Here are our recommendations on for a freelancer tax claim. There are plenty of tax deductions available for freelancers so let’s make sure you’ve got the ABCs down-pat so your 2019 tax period can be a rewarding one.
Equipment and Tools Freelancer Tax Claim
Being self-employed, it is likely that you are required to purchase equipment or tools required for your work. There have been recent legislative changes to the simplified depreciation rules, which freelance workers could find useful come tax time. Under the new legislation, business assets costing below the instant-asset thresholds can be written off in the year they are first used, or ready for use. The threshold applies to both new and second-hand assets.
The instant-asset threshold has been increased to $30,000, for assets purchased from 7.30pm on 2 April 2019. If you purchased the asset prior to this date, other thresholds apply. For the 2019 financial year, there are three different thresholds that may apply to you, depending on what date you purchased the equipment, as listed below:
- $30,000, from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020
- $25,000, from 29 January 2019 until before 7.30pm (AEDT) on 2 April 2019
- $20,000, before 29 January 2019.
Bear in mind you are only allowed to claim a deduction for the business-related portion of the equipment acquired, for example, if the asset you purchased is used for both private and business purposes, you are only allowed to write-off or depreciate the portion used to earn assessable income. If you wish, you are also still allowed to depreciate your equipment over their useful life, rather than writing off the full amount in the year acquired.
When working for yourself, it’s more than likely that your home is your principal workplace. Therefore, you may be eligible to claim a deduction for home office expenses which are split into two main categories:
Home office occupancy expenses include the following costs:
- Interest proportion of your mortgage
- Property insurance
- Land tax
- Council rates
Bare in mind you must have a dedicated work area that is not for domestic purposes such as a study or studio to be eligible for occupancy expense deductions.
The second category is home office running expenses which you can claim the work-related percentage for the following costs:
- Utility bills including heating and cooling
- The decline in value of home office equipment, furniture and furnishings such as desk, light fittings, computer and telephone.
- Repair and maintenance of home office equipment
- Cleaning costs
- Other running expenses such as the cost for stationary, paper and ink.
Taxpayers can claim a deduction for running expenses by calculating costs either of two ways:
- The fixed-rate method of 52 cents per hour of work done from home based on average running expense costs.
- The actual expenses cost method whereby recording all of your actual expenses for heating, cooling, lighting, cleaning and the decline in value of the furniture.
Remember only the additional running expenses you incur as a result of working from home are tax-deductible running expenses.
Car and Travel Expenses
Travel and Car expenses incurred which relate directly to your freelance work may be tax-deductible, these include
- Car expenses, although remember that travel to and from your home to a place of work is classified as private use and therefore not tax-deductible.
When it comes to working for yourself, there can be added pressure to be up-to-date with your relevant qualifications, which means undertaking courses which usually aren’t cheap but the good news is you may be eligible for a tax deduction.
The costs of undertaking courses which will maintain or improve skills and knowledge required in your current work situation or will result in, or likely to result in an increase in income for your current freelance work may be tax-deductible. Some of the costs include:
- Course Fees
- Student union fees
- Accommodation and meals if you need to stay away from home
It helps to know what you can claim, so you can maximise your freelancer tax return. Having a registered tax agent like Ezytaxback.com will also ensure you get the best return. If you’re short on time, contact our friendly Customer Care Team and we can assist you in getting the most out of your return.