Closely-Held Entities & Available Cash
Closely-held entities are businesses that only pay salaries to associates of the business. Examples of associates include the directors and shareholders (of a company) and their relatives. If your business is a closely-held entity, your reporting requirements for STP and PAYG is slightly different to businesses with arms-length employees (or “external employees”).
Reporting Requirements
Firstly, you are not required to report to ATO using STP until 1st July 2020.
You also do not have to submit PAYG Payment Summaries or PAYG Payment Summary Annual statements to ATO by the regular due dates. They can be submitted up until the due date of your business tax return.
You also have flexibility with regard to salaries and income distribution. It is important to plan ahead with your accountant to make sure you are distributing business profit in the most tax effective way, whether that is by way of wages, dividends or trust distributions.
Available Funds
A lot of our clients who run their own business through a company want to know what they can do with the money in the bank.
The answer will largely depend on 2 things:
Does the company owe you any money?
Was there any profit reported in the company, and did the company pay tax?
If the company owes the associates money, then they can withdraw this money at any time without any tax consequences. Examples of how a company may come to owe the associate director money, is when the director pays for business expenses out of their personal funds (e.g. from a personal credit card), or where a personal asset has been transferred to the company, but the company did not transfer cash to the associate director in exchange for the asset (e.g. when a car is transferred into the company name).
Transfer of this kind are treated as loan repayments (from the company to the director). You can also think of them as reimbursements.
If financial statements have already been prepared, have a look at the Notes to the Financial Statements, under Liabilities, and look for “Loans - Unsecured”. Assuming there have not been any withdrawals from the company account since the last reporting date, you can assume that this figure is accurate, and you can withdraw this amount from the bank if the funds are available.
It is important to note that any withdrawals made from the company must be made with the company’s solvency position in mind. Directors should not clear out the bank balance if the company has outstanding current debts, e.g. to ATO or Superannuation.
If profit was reported and tax was paid, then there are franked dividends available to distribute from the company to shareholders. These dividends can be paid at any time, but a resolution must be passed during a directors’ meeting and this must be recorded in writing. Click here for a sample document you can use to pass a resolution to pay Franked dividends.
Before making a decision to pay dividends, please send me an email to discuss this strategy so we can determine whether this is the most tax effective way of accessing your company funds.
If neither of the above applies to your business, then you can take money out as wages (please note, superannuation obligations and workers’ compensation will apply). You will need to withhold the correct amount of tax before paying yourself a wage. To work out the tax, you can use ATO’s online calculator or you can use payroll software to help you produce payslips with the correct amount of withholding tax and superannuation obligation.
If none of the above options meet your requirements (for example, you need to withdraw a large amount of cash), you can borrow funds from the company. Please note, special rules will apply to this arrangement under Division 7A of the ITAA 1936. Please contact us for more information to make sure you are meeting your obligations.
Single Touch Payroll
Single Touch Payroll (STP) will be mandatory for all employers from 1st July 2019 (previously it was only applicable to businesses with 20 or more employees). If your business is a closely-held entity, then you do not need to start using STP until 1st July 2020.
If your business is not a closely-held entity, you need to be ready (more info about Closely-held entities here). It is a good idea to get it set up now so that you are compliant by 1st July. However, ATO has confirmed that they will be lenient toward small businesses during the initial transition to STP.
This extension of the legislation to include small businesses could be very daunting for employers who are not already using an online payroll solution. Our clients can be assured that we will help them through the set up process if they require guidance.
What is Single Touch Payroll?
When you use a payroll management software (either online or using an installed program that can send data to ATO electronically), you are able to communicate data to ATO every time you process a payslip for an employee. This eliminates the need to report wages on a Quarterly basis in the BAS or to send ATO payment summaries and annual PAYG statements. While the set up and transition can cause smaller employers some confusion and anxiety, using this system on a regular basis is incredibly simple and efficient.
Does your business need to use it?
From what we have read on ATO’s guidelines and press releases, ALL (non-exempt) employers will need to use STP from 1st July 2019, even if they are considered “micro employers” with 4 or less employees.
If you are a micro-employer, you can report to ATO quarterly (same as BAS cycle). You would therefore be submitting quarterly payslips through STP software instead of a more regular cycle such as weekly or fortnightly. However, Micro-employers can still choose to report on a more frequent pay cycle if they wish.
How to get set up:
The first step is to have a cloud-based payroll management system.
Some software providers have developed a low cost cloud based software for micro-employers who only need to be STP compliant but do not want any other cloud-based software for their business. Our recommended provider is Xero ($10 per month), which we can assist our clients to set up. If you want to shop around, the ATO has listed these providers as well.
Once you have set up your account online, you will need to register an Auskey for your business. This is a relatively simple process. If your business is a company, you will need one of the directors to register (have your TFN at hand).
After you have registered your Auskey, you can go to ATO’s Access Manager and log in using your Auskey.
Click on the link from the left-hand menu titled “My Hosted SBR Software Services”.
Find your software provider from the list (or search by name or ABN) and select
Add your software ID# (this can be found when you are logged in to your payroll software during the STP set up).
You will need to confirm and save.
Go to your software provider website, log in and go to STP set up
Make a declaration that you have “advised ATO” about your SBR Service Provider and follow the steps to complete the set up (the steps will be different for each software provider, but it should all be fairly straight forward).
Now you are ready to report your wages and super to ATO using STP.
To view ATO’s step by step guide for adding Software Services on access manager, please click here.
Can B&A (Bentley & Associates) set this all up for your business?
Yes, we can certainly help you. We can also set up the software package for you, using your banking details for the subscription. If you opt to use Xero and are switching from MYOB or Reckon and want to get your whole business set up on this platform, there are financial rebates you can receive as a client of B&A. Please contact us for more information about this and to discuss our set up fees.
If you need help with STP set up, please get in touch with us ASAP, as we will not be able to provide this service between 1st July and 31st December 2019 (due to “Tax Time”).
Free Apps that Save you Time & Money
Before I go into the how and the what of saving lots of $$$ from free apps, let’s talk about deductions.
For anyone who has lodged a tax return before, whether DIY or through an agent, you know that the best way to maximise your tax refund is to claim as many deductions as possible. And in order to claim a deduction, you need 2 things - Substantiation and Nexus to the income earning activity (unless there is an exemption under a tax ruling, for example, donations or tax return fees).
Nexus - a fancy way of saying “related to” - involves proving that the expense was incurred in order to produce the income. For example, you might earn $500 interest in a savings account which had bank fees of $60. The bank fees are directly related to the interest income.
Sometimes nexus is obvious or implied, such as a trade person’s tools or laundry of work-provided uniform. Other times it needs to be proven, such as using your car or mobile phone for work-related purposes. In cases where you need to prove the nexus, the ATO accepts an employment contract or letter from your employer, outlining how the use of your car, mobile phone, home office, computer etc, is required in order for you to perform your work duties.
Once you can establish the nexus, then you need to get substantiation.
Substantiation - “evidence” that you incurred the expense - can be tricky because people generally don’t keep receipts in boxes, and most individuals do not have bookkeeping skills (and let’s face it, unless you ARE a bookkeeper, who has time to learn?), so keeping track of your receipts can be a difficult undertaking. But it really doesn’t have to be.
There are some really great apps available online, for free, which can help you to keep track of your expenses, store your receipts, and log your kms on your car. Here is a brief summary of the best free ones I have come across.
DRIVERS NOTE
This ATO-compliant app records the work-related (and personal) trips you make with your car. The app is as easy as tapping your screen when you get into your car, and tapping out once the trip is complete. Details recorded by the app include the date and time of the trip, start and end addresses, kms travelled and the cost you can claim using the Cents Per Km method. You can add notes about the trip, view a map of your journey and export reports of your car usage. Basically, this app does a bunch of amazing stuff that people used to have to do manually - such as enter data from the car’s odometer into little logbooks and use calculators to add up every little trip.
Now, technically, the app is free (if you subscribe to the Lite version). But the functionality is limited. You can record unlimited trips but can only view 20 per month. The mileage should still show up in your reports. One way around this is to take screen shots of your trips and store them on your phone, if you need them. Most employees will not be making more than 20 trips a month, but for those who do, it might be worth upgrading to a paid subscription (which by the way, is tax deductible).
So how does this app save you money?
For every dollar you claim for your work-related car use, you will reduce your tax (and most likely get a refund) by an amount equal to your marginal tax rate. So if you log 5000km on your car during the year (1250km in a 13 week period - the minimum period required to keep mileage records), the deduction you can claim is $3300 (66c per km). That’s a tax saving of $1287 if your income is over $90,000, or $1138 if your income is between $37,001 and $90,000). Please note, for the Cents Per Km method, you do not actually need to keep a log book. However, as a tax agent, I am involved in numerous tax audits throughout the year, and ATO will ask you to substantiate your km claim. These sort of records would be accepted by ATO, and you do not need to keep receipts.
If you have more than 5000km in the year, then you should use the logbook method to claim work-related car expenses. The logbook method requires (1) a logbook - obviously - and (2) receipts, including purchase invoice and current ownership records of your car. Which brings me to the next awesome app..
This is a companion app that syncs with an online Wave account. The account is 100% free - and is similar to cloud accounting software such as Xero and Quickbooks, but it literally costs nothing. As an aside: I registered an account to see how the main component of Wave Accounting works, and its very easy to use. Not anywhere near as good as Xero but if you are using it for a small sole trader business, or even just to keep track of your personal expenditure, it’s really great (and free, did I mention that?).
The first step is to register an account with Wave Receipts. From there, record keeping becomes a breeze. You take a photo of your receipt with the app, the image is scanned and the data is digitised, categorised and stored online. You then throw away your original receipt and never think about it again (until Tax time that is). If you want to go that extra step and keep track of your income and expenses on Wave, then you can use the software’s report function to send a summary of your expenses to your tax agent.
So how does this app save you money?
As I stated before, if you want to get a good refund, you need to claim as much as possible. I hate the idea of spending money in order to get a refund, but so many people spend money and don’t claim, because they didn’t keep track of their expenses.
Once you have the records, a good tax agent should be able to work out what you can and cannot claim. So get scanning! Because you will need as much information as you can when tax time comes around.
Watch this space..
I will continue to add more information about useful free apps that I come across, so come back to see what other interesting cool stuff is out there.
Digital signature
Are you still printing and scanning documents?
Did you know that in many circumstances, a digital signature is just as valid as a hard copy? In my daily work life, I frequently have to send documents to clients to sign, and this can be a daunting and inconvenient process for individuals who don’t have a printer, scanner or fax machine. Going to the post office is time consuming and costly. The fastest and easiest way to get your document signed (and your returns lodged and processed as soon as possible) is to use a digital signature.
Digital signatures are free and easy. There are endless ways to do it. You can use an online (web browser) signature tool, free downloadable software (such as Adobe acrobat reader) or download apps directly onto your phone.
This article lists the top 10 signature apps available in 2018, and also explains what a digital signature is. https://blog.hubspot.com/sales/electronic-signature
My favourite way of signing is by using PDF Xchange Viewer or Adobe Acrobat Reader DC - both of these programs are 100% free to use on your PC or laptop and have signature and document fill features. For phone apps, try Adobe Fill&Sign.
It’s so easy to use - I even made a little video! Enjoy :)
Where does your Tax Dollar go?
(C) dorinbentley.com
If you're familiar with the tale of Robin Hood, who stole from the Rich and gave to the Poor, then you are no stranger to the concept of redistribution of income. This is essentially what government's do with tax (not 'stealing' exactly - although it depends on who you speak to).
Societies in general rely on their Governments to provide services which won't or can't be paid for by the private sector (business and consumers), such as Defence and Infrastructure, and to make sure that those in society who are most needy (often the low income earners, sick and elderly) are provided for.
It's hard to argue against the logic of this redistribution, so why are people so opposed to paying tax? Two possible theories are that (1) people don't generally understand how tax works and (2) people don't agree with how tax revenue is spent.
How does tax work?
Australia has an income tax system that is progressive. This means that Individuals pay tax at marginal rates (as opposed to an average rate or a flat tax). If you earned $18,200 in 2017, you wouldn't have paid any tax. But if your income was $37,000 you would have paid 21% (including 2% Medicare levy) on the income you earned between $37,000 and $18,200. The rates are progressively higher as you earn more income.
Similarly, when you claim a deduction in your tax return, you save tax at your marginal tax rate. So if you are in the $87,000-$180,000 bracket, paying tax at 39% (including 2% Medicare levy) and you want to claim $1000 of deductions, you will get a refund of tax, equal to 39% of $1000 (ie $390). The same $1000 claimed by someone in the $18,201-$37,000 bracket would only get a tax refund of 21% (ie $210).
Why does the Government let taxpayers claim deductions? Think of how a business is taxed. The business doesn't pay tax on the income they earn; they pay tax on their profit after accounting for all their business expenses. The same logic applies to an individual's income. The expenses you incur in order to derive your income reduce your overall "profit". You therefore are taxed on the assessable income (e.g. salary, interest, dividends etc) minus deductions (car expenses, mobile phone, travel etc), which is your taxable income.
How is tax revenue spent?
According to the 2017-18 Federal Budget papers, more than 35% of budgeted government spending will be allocated to social security and welfare. There is a common misconception that a large portion of people's tax dollars are being given to fund people's unemployment. This isn't actually true. The majority of spending on social security and welfare is going to the elderly, followed by people with disabilities and then families with children. About 6% of social security spending goes toward unemployment benefits. That is about 2.16% of total non-capital expenditure.
The second largest expense in the budget is healthcare. Pretty much everyone in Australia uses some form of health service each year. In Australia we have a system that is close to "universal" healthcare. In other words, almost free health care for everyone that needs it. It ensures that even people who don't earn enough to pay tax can still have access to free or affordable health care.
Education makes up 7.28% of Government spending, and some might argue that it's not enough. It's important to note that in addition to the federal expenditure, Schools and Tertiary institutions (TAFE and universities) receive funding from State Governments which is approximately equal to 13% of total Government spending (this funding falls under the Revenue to States category, but the tax doesn't come from your earnings, it is funded by the GST - which you pay as a consumer - so technically it is still your tax dollar).
Tax Receipts from ATO
Since 2015-16 financial year, the ATO has been issuing Tax Receipts that accompany an individual's Notice of Assessment to most taxpayers. It is designed to show you exactly where your tax is being spent, which is a handy document to look over when you feel like you're paying too much tax.
Source: ATO
If you want to understand more about our tax system and government spending, send me an email! I would be happy to clarify any of the points above. I'm going to end this blog entry with a joke. Accountants love jokes, especially accounting jokes. Please note, it is a very simplified example of a tax system based overseas, but it seems appropriate for this blog post :)
The Tax System Explained In Beer
Suppose that every day, ten men go out for beer and the bill for all ten
comes to $100.
If they paid their bill the way we pay our taxes, it would go something like
this…
The first four men (the poorest) would pay nothing
The fifth would pay $1
The sixth would pay $3
The seventh would pay $7
The eighth would pay $12
The ninth would pay $18
The tenth man (the richest) would pay $59
So, that’s what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day, the owner threw them a curve ball. “Since you
are all such good customers,” he said, “I’m going to reduce the cost of your
daily beer by $20”. Drinks for the ten men would now cost just $80.
The group still wanted to pay their bill the way we pay our taxes. So the
first four men were unaffected. They would still drink for free. But what
about the other six men ? How could they divide the $20 windfall so that
everyone would get his fair share?
They realized that $20 divided by six is $3.33. But if they subtracted that
from everybody’s share, then the fifth man and the sixth man would each end
up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man’s bill
by a h higher percentage the poorer he was, to follow the principle of the
tax system they had been using, and he proceeded to work out the amounts he
suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).
Each of the six was better off than before. And the first four continued to
drink for free. But, once outside the bar, the men began to compare their
savings.
“I only got a dollar out of the $20 saving,” declared the sixth man. He
pointed to the tenth man,”but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too.
It’s unfair that he got ten times more benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get $10 back, when I
got only $2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get
anything at all. This new tax system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks so the nine sat down
and had their beers without him. But when it came time to pay the bill, they
discovered something important. They didn’t have enough money between all of
them for even half of the bill!
And that, boys and girls, journalists and government ministers, is how our
tax system works. The people who already pay the highest taxes will
naturally get the most benefit from a tax reduction. Tax them too much,
attack them for being wealthy, and they just may not show up anymore. In
fact, they might start drinking overseas, where the atmosphere is somewhat
friendlier.
https://www.mrconservative.com/2012/01/688-tax-system-explained-beer/
Tax Deductions #1 - Marketing Managers
As requested by a friend, here is a brief list of things you can claim that you might not be aware of, if you are a marketing manager. These deductions also relate to individuals in similar industries that may require research and promotions such as real estate sales agents and event coordinators. Please note, any information provided in these infographics are of a general nature and may not be relevant to your specific circumstances. To claim any deduction, it must have the relevant 'nexus to employment' and you must be able to substantiate it, unless otherwise advised. Feel free to send me an email for more info or clarification!
6 Ways to Maximise Your Tax Refund
Here is a fun and informative infographic I made for my blog. For the PDF version (with links) please click here. I will be creating more infographics like this for deductions relating to specific occupations. If you want to suggest an occupation, please send me an email!
Green is the New Black
Earlier this month, Woolworths Ltd, the second largest revenue earning company in Australia, announced that it's supermarkets (including Big W, BWS and Harris Farm) will stop using plastic bags by the end of this financial year, replacing them with paper bags, reusable bags and reused cardboard boxes.
The French government also announced this month, that it is set to ban the sale of petrol and diesel vehicles by 2040, and plans to become carbon neutral by 2050, with financial assistance committed to lower-income earners to help them with the cost of replacing polluting vehicles with cleaner ones. Norway, The Netherlands, Germany and India are hoping to meet these same targets by 2025-2030.
And it's not just governments and multi-billion corporations that are affecting change - even your local cafe is likely to give you a discount on your morning latte if you bring a keep cup with you, instead of using one of their disposable cups. In case you haven't heard, 50,000 takeaway coffees are being consumed every 30 minutes in Australia, and up to one BILLION coffee cups go to landfill every year.
There is a rapidly growing trend toward Corporate Social Responsibility, fueled by a realisation that we are heading toward a future of environmental degradation that we may not be able to come back from. It wasn't always the case. An infamous example of the anti-CSR board mentality of the past is that of Ford's 'explosive' Pintos in the 1970s. It turned out that a rear-end collision caused the cars to burst into flames. Rather than incur the cost of recalling all their Pinto cars, Ford decided it would be more cost effective to pay compensation for each claim that was made as a result of one of these life-threatening collisions.
So what is Corporate Social Responsibility?
Corporate Social Responsibility (CSR) is a business approach that is often adopted with the view of improving society in some way, by considering the impact of a company's actions on a social, economic and environmental level, beyond what is required by law.
The days of the 'ruthless investor' archetype are long gone: Most shareholders in today's internet-savvy society would forego higher returns in exchange for a share in a company that cares about equal rights, climate change and charity. Similarly, consumers often are willing to pay more for a good or service, if they are dealing with a business who's values align with their own.
Small-to-medium Enterprises (SMEs) make up 97% of all businesses in Australia, which means that as a whole, SMEs have the potential to make a huge positive change to social and environmental issues. Not only that, but from a marketing and financial perspective, you can't afford to alienate your potential customers by ignoring society's demand for businesses to care more.
And it turns out that sometimes, implementing positive social change is better for your bottom line. Here are some ideas for implementing a CSR approach in your business, that could save you tax and increase your net profit:
Invest in new equipment
Old equipment costs more to maintain and operate, as it reaches the end of it's useful life. This is especially true for cars. A car that is more than 5 years old requires higher servicing costs, more frequent replacement of parts and is less fuel efficient. This is generally true for most mechanical equipment. If you have a business with turnover of less than $10 million, you can get an instant asset write-off for any business asset purchased under $20,000.
Go Solar
Solar power is incredibly cheap and you may be able to sell your excess solar-generated electricity back to power companies. So you not only save energy costs while reducing your carbon footprint, you can potentially make money from it too. A lot of solar power companies can provide lease arrangements for commercial scale solar power systems so you don't have any initial capital outlay. But if you do have the initial outlay, you can still claim the instant asset write-off for capital equipment under $20,000.
Go Paperless
Having a paperless business can greatly reduce your overheads. From eliminating the cost of paper, ink, printers and writing tools, to digitising files and records which can free up your physical office space, to replacing mail with email correspondence; the practical benefits of being a paperless business are vast. The #waronwaste can begin with the simple option of having receipts emailed to customers instead of printing them onto thermal paper from an eftpos machine which will get thrown in the bin. Your customers will appreciate a more lasting record of their transaction as well, especially if they can claim it in their tax return!
Cut down on Travel
Virtual meetings and phone appointments can greatly reduce (or even eliminate) your travel costs, as well as saving precious time spent in transit. Sometimes face-to-face meetings are unavoidable, and often, the more human approach will suit your customers, but it's always good to offer the option of a phone or Skype appointment. Similarly self-paced training, workshops, seminars and self-education courses can often be done online. Lastly, consider offering your employees 'work from home' days. An employer who cares about their staff's work-life-balance is rewarded with a highly motivated and productive team. All of these changes have the potential to significantly increase your profit in numerous ways, especially if you have a large team of people working for you, and clients/suppliers in various locations.
Donate
You can make a one-off or periodic donation, pledge a percentage of your sales to a charitable cause, sponsor or support a social enterprise (such as thankyou.), contribute goods, services or discounts to a charity raffle, donate 2nd hand furniture, equipment, consumables and old merchandise to an opportunity shop, or hold a fundraiser. You can probably think of many others! Donations and sponsorships are tax deductible, and any of these endeavors will be appreciated and admired by your customers. They'll also make you feel good :)
free advice to all businesses
Whether you are an existing client or just looking around, please contact me if you have any questions about how your business can improve or implement a CSR strategy. I am more than happy to offer professional and creative advice tailored to your business, at no charge.
How this works: Send me an email with an introduction about your business, and we will start a conversation. Absolutely no strings attached.
ATO's war on deductions
The ATO has recently adopted a very aggressive strategy to collect more tax revenue. Earlier this year, they sent out hundreds of thousands of letters to taxpayers, warning them that their deductions may have been overstated, and advising to review their claims in order to avoid paying back tax and being penalised in the event of an audit. Many taxpayers saw this letter as a precursor to an audit, despite the letter stating that if the taxpayer believes deductions were claimed correctly, they need not take any further action.
Now they have issued a warning in the pre-filling report for 2017 as follows:
The pre-filling report is a tool used by tax agents to "pre-fill" the tax return with information from the ATO database. One of the items in the pre-filling report is "Deductions reported" in the previous year. This warning message has the consequence of pressuring tax agents (whether intentional or not) into claiming less deductions than the previous financial year, whether or not this is fair for the taxpayer.
This is why it is extremely important to have your tax return prepared by a qualified, professional and experienced tax agent, who knows what you can and cannot claim. If you are a taxpayer with legitimate work-related expenses that have the necessary nexus to employment, and sufficient substantiation, then you do not have to feel intimidated into claiming less deductions than you are entitled to.
It is always important to claim the right amount of deductions, because an audit is costly and stressful, and paying tax back can create a significant financial burden.
Some Tips for getting the most out of your tax return
Take a photo
Whenever you incur a work-related expense, make sure to keep the receipt. Keep in mind that receipts can fade, get lost or destroyed. You should always keep a soft copy somewhere safe. My favourite tip is to take a photo with your phone and email the receipt to yourself; keep the emails in a separate folder called "receipts".
Get it emailed
Have you ever paid for an expense online (such as stationery, insurance or a donation) and had the option to have the receipt emailed to yourself? You should always choose this option! If you don't get a receipt, it's as if the expense never happened. Don't fall into this trap.
Keep a diary
Using your car for work? Keep a logbook! Your trips might be deductible. Trips from home to work are generally not claimable, but can be in certain circumstances. If you want to know whether your trips are allowable, send me an email!
Do you work from home? Even if it's only a few hours on the weekend, and an hour each evening, all those hours add up, and you could be eligible to claim deductions. Keep a diary of your hours working from home, as well as the hours you spend on the internet, separating the work-related hours from personal hours. Do this for 4 weeks, and you have substantiation for claiming home office maintenance and internet use (as well as computer).
If you are a client of mine and would like a template, please contact me for access to the resources page.
Ask for a letter
This is so important - get your employer/manager/supervisor/payroll officer etc to give you a letter, confirming that you are required to incur certain expenses such as self-education and professional development, travel, phone, car, computer etc; and that these expenses were not reimbursed. There is no reason why an employer would not provide this letter, and it is much easier to obtain while you are employed, rather than a couple of years down the track when you no longer work there and are being audited. This letter will be your evidence of nexus to employment, one of the key requirements to claiming a deduction.
Stay tuned for more tax tips, or send me an email if you want me to prepare your tax return!