Elite AgentProductivity & Best Practice

EOFY tax tips for real estate professionals: Mark Chapman

Mark Chapman is Director of Tax Communications with H&R Block Australia. He has over 25 years experience as a tax professional in both the UK and Australia, specialising in tax for SME’s.

For many Australians, navigating the tax system can be quite overwhelming. To help take the stress out of their tax returns and maximising your return, here is my advice that will help make it easier:

Did you know that real estate agents can deduct:

  • Real estate licence – renewals
  • Stationary/business cards
  • Advertising
  • Hammer (for erecting signs)
  • Motor vehicle expenses
  • Mobile/telephone
  • Referral expenses

It is also important that you gather written evidence: Make sure you have written evidence, such as receipts, invoices and bank or credit card statements for everything you intend to claim. The general rule is that if you don’t have paper work to support your deduction claims, you can’t claim the deduction.

Regarding vehicle and travel expenses, the most important thing to remember is that you must keep records. If you use your car for work you are entitled to claim the work related travel expenses that relate to the business costs of using your car to do your job.

Travelling to and from work on a daily basis cannot be claimed as this is considered as private travel, even if: you do minor tasks on the way to work, such as picking up mail; you travel back to work for a security call out or parent teacher interviews; you work overtime and no public transport is available to use to get you home.

Methods you can use to claim car expenses include:

Cents per kilometre:

  • Your claim is based on a set rate for each business kilometre you travel. Under this method you are eligible to claim up to a maximum of 5,000 kilometres per year, per vehicle. If you travel in excess of 5,000 kilometres this method of claim is not appropriate to you. You will need to use the alternate method of a logbook to claim.
  • The claim value is calculated by multiplying the total business kilometres travelled (limited to 5,000 per vehicle) by the standard rate of 66 cents per kilometre. This figure takes into account all the vehicle running expenses (including depreciation).
  • You do not need written evidence, however you need to be able to demonstrate that you have covered the kilometres claimed. A diary of work-related journeys (including the kilometres travelled) will suffice.

Logbook:

  • Your claim is based on the business use percentage of each car expense. This is determined by a log book that must have been kept for a minimum 12 week period, and must be updated every 5 years. Through your logbook you can claim all expenses that relate to the operation of the car, at your percentage of business use.
  • The logbook must record all business journeys made in the car over the 12 week period that it records, detailing;
    • when the log book period begins and ends
    • the car’s odometer readings at the start and end of the period
    • the total kilometres travelled
    • the business percentage for the logbook period
  • For each journey in the logbook, you must record:
    • start and finishing times of the journey
    • odometer readings at the start and end of the journey
    • kilometres travelled
    • reasons for the journey
    • if you make two or more journeys in a row on the same day, you can record them as a single journey.
  • You will need to keep all receipts throughout the year to justify your claim, such as insurance, servicing and repairs. Petrol can be estimated using the start and end odometer readings for the year, indicating the total kilometres travelled.
  • Depreciation is calculated as 25% of the written down value of the car (using the Diminishing Value method).

You can claim the cost of work-related car expenses if they are incurred whilst performing your job as an employee, such as:

  • Carrying tools or equipment required to complete your job
  • Travelling from your home to an alternative workspace (such as a client/supplier’s office), and then back to your own workplace or home at the end of the day
  • Travelling between two separate workplaces where you are employed
  • Travelling to conferences, meetings or other events as required by your employer
  • Delivering or picking up items/packages related to your job, and as required by your employer

Similarly, if you use your own phone for work purposes, you can claim a deduction if you paid for these costs and have records to support your claims. If you use your phone for both work and private use, you will need to work out the percentage that reasonably relates to your work use. You can’t double-dip and claim for phone expenses that have been reimbursed by your employer.

To work out your deduction, you need to choose a typical four-week period from some point in the tax year.

If you have a phone plan where you receive an itemised bill, you need to determine your percentage of work use over that 4-week period. You can then apply that to the full year.

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Mark Chapman

Mark Chapman is Director of Tax Communications with H&R Block Australia. He has over 25 years experience as a tax professional in both the UK and Australia, specialising in tax for SME’s.
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