18 DEDUCTIONS to MAXIMISE REFUND & Pay Less Tax in 2025 (Australia)

Summary

In this informative video, Veronika, a Board-certified Tax Accountant in Australia, shares 18 legal ways to reduce taxes and maximize refunds on your 2024/25 Australian tax return. She covers overlooked tax deductions, including those that can be claimed without receipts, and explains tax codes for each deduction. Key topics include work-related expenses, car costs, self-education, home office deductions, and contributions to superannuation. Veronika provides tips on how to legally minimize your tax liability and boost your refund, ensuring you can claim with confidence and optimize your finances.

Takeaways

• 😀 You can legally pay less tax and maximize refunds by claiming overlooked tax deductions for the 2024/25 Australian Tax Return.
• 😀 To reduce taxable income, deductions like work-related expenses, depreciation, and self-education costs can be claimed to lower tax liabilities or increase refunds.
• 😀 The ATO's Three Golden Rules for tax deductions: 1) The money was spent by you and not reimbursed, 2) The expense must directly relate to earning your income, 3) You must have proof, typically receipts.
• 😀 Some tax deductions can be claimed without receipts if the total claim is below $300, but for higher claims, receipts are required as evidence.
• 😀 Certain expenses like work-related car costs and travel allowances do not require receipts if they meet specific criteria and fall within prescribed limits.
• 😀 You can claim depreciation for work-related assets (e.g., cars, phones, laptops) and apportion them if they are used partly for personal use.
• 😀 The Cents per Kilometer method for car expenses is simple and doesn't require a logbook, with a maximum of 5,000 km eligible for claiming at 88 cents per kilometer.
• 😀 You can claim work-related travel expenses such as accommodation and meals when traveling overnight for work, but a travel diary is needed for stays of 6 nights or more.
• 😀 Clothing deductions are allowed for uniforms, protective clothing, and occupation-specific clothing, but not for conventional work attire like business suits.
• 😀 Contributions to superannuation can be tax-deductible if they meet specific conditions, with unused concessional caps from the past 5 years available for carry-forward, helping to save on taxes.

Q & A

What is taxable income, and how is it related to allowable deductions?

Taxable income is the amount on which the Australian Tax Office (ATO) taxes you. It is calculated by reducing your assessable income (income earned from work or investments) by allowable deductions. Allowable deductions are expenses incurred in earning that income, which reduce your taxable income, thereby lowering your tax liability or increasing your refund.

What are the ATO's three golden rules for claiming tax deductions?

The three golden rules are: 1) You must have spent the money yourself and not been reimbursed. 2) The expense must be directly related to earning your income. 3) You need to have a record (usually a receipt) to prove the expense.

Can you claim deductions without receipts, and if so, under which conditions?

Yes, you can claim deductions without receipts if the total claims do not exceed $300. However, if your deductions exceed $300, you need to provide evidence. There are exceptions, such as work-related car expenses, travel expenses, and meal allowances, where receipts may not be required, especially under certain thresholds.

What are the two methods for claiming work-related car expenses?

The two methods are the Logbook Method and the Cents Per Kilometer Method. The Logbook Method requires you to keep a logbook for 12 weeks to determine the work-use percentage of your car. The Cents Per Kilometer Method allows you to claim a fixed rate of 88 cents per kilometer for up to 5,000 kilometers annually, without needing a logbook or receipts.

What are the requirements for claiming travel expenses for overnight work-related trips?

For overnight trips, you can claim accommodation, meals, incidentals, and transport expenses. If you travel for six nights or more, you must keep a Travel Diary. If the trip is less than six nights, no diary is required. Receipts for overnight stays and day travel expenses are required, but in some cases, you may not need receipts for travel allowance claims within the reasonable amount.

What types of clothing can be claimed as tax deductions for work?

You can claim deductions for compulsory uniforms, non-compulsory uniforms with your employer's logo, protective clothing (like fire-resistant gear), and occupation-specific clothing (like chef’s pants or judge's robes). You can also claim laundry expenses for these items if the costs exceed $150 and if the clothing falls into these categories.

What is the difference between the Fixed Rate and Actual Cost methods for home office deductions?

The Fixed Rate method allows you to claim 67 cents per hour for work-related expenses like electricity, phone, and internet, without needing detailed records. The Actual Cost method requires you to calculate the percentage of your home used for work and apply that percentage to your household expenses (like electricity and cleaning). You must keep records and receipts for the Actual Cost method.

How can you claim phone and data usage expenses for work?

You can claim phone and data usage by keeping a log of work-related calls for four weeks or by using a monthly phone bill. The work-related percentage of your total calls is applied to your total phone bill for the year, which determines the claimable amount.

What is the First Home Saver Super Scheme (FHSS), and how can it help first home buyers?

The FHSS allows first-time home buyers to save for a home deposit through their superannuation. You can make concessional (before-tax) or non-concessional (after-tax) contributions to your super, with tax benefits. You can save up to $15,000 per year, with a $50,000 cap per person. However, only 85% of concessional contributions can be withdrawn due to the 15% super tax.

What is the $300 limit for tax deductions, and which deductions are exempt from this limit?

The $300 limit means that if your total deductions are $300 or less, you don't need receipts. However, some deductions are exempt from this limit, such as work-related car expenses (Cents per Kilometer method), travel expenses, and certain meal allowances. For deductions exceeding $300, receipts or evidence are required.