The easy tax deduction you're probably forgetting to claim


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It's well known that the cost of getting your tax return prepared by an agent is a deductible expense.

Less well known is that as well as the agent's fee you can also claim any incidental costs that relate to having your return prepared, including accommodation, meals, taxi fares and travel insurance.

However, great care needs to be taken when claiming those expenses. Recent guidance issued by the ATO highlights that such costs are only fully deductible where the sole purpose of a trip is to meet your tax agent.

sydney cab taxi tax return

If you combine the trip with a private purpose, such as a visit to family or friends or maybe a shopping expedition, all incidental costs must be apportioned.

The tax office says that where the travel is undertaken equally for the preparation of a tax return and another private purpose, and the costs relate equally to each purpose, half the travel and incidental costs will be deductible.

Where the preparation of the tax return is incidental to another purpose, only expenses directly related to the preparation of the tax return (such as the cost of parking outside the agent's office or a taxi fare) will be deductible.

If you intend to claim the 66c per kilometre rate for using your car to drive to the tax agent, the kilometres count towards the maximum 5000 you can claim using this method, potentially reducing the amount you can claim for work-related purposes.

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Mark Chapman is director of tax communications at H&R Block, Australia's largest firm of tax accountants, and is a regular contributor to Money. Mark is a Chartered Accountant, CPA and Chartered Tax Adviser and holds a Masters of Tax Law from the University of New South Wales. Previously, he was a tax adviser for over 20 years, specialising in individual and small business tax, in both the UK and Australia. As well as operating his own private practice, Mark spent seven years as a Senior Director with the Australian Taxation Office. He is the author of Life and Taxes: A Look at Life Through Tax.