Medical

medical bills exceed $1,500 then entitled to 20 cents in every dollar over $1,500, less any Medicare refunds. Home office statutory method was 26 cents per hour in the 2004-05 financial year for the use of the office, and its likely to stay the same for this financial year. you can claim electricity, contents insurance and rates, and if youre renting your house you can claim rent on a square metre method. So if the office equates to one-fifth of the house then the deduction from the rent is in the same proportion, automatically giving you a tax saving. the minimum requirement is a specific part of the home set aside as a business area. Every time you leave the home office and do a business errand, thats a deductible travel expense.

Cars

car is leased and is claimed against income earned as a tax deduction based on usage and the log book method. Michelle says someone in Lisas position would normally upgrade to a new vehicle every three years, because at that point the value of the car will have reduced significantly, and the warranty will be due to expire. If you have a hire-purchase agreement or loan, youve claimed most of the deductions (mostly through depreciation) by then as well. Going into a new lease depends if its for a tax reason or not, but if youre a business owner then its probably more about cash flow... theres the upfront cost of buying a car as opposed to leasing, which allows you to pay for it over a longer period. Employees earning a wage from a company may have the option of salary packaging, including the lease of a car. Salary packaging a car tends to be more tax effective if you earn over $125,000, an increased rate that starts in 2007. By law, sole traders cant salary package because they cant pay themselves a wage.

Motor Vehicle Log Book

Ensure that you have kept an accurate and complete Motor Vehicle Log Book for at least a 12 week period. The start date for the 12 week period must be on or before 30 June 2011. You should make a record of your odometer reading as at 30 June 2011. You may need: written evidence for your car expenses (receipts, invoices or diary entries) your car logbook and odometer records. You can choose one of four methods to work out your car expenses. If you qualify to use more than one method, you can use whichever gives you the largest deduction or is most convenient. These methods are: cents per kilometre 12% of original value one-third of actual expenses logbook. Each method requires you to know or estimate your business kilometres. Business kilometres are the kilometres you travelled in the car in the course of earning assessable income (includes work-related activities).

Tools of Trade / FBT Exempt Items

The purchase of Tools of Trade and other FBT exempt items for business owners and employees can be an effective way to acquire equipment with a tax benefit. Items that can be packaged include Handheld/Portable Tools of Trade, Notebook Computers, Personal Electronic Organisers, Mobile Phones, Digital Cameras, Briefcases, Protective Clothing, and Computer Software. Work-related expenses - tools and equipment relating to your tax return Work-related computer expenses You can claim a deduction for the work-related portion of: * the cost of repairs to your computer * the interest on money borrowed to finance the cost of the computer, and

* the decline in value of your computer (read Work-related expenses - decline in value). Computer software expenses Expenditure incurred in acquiring computer software forms part of the cost of the unit of computer software acquired. The general rules for depreciating assets apply to these units of computer software. The decline in value is worked out using the prime cost method and an effective life of two and a half years. Other tools and equipment You can claim an immediate deduction for the full cost of tools and equipment bought on, or after, 1 July 2001 if: * the cost of a particular item does not exceed $300, and * you use the item predominantly for the purpose of producing assessable income that is not income from carrying on a business, and * the item is not part of a set that you start to hold in that income year, where the total cost of the set exceeds $300, and * the total cost of the item and any other identical or substantially identical item that you start to hold in that income year does not exceed $300. If you do not meet all of the conditions listed above, you cannot claim an immediate deduction for the full cost of your tools and equipment. However, you can claim a deduction for the decline in value of the tools and equipment you use for work based on their effective life. Claiming decline in value of tools and equipment You can claim a deduction for the decline in value of tools and equipment you use for work. Tools and equipment are depreciating assets; a depreciating asset is an asset that has a limited effective life and can reasonably be expected to decline in value over the time it is held for use. To calculate a claim for decline in value, read Work-related expenses - decline in value. Claiming the cost of repairs of tools and equipment You can claim a tax deduction for the cost of repairing tools and equipment. Apportioning expenses If you use tools and equipment partly for work and partly for private purposes, you can only claim a proportion of the cost of repairs and a proportion of their decline in value. For example, if you use your sewing machine 80% of the time for work and 20% for sewing for your family, then you can only claim a deduction for 80% of the cost of repairs and 80% of the decline in value of the machine.

Memberships
Union and professional association membership fees are deductible. However, worker entitlement fund contributions (for example, welfare fund contributions) and similar charges are generally not deductible.

Entertainment

Entertainment expenses are generally not deductible. This includes the cost of business lunches, and attendance at sporting events, gala or social nights, concerts or other similar functions or events. This is the case even if business matters are discussed at the occasion.

Publications

Books, tapes, compact discs, records and videos. You can claim a deduction for the decline in value of work-related books, tapes, compact discs, records and videos (for example, which form part of a professional library) either immediately or over time.

If the cost of the item is under $300 you can claim a deduction immediately - see below for further details. If the cost of the item is over $300 you can add the item to your professional library and claim a deduction for the decline in value.

Establishing Home Office as valid

Home Office Expenses; diaries of use and calculation of home office expenses Where individual taxpayers keep a diary for the purpose of establishing a connection between the use of their home office and their work or business, the Commissioner will accept diary records covering a representative four week period as establishing a pattern of use for the entire year. 2. Individual taxpayers who claim deductions for work or business related home office running expenses comprising electricity, gas and decline in value of office furniture may claim either a deduction for the actual expenses incurred or a deduction calculated at the rate of 34 cents per hour. Telephone proportion = Business calls (incoming and outgoing) / Total calls (incoming and outgoing) Decline in value of Computers or other equipment proportion = used only partly for work or business purposes, then the decline in value deduction is reduced by an amount that reasonably reflects the extent that equipment was not used for income producing purposes. the amount of decline in value claimed as a deduction should be based on an bona fide estimate of the percentage of income producing use. . The Commissioner will accept an estimate of the extent of income producing use where it is based on a diary record of the income related and non-income related use of that equipment covering a representative four week period. Such a diary record would need to show the nature of each use of the equipment, whether that use was for an income producing or non-income producing purpose and the period of time for which it was used.

Self-Education Expenses