July 2018 – Update

Personal Income Tax Cuts passed!

Parliament has passed the Government’s Personal Income Tax plan, meaning
that the first stage of the proposed income tax cuts will start to take effect
from 1 July 2018.
To recap the first stage of the plan was to legislate the $530 low and middle-income tax offset and raise the 32.5% bracket from $87,000 to $90,000

2018 Tax Returns – ATO Focus Areas

Work Related Clothing Expenses
Work related clothing can fit into one of the following buckets:

– Protective clothing
– Uniforms – Compulsory or Non Compulsory registered on AusIndustry
– Occupation-specific clothing – e.g.Chef checkered pants
– Laundering and dry-cleaning of clothing listed above.

Protective clothing is relative to the occupation of the wearer (Steel Cap boots for tradies are ok but are not ok for an office worker)

One key myth for Work related clothing expenses is that there is a standard deduction of $150 for Laundry expenses, this is false. The ATO allows up to $1 per load of washing deduction for the laundry of clothing that is work related.

Work Related Car Expenses
When claiming work related car expenses the only two methods available are:
– The log book method
– The set rate method

It is important that a valid logbook is kept to support a logbook claim and that the basis for calculating the amount of work related kilometers for the set rate method is reasonable and does not include any trips between home and work (Unless you are required to carry bulky tools/equipment and that equipment cannot be stored at your place of work) or travel that is not work related (i.e private in nature).

Work Related Other Expenses
The golden rules for claiming a work related expense are that you must have:

 Incurred the expense (and not have been subsequently reimbursed) and
– The expenditure must be directly related to earning employment income and
Records to support the claims must be kept for five years from the date of lodging your income tax return.