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SALES REPRESENTATIVES
TAX DEDUCTIONS
30 June 2023
Travel to and from work is usually not a tax deduction.
Some exceptions are:
1. Carrying bulky equipment with no secure lockup at work.
(Bulkiness of equipment is determined by size & weight. For tradesmen it could mean a minimum of a 35 kg tool box plus other items e.g. nail guns, drills, drop saws, materials, etc. Bulkiness is also determined by size e.g. Ladders, bench horses, large oil drums, spare tyres, etc.) If in doubt ask for a private ruling.
2. Travel between two places of work.
3. Travel to attend meetings and then to home or work.
4. Travel from home or work to see clients and then back to home or
work.
5. Some travel to a place of education.
6. When you travel overnight for
work.
This only applies to motor vehicles whose carrying capacities are
1 ton or less or fewer than 9 passengers.
Most of my clients use the ‘log book
method’ or the ‘set rate per kilometre method’.
Method 1
LOG BOOK METHOD
You must keep a log book for 12 weeks for each car once very 5 years.
You must start a new log book when you change cars or the business % changes by more than 10%.
You must have written evidence for registration, insurance, services, repairs, depreciation, interest, lease payments, RACQ, car washes etc.
PLEASE SUMMARIZE THE FOLLOWING:
Motor vehicle - 30 June 2021 and 30 June 2022 odometer readings
Motor vehicle - Log book % and business kilometres travelled
Motor vehicle - Fuel
Motor vehicle - Registration
Motor vehicle - Insurance
Motor vehicle - Interest or leasing expenses (Please provide hire purchase or loan agreement)
Motor vehicle - Repairs
Motor vehicle - Depreciation (Please provide date of purchase) 25% diminishing value method
If purchased after 30 June 2022 $60,733 then depreciation is 100%.
Motor vehicle - Breakdown service e.g. RACQ
Motor vehicle - Car washes
Motor vehicle - An extended warranty is deductible spread over the period that the warranty applies. e.g. If you
have a factory warranty for 3 years then you buy an extended warranty for 3 years. You may claim an apportioned
tax deduction over years 4, 5 and 6.
You may claim $200 worth of items costing < $10 without receipts.
You do not need receipts for fuel based on a reasonable estimate of the cost per business kilometres travelled.
e.g. 500 kms per tank with an average fill up of 50 litres = 10 kms per litre.
Therefore 15,000 kms / 10 kms = 1,500 litres x $1.95 (average petrol cost per litre in QLD) = $2,925
Method 2
SET RATE PER KILOMETRE METHOD
Motor vehicle tax receipt exception: ‘set rate per kilometre method’ 72c per kilometre x up to 5,000 kms.
You must be able to work out your estimate by using a diary or regular pattern of travel.
This means that the maximum claim using this method will be 78c x 5,000 kms = $3,900.
Example:
Charlie is a sales representative who visits clients at various locations and cities. Charlie has kept a log book for 12 weeks which shows his work travel is 95%. Charlie purchased a Toyota Hilux which has a 2 litre engine on 01/07/2014 for $25,000 which he financed through a hire purchase chattel mortgage at an interest rate of 6%. His odometer reading on 30 June 2022 was 25,000 kms and his car does 500 kms on a 55 litre tank of petrol. The average cost for petrol in QLD was $1.95 per litre.
Method 1 - Log Book
Fuel 25,000 kms/(500kms/50 litre tank) x $1.95 per litre = $4,875
Registration $680
Insurance $650
Interest on loan $25,000 x 6% = $1,500
Repairs, services & tyres $900
Depreciation $25,000 x 100% = $25,000
Breakdown service RACQ $96
Car washes $120
Total $33,821 x 95% Log book = $32,129.95
E.g. Tax refund x 34.5c (tax rate $45,000 to $120,000) = $11,084.83
Method 2 - Set rate per kilometer
Business kms 25,000 kms x 95% = 23,750 kms
Limited to 5,000 kms x 78c = $3,900
E.g. Tax refund x 34.5c (tax rate $45,000 to $120,000) = $1,242.00
Charlie chooses Method 1 because he will receive the largest tax refund.
HOME OFFICE
Method 1
You may claim home office electricity based on floor area e.g. 5%. x $400 (electricity bill per quarter) x 4 = $80. This area must be for the sole purpose of home office. It cannot be for multi-use e.g. dining room table.
Furniture, desks, fax machines, filing cabinets, book shelves, pictures, carpets, blinds, etc may be depreciated at usually 20%.
Depreciable Items < $300 may be 100% depreciated.
E.g. desk $250 x 100%, chair $120 x 100%, carpet $1,000 x 20%, blinds $600 x 20% = $690
Method 2
You may use the ATO 67c per hour rate to claim electricity, gas and depreciation of furniture. You must keep a 4 week diary.
E.g. 67c x 20 hours per week x 52 weeks = $696.80
WORK EXPENSES
iPhone, mobiles & home phone
Computers - iPad, Macs, laptops & desktops
Computer supplies
Stationery - Cartridges, diaries, pens & office sundry
Internet
Self education, conferences and courses.
PRIVATE USE APPORTIONMENT
If there is private use (other than incidental use) a 28 day diary is required each financial year.
A diary can be a simple A4 pad with a line in the middle with work & private on opposite sides.
RECORDS
You may claim $200 worth of items costing < $10 without receipts.
PLACE OF BUSINESS AT HOME
You may claim a percentage of rent, interest, home depreciation, rates, water, insurance, repairs, cleaning, pest control, gardening, etc. based on floor area.
This would apply to the following:
A small business operator whose main office is in their home.
A trades person who has their workshop at home.
A doctor or dentist who has their surgery or consulting room at home.
CAPITAL GAINS TAX IMPLICATIONS
You will lose a proportion (based on floor area and time operating at home) of your capital gains tax main residence exemption due to your income producing activity.
SUN PROTECTION AND SUNGLASSES
Includes sunglasses, sun screens and hats.
You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return. Reduce by costs of prescription lens.
TOLLS & PARKING
You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return.
LICENSES
The license or renewal expenses must relate to your current income producing activity not income that will be made in the future.
The initial cost of some licenses may not be a tax deduction. e.g. the initial cost of obtaining a truck, earth moving or heavy machinery license as the expense has occurred at a point too soon.
COURSES
Courses include fees (but not HECS), books, laptops, internet, stationery, home office expenses, some travel to a place of education.
You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return.
The course must relate to your current income producing activity, not income that will be made in the future. e.g. Medical School expenses are not a tax deduction for a doctors income in the future.
If your course is run by a university, TAFE or college you must reduce your expenses by the first $250.
SECURITY/CRIMINAL CHECKS ATO TR 98/6 PARA 177
Security checks are usually not deductible as the expense happens at a point too soon before the income is earned.
Renewal of criminal checks may be deductible as you are currently earning income e. g school teacher's blue cards.
The ATO allows the preparation of resumes and travel to attend an interview as a tax deduction against Centrelink income.
TR 2021/1
OVERNIGHT TRAVEL & OVERTIME MEAL EXPENSES
REASONABLE OVERNIGHT TRAVEL ALLOWANCE
ATO reasonable overnight travel allowances for meals & incidentals
REASONABLE OVERTIME MEAL ALLOWANCE
You must be able to prove to the ATO a reasonable pattern of expenditure using actually receipts and bank statements.
Google ATO reasonable travel & overtime meal allowance
TR 2021/1
OVERNIGHT TRAVEL EXPENSES WITH NO TRAVEL ALLOWANCE PAID
You must keep receipts and bank statements.
PLEASE SUMMARIZE THE FOLLOWING:
Air fares
Taxis or car hire
Accommodation
Meals
Water
Alcohol - e.g. wine & beer
Snacks
Toiletries
Reading materials - e.g. newspapers, magazines, books, etc.
Movies - e.g. DVDs, in-house, cinema, etc.
We have clients from the following locations:
Brisbane, Gold Coast, Sydney, Newcastle, Cairns, Canberra,
Melbourne, Adelaide, Perth, Darwin.
Other:
Brisbane, Albion, New Farm, Teneriffe, Newstead, Windsor,
Wilston, Bowen Hills, Wooloowin, Herston, Lutwyche, Hamilton, Eagle
Farm, Gordon Park, Fortitude Valley, Clayfield, Ascot, Hendra,
Nundah.
Morayfield, Burpengary, Caboolture, Bellmere, Wamuran, Narangba,
North Lakes, Mango Hill, Kallangur, Dakabin, Deception Bay, Bribie
Island, Elimbah, Kippa-Ring.
DISCLAIMER
The information provided in the above documents is not intended to
be, nor should it be construed as tax advice. Any specific
recommendation for a client can only be done after their individual
circumstances have been determined by David Douglas Accountants.
We do tax returns for individuals, trusts, companies, partnerships, contractors, ABNs and sole traders.
Liability limited by a scheme approved under Professional Standards legislation