Top 5 tax deductions for individuals in 2021
It’s always good to be prepared for tax season. While the process of filing taxes has not changed, for some of us, our work-related expenses may be slightly different compared to previous years now that we have been working remotely.
Here are 5 tax deductions you are entitled to this financial year.
1. Working from home expenses
If you conduct any of your employment activities in your home, some of the expenses involved in running your home office can be claimed as a tax deduction.
Be sure to keep records of electricity costs, internet expenses, phone bills and office supplies.
Having a room set aside in your home for work-related purposes would be the easiest way to keep records and claim your deduction.
If you are using a shared room or a room used for multiple purposes, you will only be able to claim deductions for the duration in which the room was used for employment activities.
2. Travelling for work
If your employment activities require you to travel to any location outside of your regular workplace, you can claim those expenses as a tax deduction.
However keep in mind that the costs of daily commutes to your regular workplace cannot be claimed as a deduction as those are considered private travels.
To make claims for using your vehicle for work-related purposes, you must be the owner of the vehicle and keep a detailed record for each time you use it for work.
3. Interest and investment expenses
If you have expenses incurred through your investment income, you can claim a tax deduction for those expenses.
For example, the fees for keeping your investment account can be claimed as an expense.
However, if the account is a joint account, you will only be able to make claims for your portion of the expenses.
If you borrowed money to purchase shares or dividends, you can also make a claim on the interest charged on the money that was borrowed.
4. Self-education expenses
If you are studying or pursuing any education that is directly related to your employment activities, you will be able to claim the expenses incurred in this self-education. To be eligible to make a claim, your course must:
have a direct link to your current employment;
build on skills and knowledge that contribute to your current employment; and
be likely to result in an increase in your current employment.
The expenses you can claim in relation to your self-education include tuition fees, accommodation, textbooks, student union fees, and student services and amenities fees.
5. Insurance for income protection
If you have taken out any insurance premiums against income loss, you can claim this as a tax deduction.
However, bear in mind that only insurances that protect you against a loss of income can be claimed for a deduction. Avoid making claims for insurances that cover health or property as these cannot be deducted.
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