As tax season unfolds, it's crucial for individuals to understand the importance of receipts and invoices, known as substantiation in tax law, when claiming deductions. This guide focuses on non-business individuals and clarifies what constitutes valid documentation.
To claim a deduction for expenses in your tax return ending June 30, 2024, you must have "incurred" the expense between July 1, 2023, and June 30, 2024. The term "incurred" in tax law refers to the point at which an obligation to pay arises, not necessarily when payment is made. This includes instances where an invoice is received by June 30, 2024, even if payment hasn't been made.
According to tax law, a valid substantiation document from a supplier must include their name or business name, the expense amount in the currency used, a description of the goods or services, the date of the expense, and the date the document was issued.
While it's advisable to retain receipts or invoices for work-related expenses, they are not always mandatory under tax law. Expenses under $300 can be claimed without receipts, but for claims exceeding $300, detailed evidence is required.
Bank and credit card statements alone are insufficient for the Tax Office, as they do not provide all required substantiation details from the supplier. However, they can be useful in disputes with the Tax Office regarding expense claims.
Certain expenses, such as overtime meal allowances under industrial laws, may be deductible without receipts if they fall within reasonable limits set by the Tax Office.
Deductible expenses for laundry, dry cleaning, and repair of occupation-specific, protective, compulsory uniforms, or registered non-compulsory uniforms can also be claimed.
If claiming home office expenses using the fixed rate method, detailed records of hours worked at home are essential. Estimates are insufficient for Tax Office purposes.
Consult a qualified and experienced tax agent such as Symmetry Accounting & Tax to explore other potential deductions related to earning income, ensuring you have necessary proof of expenditure for each claim.
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