Hi Guys,
With the recent changes in my jobs where, I have to work from home, whats are the things i can claim in Tax claim.
I do know 52 cents rule from previous ATO tax calculator.
What about if i buy office equipment as of this month April 2020 worth $300 do i get full refund (Deduction) in my tax claim in current financial year(2019-2020).
Also with new changes from March 1st 2020, 80 Cents rules dose it include all charges Like (Aircon, internet, phone, electricity) ?
A deduction is not a refund, do not make the mistake of thinking your purchase will not cost anything in the long run.
I'm constantly amazed how many people think deductions are a refund. It seems that people don't understand that deductions lower taxable income, not tax payable.
If taxable income is reduced, won't it reduce tax payable as well?
Yes but many think spending $300 and deducting it means its free when in reality your saving is your marginal tax rate.
Yes, but not by 100% of the value of the deduction. It only reduces the proportion equal to your marginal tax rate.
eg if you have a $100 expense and your marginal tax rate is 30%, then $30 less tax is paid. YOU pay the other $70.
Yes but no-one is taxed at 100%. So a deduction is a 19%-45% Discount on the item because screw the poor.
@Krankite: I suppose only if the values goes above $300 we talk about deduction. If its below $300 you can claim full price ($300 in cash) back. Correct me if i am wrong.
I suppose only if the values goes above $300 we talk about deduction. If its below $300 you can claim full price ($300 in cash) back. Correct me if i am wrong.
No, if the value is below $300, then the deduction is for the full value. If the value is above $300 then the deduction is for depreciation.
@p1 ama: Does it mean i can claim cost of my new chair, table and monitor which costed me approx $270 and in total $870?
so my taxable income is salary $40,000 - $870 = $39,130?
@pyramid: Yes it reduces your taxable income by the full amount, so it only reduces the tax payable by the amount equivalent to your tax rate.
Just work out tax payable with and without that $870 purchase and it will make sense.
@pyramid: Yes, the best way to think about it in terms of a purchase is to think it's just X% off where X is your MTR. So if your MTR is 30%, for instance, then anything you buy is basically 30% off.
@Krankite: It's not "screw the poor" - it reduces your taxable income by 100%, but you only pay tax at your MTR.
@lunchbox99: it's not screw the poor, but it benefit more for people with high income.
The more income you have, the more you can buy and the more you can claim in tax refund.
for example, someone with income $45K probably can only buy $100 office chair.
If it's claim in deduction, you only get 32.5% back which is $32.5.
Compared to someone with income $250K. with that income you probably can afford a luxury office chair for $500.
If you depreciate $100 every year, then you can claim $45 for the next 5 years.
The more income you have, the more you can buy and the more you can claim in tax refund.
Without going into the morality of the way that taxation works, higher income earners pay more tax, so should be able to claim more deductions.
My personal view is that we should just get rid of deductions altogether and just reduce marginal tax rates for everyone. I'm hardly a libertarian, but I just think inefficiency and waste is stupid. Even if everyone paid exactly the same amount of tax as they are now, I still think getting rid of deductions would greatly simplify overheads, administration and the tax code. But hey, that's just me.
@p1 ama: not saying it's right or wrong, or ethical or not.
but it's a fact that higher income can afford to spend more and use it to reduce taxable income significantly.
There's few article saying that there's few people in Australia that are in the top bracket of tax but paying virtually no tax due to deduction.
@Bargain80: That is how Apple only pay $1(relatively small amount) tax vs us paying hundred and thousands tax every year, just because of processing income oversea and deduction
@SnoozeAndLose: Nice that Apple aren't making any profit here - they won't complain if we shut them down.
@p1 ama: This is done to create jobs for accountants and cause the burgeoning behemoth that is the ATO.
deduction to the extent that it is business, yes.
Yes - From the ATO site:
Expenses you can claim
If you work from home, you will be able to claim a deduction for the additional running expenses you incur. These include: