Question

1. The authors group tax reduction techniques into five Ds. Describe the five Ds.

2. Explain forgotten deductions as a tax reduction technique.

3. How can home ownership be used as a tax deduction strategy?

Please give references if any taken.

Answer 1

Note:- As per HOMEWORKLIB RULES if more than one question is posted than we liable to answer only one question.

2. Explain forgotten deductions as a tax reduction technique:-

1. Tax agent fees are also a tax deduction

Did you use Etax.com.au or another tax agent to prepare and lodge your tax return last year? If you did, then you can claim the amount you paid last year – on this year’s return. On your tax return, simply put the amount you paid last year into section D10 – “Cost of Managing Tax Affairs”. The fees you pay for tax return help are always tax deductible.

2. Union/Membership fees are tax deductible

Are you part of a union? How about a membership body related to your profession? If you pay work-related union or membership fees you can claim the total cost of these fees.

3. Claim work related Car Expenses

If you are required to use your personal car for work-related reasons, apart from driving to and from work, you can usually claim fuel and maintenance costs as a tax deduction. There are now just two methods for calculating this deduction – you can either use a 12 week logbook (which generates numbers you can re-use for 5 years!) or the cents per kilometre method.

The ATO defines work-related kilometres as kilometres travelled in your car while you are earning your income. To be eligible, you must be the owner of the car and your travel must be part of your working day – e.g driving between offices, special trips to the post office or bank (not including stop-offs on the way home) or moving from one job site to another. Remember, you cannot claim trips between work and home unless you’re carrying heavy equipment for work, or transporting heavy tools required to do your job.

Depending on your personal circumstances, either a logbook or the cents per kilometre may be a better method for you. If you’re unsure which to use, please contact us on [email protected] (or just add a “my messages” note in your etax.com.au tax return) and one of our accountants will help choose which method gets you the biggest tax deduction.

4. Claim home office expenses

Do you ever find yourself working from home? How about checking and responding to your work emails in the evening or on the weekend? If you do, then you may be able to claim the cost of using your personal computer as a tax deduction. The ATO allows employees who have to work from home occasionally to claim part of their home office expenses.

Even better, if you work entirely from home (either self-employed or as a home-based employee) you can typically claim the ”occupancy cost” of your home office space as a tax deduction. These expenses can include software, equipment, furniture and a percentage of your rent/mortgage and electricity.

The details on this can get a bit complicated, so it’s a good idea to trust your Etax accountant to help get it right. Just give them honest info and they can take it from there to boost your tax refund.

5. Mobile Phone Tax Deduction

Using your personal phone to take and make work calls? Are you sometimes required to call clients or other staff members on your personal mobile phone?

If you answered yes, then you generally can claim these cost of these calls as a deduction on your tax return.

Remember, you can only claim the cost of your work related calls, not your entire phone bill. It’s a good idea to keep a logbook or record (for at least one month) of when you use your personal phone, to determine the average percentage of your calls that are work-related.

Example:

George pays $49 per month for his mobile phone plan. He estimates that 50% of his monthly phone calls are work related. Therefore:

• 50% of $49 = $24.50 per month
• $24.50 x 12 = $294 per year

George can claim $294 on his tax return as a deduction for mobile phone expenses