According to a recent survey conducted by the ATO, one in five Australians are not confident that they have the knowledge and information required to accurately lodge their tax return. To address this, the ATO has created 11 tailored toolkits for major employers, member associations, industry peak bodies and tax professionals, including a toolkit for real estate professionals.
It may not currently be tax season in Australia, but learning what you can claim at tax time as a real estate professional will make life easier when it’s time to prepare and lodge your next return.
The best way to prepare for your tax return is to find out what claims can be deducted, and to keep track of records throughout the year to make tax time easier. You must also remember to declare all income when lodging your tax return, and therefore all sources of income should be recorded too.
The tailored toolkit has specifically been designed to help professionals in areas where the ATO knows taxpayers are at risk of making a mistake when they’re preparing and lodging their tax return. It is a helpful resource for organisations and professionals in real estate, as well as rental property owners, to understand what can and cannot be claimed as work-related expenses, and what income needs to be declared.
As a general guideline, if you work in real estate and want to claim a work-related expense, the following apply:
- You must have spent the money yourself and not been reimbursed
- It must be directly related to earning your income, and
- You must have a record to prove it.
The ATO advises that the best time to lodge your tax return is mid-August, when all financial information the ATO receives from employers, banks, government agencies and more, will be pre-filled.
Below is a summary of claiming for work related expenses you are entitled to as a real estate professional, taken from the ATO’s toolkit. We suggest downloading the full toolkit for more information:
Real estate professionals can claim a deduction when:
- they drive between separate jobs on the same day – e.g. travelling from their real estate agency to their second job as a waiter.
- drive to and from an alternate workplace for the same employer on the same day – e.g. travelling between two different residential open homes.
You generally can’t claim the cost of trips between home and work, even if you have to work outside normal business hours – e.g. to attend a weekend auction.
There are limited circumstances where you can claim the cost of trips between home and work, such as where you carry bulky tools or equipment for work – e.g. a large ‘for sale’ sign and tools to erect it. The cost of these trips is deductible only if:
- your employer requires you to transport the equipment for work
- the equipment was essential to earning your income
- there was no secure area to store the equipment at the work location, and the equipment is bulky – at least 20kg or cumbersome to transport.
If you claim car expenses, you need to keep a logbook to determine the work-related percentage, or be able to demonstrate to the ATO a reasonable calculation if you use the cents per kilometre method to claim.
You can claim a deduction for travel expenses if you have to travel overnight from your usual work location – e.g. traveling to a remote area to inspect a property – provided the cost was incurred while carrying out your work duties. Travel expenses may include meals and accommodation, fares, petrol and incidentals such as parking fees and tolls.
Receiving a travel allowance from your employer does not automatically entitle you to a deduction. You still need to show that you were away overnight, you spent the money yourself, and the travel was directly related to earning your income – e.g. it was not a personal expense.
Clothing and grooming expenses
You can claim a deduction for the cost of buying, hiring, mending or cleaning certain uniforms that are unique and distinctive to your job e.g. clothing items you’re required to wear which have a logo that is unique and distinctive to your employer.
You can’t claim a deduction for the cost of buying or cleaning plain clothing worn at work, even if your employer tells you to wear it and even if you only wear it for work, e.g. black pants and a white shirt.
You can’t claim a deduction for hairdressing, cosmetics, hair and skin care products, even if your employer tells you to use them, or you are required to be well-groomed.
Home office expenses
You can claim a percentage of the running costs of your home office if you have to work from home, including depreciation of office equipment, work-related phone calls and internet access charges, and electricity for heating, cooling and lighting costs.
If you are required to purchase equipment for your work and it costs more than $300, you can claim a deduction for this cost spread over a number of years (depreciation).
You generally can’t claim the cost of rates, mortgage interest, rent and insurance.
Other common deductible work-related expenses
Other expenses you can claim a deduction for include:
- marketing equipment – e.g. the work-related portion of cameras used for property photos
- decorating properties – e.g. flowers
- renewing your annual Certificate of Registration
- union and professional association fees
- technical or professional publications.
You can claim a deduction for the cost of gifts – e.g. alcohol, flowers – bought for work purposes if you are a salesperson or property manager entitled to receive your income from commission or both commission and retainer.
You can’t claim a deduction if you earn a fixed income and you are not entitled to earn a commission.
You can’t claim a deduction for gifts that are in the form of entertainment – e.g. a live sporting event.
- The ATO has a range of practical information available on its website to help you prepare and lodge your next tax return.
- The ATO app provides information and tools to manage tax affairs on the go – all in one place. This includes the myDeductions tool, a useful way to keep track of records throughout the year.
- If you have tax and super questions, you can ask them on ATO Community, the ATO’s online community forum.