Russell said union fees or professional association membership fees could easily be forgotten if they were paid several months ago. “It doesn’t enter their mind at the end of the financial year,” she said.

Remember all your tax deductions and get a bigger tax refund.


Subscriptions to work-related journals or magazines might cost hundreds of dollars each year and deliver handy tax deductions. “You might think it’s just a magazine, but it’s deductible if related to your employment,” Ms Russell said.


H & R Block director of tax communications Mark Chapman said education courses related to your current employment opened up a range of deductions, from travel and accommodation to books and home office costs. Stationery and other office supplies — whether for your work or relevant study — were also deductions that were missed, he said.


If you didn’t keep records for deductions for 2016-17, make sure it doesn’t happen again this year. “You may have done your dash for the last financial year but you haven’t done it for the future,” Ms Russell said.

Mr Chapman said holding onto receipts was vital, even if you were unsure whether an expense was tax-deductible. “If you keep the receipt, you can have that conversation with a tax agent at tax time,” he said.

“If you don’t, you are basically leaving money on the table for the ATO to take.”


Original article published here in The Courier Mail on 14 July 2017.


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