The proportion of government tax revenue collected from individuals has never been higher, in a trend which has continued more or less unbroken since the 1950’s.*
Recent years have seen legislative changes increasing the exposure of individuals to higher taxes by:
- “Bracket creep” – failing to raise tax thresholds to keep pace with inflation.
- Raising of thresholds or removal of offsets, like the Medical Expenses Tax Offset and Low Income Spouse Offset.
- Increasing the Medicare Levy (not technically income tax, but administered through the tax system and having the same effect as raising the base level of taxation for most taxpayers).
- Imposition of levies such as the Flood Levy and Temporary Budget Repair Levy.
It is not a stretch to believe the ATO's current focus on work related deductions, however valid, is part of the same pattern.
Businesses are entitled to claim tax deductions for many, if not most, of the expenses they incur in running a business. By the same token, employees are entitled to claim many expenses incurred to enable them to earn income. Such as education, use of mobile phone, internet, hours spent working from home and travel to conferences, clients and other work locations.
It has always been necessary to maintain proof (substantiation) of expenses you wish to claim as a tax deduction. That means written evidence which shows what you bought, who from and how much you paid. Critically, you need to be able to explain how your expenditure was necessary for you to carry out your work or business.
Our job together in tax consultations is to review your expenses to ensure you claim what you are entitled to, and to the extent you legally can. That way, as your tax agent, we can credibly explain the expenses to the ATO on your behalf.
Alex Frost is a tax agent with two degrees in tax law and, as a Chartered Tax Adviser, she undertakes at least 30 hours of structured continuous tax education every year (seminars, etc), to maintain an exceptional level of knowledge. Lisa and Kristie are degree qualified accountants who also regularly attend professional education sessions and have many years of experience between them.
Our highly trained and qualified team will identify your entitlements and can confidently represent your affairs to the ATO.
So if your tax deductions are complicated this year, please don't hesitate to call us.
* See here for more details: A brief history of Australia's tax system