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Why commuting costs can’t be claim as a travel expense in tax return

Individual Tax Return, Frequently Asked Questions

The key reason is that under Australian tax law, normal trips between home and your regular place of work are considered private commuting travel expense in tax return rather than work-related travel. In this article, I will introduce the right way to claim a deduction for transport expenses in tax return.

Content

Claiming a deduction for transport expenses

limited circumstances

Types of transport expenses you can claim in tax return

How to keep a record for transport expense

Claiming a deduction travel expense in tax return

In Australia, to claim a deduction for the work-related travel expense in tax return, the expenses must be incurred when carrying out income-earning activities. So you can’t claim the trip between an employee’s home and work place because it counted as a private trip. However, there are also some exceptions(see limited circumstances).

Deductible transport costs can include trips between separate workplaces to undertake employment duties or assignments. The taxpayer must have paid for eligible expenses out of pocket without reimbursement to claim a deduction. If your travel serves both work and private purposes, you only can claim the work-related portion.

To successfully claim this deduction in tax return, you must retain records substantiating payment of deducted transport costs. Receipts should evidence amounts spent on eligible fares, tolls or vehicle hire.

Limited circumstances of travel expense in tax return

There are some circumstances where you can claim a deduction for the cost of trips between home and work. You must check that you meet the eligibility conditions:

Home is a base of employment.
The purpose of trip is to transport bulky tools and equipment.
You have itinerant or shifting places of work.

You may also be able to claim a deduction for a trip that includes an alternative place of work that isn’t a regular place of work, which includes:

perform your work duties – for example, if you travel from your regular place of work to meet with a client
attend work-related conferences or meetings away from your regular place of work
deliver items or collect supplies
go between 2 or more separate places of employment, such as if you have more than one job (but not if one of the places is your home)
go from your

regular place of work to an alternative place of work that isn’t a regular place of work (for example, a client’s premises) while still on duty, and back to your regular place of work or directly home
home to an alternative place of work that isn’t a regular place of work to perform your duties, and then to your regular place of work or directly home (this doesn’t apply if the alternative place of work has become a regular workplace).

Types of travel expense in tax return those you can claim

Public transport fares – This includes train, bus, ferry, tram and taxi fares where travel is for work purposes.
Ridesharing and ride-sourcing apps – Work related costs from services such as Uber or Ola.
Vehicle expenses – Expenses relating to operating a vehicle for work like fuel, servicing and repairs may be deductible.
Flights – Airfares for income-earning activities.
Car hire – Short-term vehicle rental costs can be deducted if the hire car is used only for trips that are work-related.
Tolls and parking – Road tolls, bridge tolls and temporary parking fees incurred while traveling for work purposes qualify.

How to keep a record for transport expense

If you want to claim a deduction of travel expense in Australia tax return, you must have written evidence which meet the following requirements:

Explanations for each eligible trip detailing the work-related purpose and activities undertaken
Travel dates and times, including start and finish of work duties as well as any private activities or detours
Trip destinations and locations of work tasks or meetings
Itemized receipts for public transport fares like trains, buses and taxis showing payment amount and date
Vehicle logbook (if claiming car expenses) outlining total and work-related kilometers over a representative period
Receipts for any parking fees, tolls or vehicle hire costs incurred while traveling for work

If one’s employer provides a payment intended to cover transport costs incurred for work purposes, this amount must be disclosed as assessable income when filing the annual tax return. Normally, the employer will document it on the income statement or payment summary at the end of financial year. While such allowances constitute taxable income that boosts assessable totals, individuals may be able to claim as a deductions for actual transport expenses to offset this amount.

12/02/2024

A Beginner’s Guide to Tax Return in Australia

Individual Tax Return

As a newcomer to Australia, filing your first tax return here can feel daunting. This guide will explain the basics of the Australian tax system and tax return process to help you successfully lodge your return.

In Australia, individual taxpayers are required to lodge a personal tax return each financial year (1 July to 30 June) to declare their income and claim eligible tax deductions or credits from the previous year. The lodgment deadline is generally October 31, though some may receive an automatic extension to May 15 if using a registered tax agent.

The tax return form assesses your income tax liability based on resident status and worldwide income earned during the financial year. The starting point is determining your assessable income – this includes employment income like wages, salaries, commissions; income from investments like dividends, interest; government payments; and business or rental income if applicable. You will need to provide income statements like payment summaries and dividends statements to verify amounts declared.

Filling out your tax return allows you to reduce your total taxable income by claiming eligible tax deductions. Common deductible expenses include work-related expenses like a new uniform or tools if required for your job; donations to charitable organizations; interest paid on loans for gaining income; and private health insurance premiums. Keep clear records like receipts to support any amounts deducted.

The tax office will use the information provided in your return to calculate your tax liability for the year. If too much tax was withheld from your pay during the year compared to your actual liability, you are entitled to a tax refund. On the other hand, if not enough tax was withheld you may need to pay the additional amount owed.

There are a few options for lodging your return. We suggest using our online tax return services. It is super friendly to the users who are new to Australian Tax returns. Once submitted, the ATO will process your return within about 2-4 weeks and notify you of the final outcome.

With the right guidance, the tax return process in Australia is straightforward. As a new resident, I recommend familiarizing yourself with the basic tax rates and available deductions so you pay the right amount of tax. Let us know if you need any clarification on how to successfully lodge your first Australian tax return.

13/11/2023

Your Complete Guide to Investment Property Tax Deductions

Individual Tax Return

When it comes to Australian tax returns, there are certain expenses related to investment property tax deductions. In this article, I’ll explain common tax deductions and the documents needed to claim them.

A general overview of common investment property tax deductions

Rental Interest: If you have taken a loan to purchase an investment property, you may be able to claim the interest charged on that loan as a deduction.
Property Management Fees: Agent/Management Fee if you use the services of a property management company
Advertising Costs: Expenses incurred for advertising your rental property, such as newspaper ads or online listings
Insurance: Premiums paid for insuring your rental property, including building and contents insurance
Repairs and Maintenance: Costs associated with repairing and maintaining the rental property, such as fixing plumbing issues or repainting.
Council Rates and Land Tax: These are local government charges imposed on the property
Utilities: If it’s not paid by the tenant, you may be able to claim a portion of utility bills, such as electricity and water

Documents need to keep as proof for investment property tax deduction

To substantiate your investment property tax deduction in tax return, it’s important to maintain accurate records and relevant documents. Here are some documents you should consider keeping as proof of your investment property tax deduction:

Rental Income Records: Such as rent receipts or statements from your property manager or tenants
Expense Receipts: Retain receipts, invoices, or statements for all expenses related to your rental property. For example, receipts for repairs, maintenance, council rates, and etc…
Loan Documents: If you have a loan, keep copies of those documents. For example, statements that reflect the interest charged on the loan.
Utility Bills: Such as electricity bills or water bills, if you are claiming a portion of utility expenses.
Insurance Policies: Retain copies of insurance policies for your rental property.
Depreciation Schedules: If you are claiming depreciation on capital assets within the property.You keep a copy of the depreciation schedule, which is prepared by a qualified quantity surveyor, or relevant documentation related to the depreciation claim.
Bank Statements: a bank statements to show rental income and expenses.
Lease Agreement: Lease agreement or rental contract that outlines the terms and conditions of the tenancy.
Correspondence: Retain any correspondence related to your investment property tax deductions, such as emails, letters, or notices exchanged with tenants, property managers, or relevant authorities.

It’s important to note that the ATO may require you to retain these records for a certain period of time, typically five to seven years, so it’s advisable to keep them organized and easily accessible.

Looking For Investment Property Tax Return?

12/08/2023

Easy to Claim Tax Deduction with Online Tax Return System

Individual Tax Return

In Australian tax return, a tax deduction refers to an expense that can be subtracted from your assessable income, thereby reducing your taxable income. By claiming deductions, you can potentially lower the amount of tax you owe.

Type of Tax Deduction

Deductions for costs incurred in running your business are allowable, provided the expenses are not of a private, domestic, or capital nature. You may be able to claim deductions for your business expenses.

– Accounting Fee

– Advertising Fee

– Bank Fee

– Other Fee

– Rent

– Sub-Contractors

– Salary & Wages

– Superannuation

– Work Cover

– Insurance

– Public Liability Cover

– Business Trip

– Staff Training Exp

– Freight & Cartage

– Leasing & Hiring

– Fuel

– Parking

– Registration

– Repairs & Maintenance

– Internet Expenses

– Printing & Stationery

– Postage

– Repairs

– Rubbish Removal

– Telephone

– Office Equipment

– Tool Replacements

– Uniform/Prot. cloth

– Electricity Expense

– Material Purchase

– Closing Stock

– Other Purchase

– Car Purchase

05/08/2023

A Simple Guide to Tax Deductions for Australian Businesses

Business Service

Tax deductions for an Australian business are expenses that can be deducted from the business’s assessable income to reduce the amount of income tax payable in tax return. Here are some common tax deductions for Australian businesses:

Operating expenses:

This includes expenses such as rent, utilities, insurance, and office supplies.

Wages and salaries:

The cost of wages and salaries paid to employees, including superannuation contributions, can be deducted.

Depreciation:

Businesses can claim deductions for the decline in value of their assets, such as equipment, vehicles, and buildings.

Bad debts:

If a business is unable to collect payment for goods or services that it has provided, it can claim a deduction for the amount of the debt.

Travel expenses:

Businesses can claim deductions for travel expenses incurred in the course of doing business, such as airfare, accommodation, and meals.

Marketing and advertising expenses:

The cost of advertising and promoting a business, including website development and maintenance, can be deducted.

Professional fees:

Businesses can claim deductions for fees paid to accountants, lawyers, and other professionals for advice and services related to the business.

It is important to keep accurate records of all business expenses and ensure that they are legitimate and directly related to the business. Businesses should seek professional advice from an accountant or tax agent, such as TAX123, to ensure that they are claiming all eligible deductions and meeting their tax obligations.

26/07/2023