Tax deductions 2022: 10 tips to grab a bigger refund

Tax deductions can offer a handy income boost for households battling the rising cost of living. Here’s what to consider.

Money-saving ideas are like gold as living costs soar, but one key area of potential savings is often overlooked by Australians: tax deductions.

The average tax refund in Australia is more than $2800, and man people can claim back more through some clever deductions.

Here are 10 ideas to consider.

1 HOME OFFICE DEDUCTIONS

If you’re working from home, even for just a few hours a week, tax deductions are available. Accountants say a good way to claim is using the ATO’s fixed rate method of 52c per hour worked at home, and you can separately claim other costs including internet, stationery and the decline in value of some home office items.

You may be able to claim tax deductions on technology and home office costs.

2 TECH COSTS

Do you use your phone, computer or other technology at least partly for work? If so, you are allowed to claim some of the cost of your contract, calls and even depreciation of electronic equipment – as long as it is correctly apportioned between work use and non-deductible private use.

3 SUPER CONTRIBUTIONS

Most people can claim a deduction for extra money they deposit into superannuation, up to an annual cap, through either regular salary sacrifice or one-off contributions. If possible, seek advice from your super fund or a financial planner because once deposited, the money is locked away until retirement.

4 UNIFORMS

If you have a specific work uniform, you cannot only claim for purchase costs – keeping it clean is also tax deductible. The ATO allows up to $1 per load, but check that your uniform qualifies as a uniform – a business suit definitely does not.

5 WACKY WORK DEDUCTIONS

Depending on your job, you may be able to claim for items including sunglasses, sunscreen, sanitiser, knives, scissors, face masks, hats and Covid-19 tests. The ATO has a variety of occupation-specific guides that can be downloaded online.

Certain items can be claimed, including sunglasses, depending on your job.

6 INCOME PROTECTION INSURANCE

If you pay for income protection cover outside of your super fund, the premiums are tax-deductible.

7 INCOME SPLITTING

In his latest 2022-23 edition of 101 Ways to Save Money on your Tax Legally, chartered accountant Adrian Raftery says couples should try to level their income so they are both paying the same marginal tax rate. “While income from personal exertion such as your salary cannot be transferred to the other partner, there is scope to have passive income from investments transferred if the assets are held in the lower-earning spouse’s name,” Dr Raftery says.

8 LOAN INTEREST

Interest paid on mortgages and other loans can be tax deductible, but only if they are related to income-producing assets such as investment properties or shares. Your own home is generally off-limits.

9 INVESTMENT EXPENSES

Investors have a pile of other deductions available, especially property investors who can claim depreciation, council rates, property management fees, repairs, garden gnomes and much more.

Investors can make a number of claims.

10 YOUR TAX RETURN

Getting a tax accountant to do your tax return is itself deductible. Some professional financial advice may also be deductible, but check this with an accountant.