Expenditure incurred by a taxpayer in managing their tax affairs is deductible
The Australian tax year is based on the financial (or income) year, i.e. from 01 July to 30 June of the next year. All Australian tax residents must lodge a tax return each year unless one of the exemptions applies.
Individual taxpayers have from 1 July to 31 October to lodge their tax return for the previous income year. If you use a registered tax agent to prepare and lodge your tax return, you may be able to lodge later than 31 October.
Income tax is paid on money you receive, such as salary and wages, Centrelink payments, investment income from rent, interest and dividends, and profits from selling shares or property.
You can reduce the amount of tax you pay by claiming certain deductions that are directly related to earning your income. Your tax may be further reduced if you are eligible for certain tax offsets or government rebates.
When preparing your tax return, you’re entitled to claim deductions for some expenses, most of which are directly related to earning your income. Also you can claim a deduction for expenses you incur in managing your tax affairs, including the cost of travelling to have a tax return prepared by a “recognised tax adviser”. However, to the extent that the travel relates to another non-incidental purpose the expenditure must be apportioned.
Example 1 – full travel expenses deductible
Maisie and John are partners who carry on a business of sheep farming on a station near Broken Hill. Every year they travel to Adelaide for the sole purpose of meeting with their tax agent to finalise preparation of their partnership return. They stay overnight at a hotel, meet with their tax agent the next day and fly back to Broken Hill that night. The full cost of their trip, including taxi fares, meals, accommodation and travel insurance, is deductible.
Example 2 – apportionment required
Julian is a sole trader who carries on an art gallery business in Oatlands. He travels to Hobart for two days to attend a friend’s birthday party and to meet his tax agent to prepare his tax return. He stays one night at a hotel.
Because the travel was undertaken equally for the preparation of his tax return and a private purpose, Julian must reasonably apportion these costs. In the circumstances, it is reasonable that half of the total costs of travelling to Hobart, accommodation, meals, and any other incidental costs are deductible.
To help make tax time as easy as possible, The Quinn Group has put together their 2016/2017 Tax Record Kit. Our kit is split into 3 sections – income streams, expenses and other items which will help you organise your tax documents for this financial year.
We can help you legally minimise the amount of tax you are required to pay. If you would like to request your copy of our 2017 Tax Record Kit or need help lodging your tax return, contact us on 02 9223 9166 or submit an online enquiry form today.