Did you know you could claim a tax deduction for your Hills & West bag?
As the financial year comes to a close and we are all frantically getting our accounts in order, be smart with your tax and claim part of your everyday workbag essential.
After a wee reminder from Melissa Browne, CEO of accounting firm A&TA and author of Fabulous but Broke, this morning, I wanted to share some tips on how to tick the Tax Office boxes when claiming your workbag as a tax deduction.
What’s classed as a work companion?
Australian tax law states that your bag must be used for work-related purposes, purchased to house your laptop, iPad, business cards, pens and documents throughout your working day. If 100% work use related you could be eligible for a tax deduction up to $300.
The Morgan Collection – Business Folio and 3 in 1 Backpack
Lucky for you the Morgan Collection’s Business Folios in black or whiskey tan, are designed as work companions for him or for her, sized to fit your 13’ laptops, iPad and daily work essentials, with an easy carry grip for extra function.
The Morgan 3 in 1 backpack is also designed to house your larger work essentials, making the commute to and from work easier. With compartments for your tech, chargers, phone, client notes, notebook and sized for larger computers, the 3 in 1 backpack, made from durable Furla leather, can be worn as a backpack, tote or carried by the handle, versatile and stylish corporate chic.
How to claim
The Tax Office loves documentation so to cover all bases keep a record of the work use of your bag, ideally a logbook for a period of about three months.
If you carry 2 bags, a smaller bag for your wallet, keys and skincare essentials and the second for your bulkier laptop, tech and client servicing items, this makes the claim even clearer for the Tax Office. Photo evidence proving the usage is a plus, however if you are a one bag fits all kinda wearer, then you should really maintain a log-book in the event that the ATO decides to audit your tax affairs.
A small effort I would say for a worthy tax deduction!
So what do you get back?
As we know tax is never straightforward. Here is a break down of the different scenarios:
Employees – for a bag less than $300 you can claim an immediate deduction (for the work- percentage allocated to work use). This is a tax saving of approximately $100 in the tax year you purchased the bag (if your log book states 100% business use).
For a cost greater than $300 you’ll need to depreciate the bag over a number of years which means your claim is stretched out and so is the tax saving.
If you are self-employed – it’s much easier and if you’re registered for GST you’ll receive a dual saving.
First you’ll receive a credit for the GST component and if you’re a small business with a turnover of less than $2 million and the bag cost less than $20,000 you can claim the entire amount as a deduction in the tax year in which you bought it. Here is an example, for a bag costing $1100 you could receive up to $100 back in GST and if you’re in the middle tax bracket you’ll save approximately $300 in tax.
Assistant Tax Commissioner Graham Whyte clarifies that you “can claim a deduction for assets that are predominantly used for work purposes, such as bags and satchels used to carry work papers or electronic devices, to the extent that such items are used for work purposes. It is the use of the item rather than its description that is relevant. For example, if a briefcase is primarily used to carry lunch and other personal items to work it is being used in a similar way to a handbag and no deduction for its cost would be available.”
So treat yourself to an EOFY gift and buy that Hills & West piece you have been eyeing off. Make your workday that little bit more stylish (with the bonus of deducting it from your tax).
Love your Hills & West work companion even more!
BTW if you love the scarves you have to visit dog&boy scarves as they are also the perfect everyday work accessory