What are some common mistakes that nurses and midwives make when completing their annual tax return? Mark Chapman, H&R Block Director of Tax Communication, shares his tips.
Don’t embellish deductions….
Tax time is here and whether you plan to use a professional to complete your return or do it yourself, it’s vital that you claim deductions for everything that you’re entitled to. Here’s a list provided by H&R Block Director of Tax Communications, Mark Chapman.
You can only claim what you’ve spent. So, don’t inflate deductions in order to get a bigger refund and only claim for costs you can prove you spent, by producing an invoice, receipt or bank statement for instance.
If your deduction claims are found to be incorrect, you will be required to repay the tax avoided, plus pay interest. If the ATO believes that you have acted carelessly, a penalty between 25% and 95% of the tax avoided may also be charged.
Don’t rely on pre-filled data from the ATO
These days, with the push of a button, you can pre-fill lots of your income information straight from the ATO’s systems. Take care though and don’t assume that income data is correct or complete. Particularly if you are lodging early, always use your own information as the key source data.
Some people assume that because the data comes from the ATO, it must be right. That’s a dangerous assumption, especially in July and early August.
If you omit income and get questioned by the ATO, the legal burden will be on you, even though you’ve taken the information straight from the ATO’s pre-filled data.
What areas can nurses and midwives focus on to help reduce the stress of completing a tax return?
You’re entitled to claim a deduction for any expense which you incurred in earning your income. So, if you have incurred a work-related expense, and you have the paperwork to prove it, don’t hesitate to claim it.
A good tax accountant will be able to tell you exactly what you can and can’t claim, minimising the chances of an audit at a later date.
Amongst the common deductions that are available to nurses and midwives are the following:
Work-related clothing
If you’re required to wear a uniform as part of your role, the cost is deductible. If your uniform is compulsory, you may be able to claim for non-slip shoes, socks, stockings or a single item like a tie if they’re an essential part of your work gear. Then there’s occupation-specific clothing; garments that aren’t every day in nature but would allow the public to easily recognise you as a nurse – these are all deductible.
You can also claim a deduction for the cost of clothing that you use at work to protect your ordinary clothes from soiling or damage, for example, laboratory coats and aprons.
Claim for the cost of laundering and dry-cleaning your eligible work clothes such as your required uniform.
Self-education
Claim for conference and other training expenses. As well as the cost of the conference or course itself, that can also include travel, meals and accommodation costs – even where the conference or course is overseas, though you might need to apportion the costs (and disallow the private bit) if you spent some downtime on the beach afterwards!
Professional subscriptions
Claim for professional subscriptions, whether to a professional body like the AMA or to a trade union. The costs of renewing your annual practising certificate are deductible as are the costs of journals, periodicals and magazines that have a content considered to be aligned with nursing and healthcare.
Travel and meals
You can’t usually claim the cost of the daily commute to and from work. The only exception to that rule is if you have to carry bulky equipment to and from work because there is no secure place of storage for them at your workplace.
You can claim the cost of travelling between two workplaces, such as between two hospitals or medical centres. In addition, the cost of transporting patients and travelling between patient’s homes is deductible. This includes public transport and taxi costs.
If you plan to use your own car for work purposes, you can either claim a set rate of 88 cents per kilometre for all work journeys, or you can claim the actual expenses incurred. If you choose the latter, you’ll need to keep receipts for all costs (including road tolls and parking fees) and also keep a logbook of all your journeys for a 12-week period.
If you’re required to work overtime, you can claim for the cost of buying meals provided you have been paid an allowance by your employer.
Working from home
If you spend time working from home – for instance preparing staff rosters at the weekend for the week ahead – you can claim a proportion of home running costs, either based on actual costs (in which case you’ll need receipts), or the ATO’s fixed rate of 67 cents per hour. Be warned, if you are using the 67 cents rate, this includes all your mobile phone usage (therefore, you can’t claim for mobile phones separately) and you need to have a record of all your working from home hours for the entire year (1 July 2024 to 30 June 2025) – copies of timesheets, a dairy or work rosters will do.
Tools and equipment
You can claim a deduction for items including stethoscopes and other medical equipment, reference books and nursing fobs. If the cost is less than $300, a deduction is claimable immediately, otherwise a deduction can be claimed over the “effective life” of the assets.
Other deductions
- Agency costs: if you get your work through an agency, the cost is claimable.
- Mobiles or pagers if you’re on call can be claimed
What sort of details should you be looking to consolidate ahead of the end of financial year?
Now is a good time to gather together all the evidence you’ll need to complete your tax return; you’ll need all the evidence of your income (payslips, dividend statements, etc) and – crucially, you’ll need all the evidence of what you’ve spent and intend to claim.
The golden rule is that you can’t make a claim unless you can prove you spent the money (and also that you weren’t reimbursed by your employer). So, make sure you keep all relevant receipts, invoices, bank statements and credit card statements. If you’re not sure if you can make a claim, keep the receipt anyway and discuss it with your tax agent.
Don’t forget – preparing a tax return can be daunting and stressful….therefore it is worthwhile getting help!
There’s a reason 70% of Australians use a tax agent to prepare their tax return; tax is complicated! Get your tax return wrong and the comeback is on you, either with a lower refund or ATO penalties.
Most people find it far less stressful to simply pass on all their information to a tax agent and leave it to the agent to complete their return, safe in the knowledge that the return will be accurate and complete. An experienced agent will usually be good at sniffing out those obscure tax deductions you didn’t know you could claim so they can often pay for themselves several times over. Best of all, the tax agent’s fee is also tax deductible!
