Maximising Tax Deductions for Accountants: A Comprehensive Guide

As an accountant, managing money is nothing new for you, but navigating Australia’s complex tax laws can surely make it difficult— there is an intricate web of regulations and constant updates to tax laws, which can leave even the most seasoned professionals feeling overwhelmed! 

That’s where our comprehensive guide on maximising tax deductions and can help Australian accountants like you. In the following sections, we’ll cover common tax deductions for accountants, record-keeping practices, tax planning strategies, and how to avoid common pitfalls. 

Let’s dive right in.

Understanding tax deductions for accountants

Tax deductions are expenses that you can subtract from your gross income, reducing the portion of your income that’s taxable. Ultimately, this lowers the amount of tax you owe in a financial year. 

By carefully tracking and claiming eligible expenses, you can significantly reduce your tax liability. Standard deductions for accountants in Australia encompass a wide range of work-related expenses. These include:

• Work-related travel expenses 
• Professional development
• Tools and equipment
• Home office expenses
• Professional memberships
• Reference materials
• Self-education expenses
• Phone and Internet

It’s important to remember that if your employer reimburses certain costs, then these are no longer tax deductible. Also, claims require detailed records, and you’ll typically need to keep your receipts in case of an audit by the Australian Taxation Office (ATO).  

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Tax breaks for work-related expenses

If you incur certain costs while performing your job (whether you are an independent or employed worker), you can claim these costs on your tax return. For an accountant this means various deductions related to your professional activities.

Here are some typical deductions specific to accounting professionals:  

• Professional memberships in organisations like CA, CPA, and NIA 
• Professional training, such as a CA or CPA program
• Annual subscription to the Tax Practitioners Board
• Subscriptions to technical accounting journals
• Professional indemnity insurance
• Calculators and accounting software

Besides these specific deductions, accountants are also eligible to claim regular work-related and business deductions. Your eligibility will depend on whether you are an employee or an independent accountant and your business structure—whether you operate as a sole proprietor, partnership or a company. 

Below is a non-exhaustive list of possible deductions. 

Professional development and training

If you invest in your professional development, you can claim related costs against your taxes. This includes costs associated with attending seminars, courses, and conferences that are directly related to your job.

Work equipment and tools

Professional tools and equipment are essential to perform your duties as an accountant and can include items such as computers, software, calculators, and other office equipment etc. But did you know that these can be claimed as deductions? It’s true— these are deductible as long as you primarily use them for work purposes. 

Office supplies

Everyday office supplies like stationery, printing costs, and other consumables used in the course of your work are also tax deductible. However it is important to keep detailed records of these expenses to substantiate your claims when filing them. 

Travel expenses

If your job requires travel, you can claim deductions for car expenses, public transport, and accommodation for work-related trips. Depending on how you choose to claim your expenses, you should keep a logbook or receipts.

Home office expenses

If your accounting set-up follows a ‘work from home’ format, you can claim a portion of your spends on home as home office expenses. This includes items such as electricity, internet, and office furniture.

These are just some examples of what accountants in Australia can claim on a tax return. Consult the ATO website or a tax professional to maximise your tax benefits. 

Record keeping for accountants

Accurate record-keeping is paramount when it comes to tax claims. You should keep detailed and organised records of your work-related expenses if you plan to report them to the ATO. Proper documentation is a regulatory requirement, and the ATO might request it at any time to audit your tax claims. 

Here are some of the records you should keep. 

• Receipts: Keep receipts of all work-related purchases, including office supplies, professional development courses, and equipment. You can keep paper or electronic receipts. 
• Invoices: Documents invoices both for services rendered and expenses incurred.
• Mileage logs: Maintain detailed records of work-related travel, including dates, destinations, and purposes. If opting to report using the cents per kilometre method, you won’t need a receipt, but detailed logs are necessary.  
• Bank statements: Organise your bank statements to corroborate financial transactions.
• Home office expenses: If you work from home and wish to claim these expenses, you’ll need records of utilities, Internet, and other related costs.

Certain smaller expenses, generally below a total of $300 per financial year, don’t require receipts. You should still record these carefully and keep a log, but won’t need to present a physical receipt. 

You should keep most records for five years after you’ve submitted your tax return. However, make sure to keep records for a more extended period in the following situations: 

• Records related to depreciating assets should be kept for five years after the last claim for decline in value.
• Documents pertaining to capital gains tax (CGT) events should be retained for five years after the event is reported in a tax return.
• In cases of disputes with the ATO, records should be kept for five years from the date the dispute is resolved.
• Businesses need to keep records for seven years from the lodgement data as per the Australian Securities & Investments Commission

Consider implementing a record-keeping system to streamline the process. Tools like cloud storage solutions or accounting software can be invaluable to better tax organisation. By maintaining comprehensive and organised records, accountants can confidently claim all eligible deductions while remaining compliant with ATO regulations.

Tips to reduce tax liability for accountants 

There are several ways to optimise your tax returns and minimise your tax liability. Below are some effective strategies you may consider. 

End-of-year tax planning tips

The financial year in Australia ends on June 30th. Each year before this date, identify the opportunities to maximise your deductions. 

For example, you could repay certain expenses for the next financial year. This could include paying for professional memberships, subscriptions, or insurance premiums before June 30th. This way, you can claim deductions for the current year.

You can also write off any bad debts before June 30th to claim them as deductions in the current financial year.

Finally, make sure to thoroughly review and pay any outstanding ATO debts to avoid paying interest on taxes owed. 

Superannuation contributions

You can reduce your taxable income by increasing your contributions to the superannuation fund up to the annual cap. Not only will you save on taxes, but you’ll also increase your retirement savings.

If eligible, take advantage of the government co-contribution scheme by making after-tax contributions to receive up to $500 from the government.

Investment in tools and resources

Invest in professional development courses, seminars, and conferences related to accounting. These expenses are generally tax-deductible.

Purchase necessary work equipment such as computers, software, and calculators before the end of the financial year to claim immediate deductions.

Salary packaging and structuring

If you are an employee, talk to your employer about salary packaging options. For example, you can take advantage of novated car leases or additional superannuation contributions to reduce your taxable income.

If you’re a sole trader, consider the benefits of incorporating your business or setting up a trust structure; this could give you access to lower tax rates and asset protection benefits.

Review your current business structure annually to ensure it remains optimal for your tax situation.

These are some of the many ways to save on taxes if you are an Australian accountant. It’s critical to stay abreast of the latest changes in tax legislation to effectively manage your tax benefits. Plus, you can benefit from personalised advice from a tax professional to obtain maximum tax benefits while ensuring tax compliance. 

Common tax mistakes and how to avoid them

Even experienced accountants can make mistakes when claiming deductions. Here are some common errors and tips on how to avoid them. 

Overclaiming or underclaiming deductions

One of the most frequent errors accountants make is overclaiming or underclaiming deductions. Overclaiming means you’ve claimed too many expenses or inflated the amount you can claim. Meanwhile, underclaiming refers to missing out on eligible deductions.

Tips to avoid overclaiming or underclaiming

• Claiming only legitimate expenses: Make sure to only claim expenses directly related to your work and meet the ATO’s criteria for deductibility.
• Accurate calculations: Avoid estimating deductions. Use precise figures backed by receipts and records.
• Staying informed: Regularly review the latest tax laws and deductible expenses to ensure compliance and accuracy.

Not keeping adequate records

Inadequate record-keeping is another common mistake. It will be difficult to substantiate claims without proper documentation. In the case of an audit, you could even face potential penalties. 

Tips to maintain adequate records

• Detailed documentation: Keep receipts, invoices, mileage logs, bank statements, and any other relevant documents.
• Using technology: Use digital tools or accounting software to organise and store records. These tools can help you track deductible expenses and generate reports.
• Timely updates: Regularly update your records to avoid last-minute scrambles.
• Using technology: 

Misunderstanding deductible expenses

It’s critical to understand exactly what qualifies as a deductible expense. Any misunderstandings can lead to mistakes or missed opportunities to reduce tax liability for accountants. 

Tips to understand deductible expenses

• Regular updates: Stay informed about the ATO’s guidelines on deductible expenses. Attend tax seminars, read relevant literature, and consult with tax professionals.
• Professional advice: When in doubt, seek advice from a tax professional to clarify what can and cannot be claimed.

By avoiding these common mistakes and implementing best practices, you can easily optimise your tax returns, ensure tax compliance, and avoid potential penalties. 

FAQ

What tax deductions can I claim as an accountant?

As an accountant, you can claim deductions for work-related expenses such as professional development, work equipment, office supplies, travel expenses, and home office costs. The range of deductions will depend on whether you are employed or run your own business. 

Can I claim the cost of professional development courses?

Yes, you can claim the cost of professional development courses, seminars, and conferences that are directly related to your job as an accountant.

Are there any deductions specific to accountants who are sole traders?

Yes, sole trader accountants can claim expenses such as professional membership and training fees, accounting journal subscriptions, expenses for accounting software and tools like calculators, and more. You can also claim regular eligible tax deductions for sole traders.  

Final thoughts

To maximise your deductions as an Australian accountant, you’ll need to thoroughly understand various deductible expenses. You’ll also need to maintain accurate and meticulous records of all relevant expenses. 

Lawpath can help you ensure business tax compliance while optimising your tax benefits, whether you are an employed accountant or running your own accounting business. Get in touch with us today to learn more.