Alfred J Camilleri & Associates

Checklist For Individual Tax Returns      

MOST INCOME IS ASSESSABLE AND MUST BE DECLARED:
Refer ATO for full list.
REFER TO TAXPACK FOR LIST OF EXEMPT AND ASSESSABLE INCOME.
Typical sources incl:-

Income

• Investment income incl.interest from banks & other sources and Dividends


• Capital Gains on sale of assets(eg shares)Notify purchase & sale details


• Distributions from Managed Trust Funds


• Distributions from Other Trust funds eg family trust


• Foreign source income or pension, WAR reparation pensions are exempt


• Royalties or Commissions received.


• PAYG, Sub-Contracts and self employed income


• Pension Income. (Subject to rebates on certain thresholds)


• Refer to Taxpack for a comprehensive list.


• If unsure of the assessability of income the accountant should be notified

This following list is not an “invitation” for “willy-nilly” claims, even if a taxpayer feels justified, substantiation rules are strict and must be applied, see below. Many “incorrect” rumours persist leading to frequently incorrect or exaggerated claims, be careful, acceptance of a tax return by the ATO does not mean the return was “accepted” as correct. Time delay for audits/investigations can be up to two years. Clients need to demonstrated substantiation at time of interview. The ATO have advised they reserve the right to review tax returns retrospectively up to 6 years, clients are therefore advised and urged to maintain expenditure and substantiation records for at least 6 years. Penalties may apply for supplying incorrect or misleading information on tax returns. Deductible expenses – expenses or outgoings that are related to the production of assessable income. “WORK RELATED”

• Accountant or tax agent’s fees
• Admission fees for law professionals are disallowed as capital expense
• Advertising: if self-employed or running business
• Agents if agency fees: e.g. actors, models, agency nurses, performing artists
• Agency staff: may be able to claim travel from home to work place
• Airline staff: travel bags, suit packs, trolleys, clean uniform, calculators, training, beepers, self-education, cabin shoes, hosiery, moisturisers, hair conditioners, ETC
• Actors: cost of portfolio, photographs, agents fees, commissions, make up, show cast membership, audition costs are not deductible
• Bank charges & credit card fees (work related only, also for interest earned)
• Bar & till shortages: e.g. stewards, airline staff, etc. conditional on reimbursement
• Books. Reference, text and manuals. Dictionary or thesaurus for secretaries, Melways Directory, newspapers: limited deductibility, must be able to demonstrate work use
• Borrowing expenses: spread over 5 years or life of loan. Must be income producing
• Briefcase & luggage replaces, also satchel, artists’ folio, tool box, cash box
• Business trips: other than motor vehicle, out of pocket expenses, diary required, calculators. Electronic organisers, minor office equipment.
• Capital gains implications? Capital gain events e.g. sale of shares, capital losses are deductible only against capital gains, can be carried forward
• City link and road tolls: apportioned if shared use
• Certificates: professional practising certificates, certification, nurse reg
• Coaching classes: acting, singing, dancing for performing artists & work related
• Computers: depreciate 40% reducing balance, 28% PC, software same, needs private
• Consultants, financial advice and other work or investments related use
• Costumes, stage make-up only, stage acting props: for performing artists
• Chefs: meals for research are considered private use by ATO nor deductible
• Chefs: cooking equipment, office equipment, utensils, books & magazines, subscriptions, sharpening service, courses, home office, ingredients, spices, etc.
• Child care fee: can only be claimed directly from Centrelink
• Clinical equipment and tools for medical staff, nurses etc.
• Clothing: restricted claims
  - Protective: e.g. overalls, protective clothing only not conventional clothes used for work, except woollen jumpers for fire protection, jeans, drill shirts & trousers, waiters black/white are considered conventional
  - Occupational specific: e.g. nurses, chefs, butchers, actors’ stage
  - Compulsory uniform: must be unique, some corporate uniforms not deductible
  - Non-compulsory uniforms: must be on register dept. of industry
  - Conventional clothing: NO! but maybe if abnormal circumstances can be demonstrated but ATO usually disallow
  - Laundry and maintenance: on deductible clothing only. Substantiation not required. Up to $150 if justified, ATO formula: $1/wash/separate, $0.50/wash/mixed
• Commission paid to others (in limited circumstances)
• Commission paid to agencies: e.g. temp workers, agency nurses, actors, models
• Computer: if work related. Depreciation. Supplies deductible also if work related
• Conferences; seminars; workshops; conventions: do not claim subsidised amount
• Consumables, supplies, computer supplies, clinical supplies, vaccines
• Courses: e.g. first aid, language, PD, Updates, Acting Classes, WORK RELATED ONLY
• Copyrights; patent applied for – must be work related
• Crowd control licence e.g. security guards
• Drive offs or till shortages: for sales staff, if from own pocket
• Driver’s license: renewal is NOT deductible, exception is endorsed licence
• Dependants: rebate may be available where applicable
• Donations & gift: to approved charities, school building funds, political orgs, purchase of raffle tickets is not donation, fund raising events also are not
• Education Expenses: see self-education courses
• Entrance & admission fees: exhibitions, shows, demonstrations, galleries, lectures
• Entertainment expenses ARE NOT DEDUCTIBLE; exception is in-house dining e.g. Artists opening night drinks & snacks. No deduction for meals even if work related
• Employment agreements: NOT for new employer, but cost of renewing, renegotiating employment with existing employer are deductible
• EQUIPMENT: can be depreciated: private use component MUST be specified e.g. computer, printer, scanner, office equip, TV & video if work related, home office furniture and fittings, mobile phone ONLY if work related, motor vehicle *=(when using full expenses method), Major items of tools of trade i.e. over $300 (for tradesman), self-education equipment, items under $300 not depreciated but refer to new pooling alternatives
• Fees and commissions paid to agencies or agent
• Fitness expenses: where applicable. Limited use e.g. high degree of fitness required
• Firearms: only where necessary. E.g. solicitors, security guards, police
• First stopped full time education i.e. students who have completed full time education. Affects tax free threshold. Migrants’ date of arrival
• Foreign language courses: only if employees exposed to migrants & ethnics
• Foreign exchange costs, incl cash conversion, ATM, withdrawal fees, only for work
• Government fees & regs: e.g. nursing reg, teachers’ reg
• Grooming or make-up not deductible unless client is a performing artist
• HECS debt: watch out for taxable threshold, employers MUST be notified
• HEATH CARE CARD: advise clients below income threshold of entitlement
• Hair: grooming not allowed unless for stage or acting work only
• Hire expenses: e.g. computer, equipment, tools, two way radio (courier), videos, films
• Home office expenses: ATO watches this one carefully! Strict rules apply. Self-employed can claim occupancy & running costs. Employees: statutory formula is 0.45 cents per hour only. If self-employed with daytime premises (e.g. solicitors, health professions) avoid this claim unless clients can and do visit home
• Insurance: health insurance subject to separate ules. But income protection or income continuance where income is assessable is deductible, professional indemnity. Travel insurance = NO. Car insurance goes with car expenses
• Insurances: sundry e.g. insuring work related tools and equipment, loss of license
• Interest paid on loans: e.g. to purchase computers, equipment or MV
• Internet cost: also see phone, must be apportioned private:business and be work related
• Investment allowance: once off deduction of 50% + depreciation
• Investment portfolio: expenses of servicing portfolio, advise, interest, bank fees
• Investment in the film industry: subject to rebates, refer to relevant dates
• Journals, magazines, newspapers; subscriptions to same; reference books
• Legal expenses: see master tax guide. Limited deduction, subject to guidelines
• Licenses & permits: e.g. forklift, crane, endorsed license: renewals only
• Licenses: loss of license renewal (pilots), also salary guarantee insurance
• Laundry protective clothing & uniforms – only if clothing is deductible: mixed wash $0.50/load, separate wash $1.00. claims over $150 need substantiation
• Living away from home allowance: is a complicated issue which must be discussed
• Losses of previous year. If applicable, where taxpayer was in business 7 years to 1989. 7 year restriction removed from 1990. Capital losses deduct from capital gains only
• Luggage and trolleys: $2120 within one financial year will give 20% rebate
• Medical examination for license renewal e.g. pilots, is deductible
• Medicare levy exemption or reduction. NO LEVY if below threshold: especially sole prnts
• Medicare levy surcharge = +1% : single income over $90,000, $180,000 for family N.B. surcharge applies to both partners – even if one is below $90,000
• Meal expenses: restricted. Based on receipt of meal allowance. Overtime meals – yes. Travelling overnight – yes. If taken during day – no
• Membership and professional associations work related only, no claim for clubs
• Motor vehicle: must be work related & supported by log book: refer to travel
  - Required: Reg no; make; model; capacity off engine in cc
  - Methods:
  • 1. Cents per km: limited to first 5000 km only
  • 2. Log book i.e. full expenses x % private use. Fuel can be estimated
• Moving expenses: business: cost of mobbing trading stock only
• Make-up: grooming not deductible except for acting or stage professionals
• Nursing: government reg, professional associations, ANF, medical equipment, etc
• New job: expenses in getting or changing job e.g. travel are not deductible
• Newspapers: where relationship to employment s demonstrated % private use
• Overtime meal allowance: deduction of equal value received under industrial award
• Overseas travel: must meet strict conditions, be work related, diary kept etc
• Overseas taxes: travellers are generally exempt from local GST or VAT (England) and can claim refund for these at point of departure. Check with indirect taxes people in individual countries or retail stores where purchases are made
• Parking fees, road tolls, reasonable est of meter parking if work related, dairy should be maintained
• Permits, endorsed license, govt. fees. Photographs for ID cards
• Performing artists: refer to remainder of list, add glasses or contact lenses for particular roles, particular hairstyles, depreciation of TV & VCR, no to audition expenses & social functions, theatre tickets subject to relevancy test, Fitness expenses in limited cased
• Photographic costs: e.g. ID cards, teachers, artists, photographers, models
• Police check costs and working with children certificate
• Portfolio: e.g. models & artiste: prepare now = no, cost of maintaining = yes
• Printing, postage, stationery, work related requirements e.g. batteries etc
• Professional subscriptions, membership fees, practising certs, incl. overseas payments
• Protective gear: gloves, goggles, helmets, aprons, rubber gloves, ear plugs, breathing masks, boots, sunscreen. Not wet weather gear
• Private equipment used for work related purpose: e.g. video recorder deduct % use
• Publications: trade, technical, professional texts, text books
• QANTAS club membership: considered deductible, allows travellers access to office
• Rebate entitlements: refer to tax pack for full list
  - Low income: automatic calculation in tax return
  - Medical expenses over $1500 provides 20% for excess over $1500 abolished 2015
  - Short term life policies bonuses
  - Nursing home fees, some conditions need to be met, please ask
  - Pension paid arrears
  - Termination payments, income arrears paid in lump sum
  - Zone allowances: taxpayers in remote areas
• Relocation or removal expenses: not deductible, new or existing employment
• Repairs & maintenance of office equipment, trade tools, work related equip etc
• Rent: applicable to home office claim. Strict & limited rules, req. more info
• Salary sacrifice: fees to administrators or providers ARE NOT deductible
• Secretarial fees and assistance, casual bookkeepers, for resumes or CVs no deduction
• Self-education expenses. Only if work relates to study & tax payer employed
  - No claim if austudy. E.g. home office, travel, books, textbooks, fees, tuition fees, professional & trade journals, photocopying, technical instruments, equipment, stationery, field trips, interest on loan e.g. to purchase computer but not to pay HECS
  - Is austudy is sole source of income – travel & study expenses not allowed
  - If on newstart or jobsearch: self-education expenses not allowed
  - Travel allowed: home/college/home or work/college/work YES
  - First leg only: home/college (YES) college/work (NO)
  - Work/college (YES) College/home (NO), work/home (NO) work/college (YES)
• Seniors health care card: must be over 65 years of age, $50,000 single limit $80,000 couples limit
• Sharpening service: chefs, gardeners, hairdresser
• Stationery, postage, printing, computer consumables
• Social functions: no. same as client entertainment & dining – not deductible
  Work lunches are considered entertainment – no deductions
• Solicitors’ supreme court liability fees if paid on annual basis
• Sun glasses, sun hats, sunscreen: required due to conditions e.g. outdoor workers, pilots, parking inspectors, construction workers
• Superannuation: (Concessional Contribution; A notice of Intent to claim required)
  - Interest on loans to pay super premiums not deductible
  - Gov contributions will be calculated by ATOs
• Self-defence classes, fire arms: limited to security guards or employees at risk
• Sun protection & sun glasses: generally no but new rules, need receipts
• Stage costumes, clothes for performance work only, props
• Supervision: esp for psychologists and counsellors, can be classified as self-education also under certain circumstances
• Tax free threshold: restrictions apply for migrants & students leaving school
• Taxi drivers: torches, meals, sunglasses, sunscreens, melways, uniforms, stationery, tools, commission to base, self defence
• Telephone, pagers, mobile, % apportionment important, cost of install & silent NOT
• Teaching aids, equipment, sports equipment but not for PE teachers, children’s gifts, prizes, incentives
• Teacher registration: vic inst of teaching
• Till or bar shortages paid if employee is liable to reimburse employer only
• Tools of trade. Depreciation or replacement where no employer contribution
• Trade union dues, multiple memberships also deductible but must be work related
• Travel: to & from work NO! Unless employee has no usual place of employment e.g. travelling sales person or agency worker, ok for home to alternate place of employment. Allowed for tradesperson carrying bulky equipment or travel between work locations. If on call NO deduction, please ask for more details
• Travel for teachers: subject to restrictions e.g. driving back to school for in-service is not deductible. Ask for more info re teacher travel
• Travel other than motor vehicle e.g. taxi, tram, train, bus, plane, departure tax, some may need apportionment. Subject to substantiation even if under $300 limit
  - Travel form home to alternate work place for work related purposes and return to normal work place or directly home is allowed
• Uniforms: see clothing, uniforms must meet strict deductibility guidelines
• Vaccinations: no, may be deductible for nurses if used for patient protection
• Watches: not deductible, except for nurses FOB: sports teachers stopwatch
• Working with children permit

• Personal superannuation contributions, only
• If self-employed high income earners may be subject to excessive contributions tax.
• Personal services income losses are subject to restrictions
• Tax offsets (Rebates) are now limited. Advice given at interview time.
• Eligible start-up cost-fully deductible eg formation expenses

   Accountant’s disclaimer

This “Checklist” is not intended as a definitive checklist. It’s purpose being as a “prompt” sheet for the accountant at interview time for the preparation of “individual” return only, business clients may have additional needs, It is made available to clients to serve as a guide only in the accumulation and preparation of data/ substantiation for the tax return preparation. This list is NOT intended as advice or interpretation of Taxation laws, which change frequently, for self prepares of taxation returns; no responsibility is accepted for the private use of this accountant’s checklist, or for omissions or mistakes contained herein..