With tax time upon us, now is the time to think about preparing your annual tax return.

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From 1 July, 13 million Australians will lodge a return and with 84% of them expecting a refund, and the average size of refunds reaching over $3,000, it pays to spend a little time and effort ensuring you’ve got every detail of your return right and that you’ve avoided some of the more common traps that people tend to fall into.

The ANMJ asked Mark Chapman, Director of Tax Communications at H&R Block, to share his top tips for getting your return right this year.

1. Claim what you’re entitled to…

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, says Mr Chapman.

“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 but consider claiming these:”

• 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.

• Personal protective equipment (PPE)

You can claim a deduction for protective items such as gloves, face masks, sanitiser and antibacterial spray.

In relation to COVID-19 tests, these will be deductible where they are taken for work-related purposes, eg where there is a mandatory requirement under your employer’s COVID-19 policy.

COVID tests taken for private purposes (eg personal travel, convenience) are not tax deductible.

• Self-education

Claim for conference and other training expenses. As well as the cost of the conference or course itself, this 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 ANMF. 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.

• 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 patients’ 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 85 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 a standard rate of 67 cents per hour. The 67 cents rate covers:

• home and mobile internet or data expenses
• mobile and home phone usage expenses
• electricity and gas (energy expenses) for heating, cooling and lighting
• stationery and computer consumables, such as printer ink and paper

“Therefore, be careful not to “double dip” and claim separately for mobile phone costs (even if you are using your mobile phone outside the home, for instance while you are on the road),” says Mr Chapman.  

Equally, the 67 cents rate doesn’t include:

• depreciation of technology and office furniture such as chairs, desks, computers, bookshelves.
• repairs and maintenance of these items.
• Office cleaning costs

So be sure to include separate claims for these items!

• 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.

• Agency costs

If you get your work through an agency, the cost is claimable.

2. But don’t embellish deductions…

“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,” Mr Chapman warns.

Self-lodgers using the ATO’s myTax program are monitored as they prepare their return by the ATO’s computer systems to ensure they’re not over-claiming. The ATO’s computer systems compare your claims to those of others like you and if your claim rings alarm bells, myTax will give you a stern warning inviting you to rethink that deduction.  Ignore that message, and you could be headed for an audit.

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.

3. 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,” Mr Chapman advises.

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.

4. Don’t forget the basics!

Lots of tax returns get held up by the ATO because taxpayers have made basic mistakes like these:

• Name or address changed? Tell the ATO before you lodge your return. If you lodge under different details, the ATO won’t be able to match it with your Tax File Number. Delays will ensue.
• Not included your bank account details? The ATO doesn’t send out refund cheques these days, so you need to include your bank details on your return. No bank details, no refund!
• Spelling mistake? If you’ve added an extra letter to a key field such as your name, that slip of the keyboard could consign your return to a black hole whilst the ATO tries to manually match your details.

For more information, visit the ATO’s income and work-related deductions guide for nurse and midwives here