While you don’t have to complete your tax return until 31 October, if you want to be on top of your paperwork, tax return planning is a year-long activity. As an independent support worker offering your services directly to clients, paying tax for the earnings from your business is your responsibility. However, it also means there could be certain business operating expenses you are eligible to claim.
Last month, we posted an article on six online resources that will help you when it comes to doing your taxes. Whether you’re engaging an accountant to take care of business, or trying your hand at doing your own taxes, you’ll still need to keep track of your business expenses to include as possible tax deductions. So, as an independent support worker, what exactly can you claim for?
Firstly, back to basics on tax deductions
Tax deductions are certain expenses you have incurred in order to earn your income. Deductions will reduce your taxable income before your tax is calculated and would generally include:
– Work related expenses
– Self education expenses
– Charitable donations
– The cost of managing your tax affairs (e.g. paying your accountant)
It’s important to keep records and receipts of your business expenses throughout the year.
How to know when you can claim an expense
This article on Aged Care Insite is a guest post from the ATO Assistant Commissioner. In it, he mentions the ATO’s Three Golden Rules when deciding whether something can be claimed as an expense:
1. You must have spent the money yourself and can’t have been reimbursed
2. The expense must be related to your work
3. You must have a record of the purchase to prove it.
If you aren’t sure whether something is a valid expense, call the ATO (or check our their deductions page) or ask your accountant.
What you might be able to claim
We’ve outlined some examples of what self-employed support workers may be able to claim for below. It’s important to note that this should not be interpreted as tax advice, and you should seek advice from an accountant or the ATO for your specific situation.
Work-related supplies or equipment
These expenses might include any equipment or supplies that you require for your job that’s not supplied or paid for by your client.
Self-education expenses could be claimed for courses that directly relate to your current job, like improving your skills or qualifications. You cannot generally claim for study that you’re undertaking that’s not related to your profession.
As an independent worker, you’re not required to wear a uniform, so you cannot typically claim for clothing or laundry for your client work. The only exception that may apply would be any protective clothing that you would be required to wear (such as medical gloves) and that would only be worn while you are working.
Home office and mobile phone expenses
We recommend checking the ATO’s website for the best advice on claiming mobile phone, internet and other home office expenses. You can also refer here for a complete list of other work-related expenses that you may be able to claim.
Don’t forget about superannuation!
As you are a self-employed support worker, you will need to think about your superannuation. If you don’t put money towards your superannuation, you could risk not having enough money when you retire.
For eligible employees, the minimum superannuation payable by employers is 10% of an employee’s ordinary time earnings.
When you work for yourself, it’s up to you to ensure you are provisioning for your retirement. You might like to periodically transfer a lump sum to your superannuation fund.
Track your expenses easily online
To simplify the claiming process, the ATO has developed a tool within its ATO App called myDeductions, which lets you track your expenses on the go throughout the year and upload them all and prefill your return when it comes time to do your taxes.
Interested in becoming an independent support worker supporting clients in your area? Find out more here.
Note: The information contained in this article should not be considered legal, accounting or tax advice. We recommend you speak with an accountant, tax advisor or your financial advisor. Mable and other parties disclaim all responsibility, representations and warranties, including, but not limited to, warranties as to the quality, accuracy and completeness of the information of whatsoever nature and warranties of fitness for a particular purpose, or any action taken or not taken based on this information.