Tax Deductions

From: Dale Gatherum-Goss


There has been quite a few posts lately about whether or not you can claim a tax deduction for this, that or the other. So, I thought it might be helpful to explain the tax law so that you always KNOW what is and is not allowed rather than asking your accountant (who may or may not know anyway).

The law says (and I quote):

"You can deduct from your assessable income any loss or outgoing to the extent that:
(a) it is incurred in gaining or producing your taxable income."

Please note, the law does not say that you can only claim one of each kind of expense.

Therefore, any costs that you have relating to your income are tax deductible unless they fail one of 2 more legal tests built into the law, which are:

"the loss or outgoing must not be private or personal in nature, or
the loss must not be a capital item or capital in nature."

What does this mean?

It means that you can claim any expense that you outlay in earning your income unless you spend money on something private (such as most clothing, meals, holidays and the like) or unless the cost is to buy something new.

The most important thing that you can have is an open mind and the ability to ask "how can I claim a tax deduction for this?", rather than asking: "can I claim a tax deduction for this?"

The first assumes the answer is yes, and looks for a way to explain the expense. The second assumes defeat and awaits confirmation that the answer is no.

Therefore, most things are tax deductible if you keep the receipt and find a way to explain how it is tax deductible.

I hope that this helps. have fun!

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