Lawyer Tax Return and Deduction Checklist
Reading the fine print and keeping track of details is one of your best skills as a lawyer – but how carefully are you checking your taxes each year? It's one of those pieces of life admin that you might just want to get done as quickly and painlessly as possible. But if you don't look closely then you might miss out on some important deductions that could save you some serious money.
We've put together a handy checklist below to get you started, but to really get the job done properly we recommend enlisting some professional help. Our experienced tax consultants here at H&R Block live and breath the Australian tax system every day, so they really know their stuff and will be able to walk you though all the possible deductions for your job as a lawyer to make sure you don't miss out on a single dollar in your return.
To get your tax return done, you'll first need an income statement from your employer (previously called a "payment summary" or "group certificate"). This is a summary that outlines all of your salary, wages, allowances and bonuses for the financial year.
You won't need to have a copy of this statement, as it should be lodged by your employer directly to the ATO. Once this has been lodged, we can download the information for you and then help you work out your deductions.
What do I need to know about claiming deductions?
As you know, you're entitled to claim deductions on any money spent during the financial year on products or services that directly related to earning your income. But there are two things you need to remember:
- First, you need to have spent the money yourself (it can't have been reimbursed by your employer), and
- Secondly, you need to keep a record of the expense such as a receipt or invoice.
What deductions can I claim?
There is a wide range of deductions you can claim as a lawyer, such as:
- The cost of renewing your annual practicing certificate, but not the original cost of obtaining it, plus union and professional association fees
- Car expenses, including parking costs and tolls, if you travel between different jobs on the same day (for example from your day job as a corporate lawyer to a second job as a university lecturer) or to different locations for your work, such as from court to your office or to meet with a client
- Any expenses connect to buying, repairing and cleaning any work clothing items that are either part of a uniform or distinctive to your company or job (such as your wig and robes if you are a barrister)
- Income or loss of work insurance and professional indemnity insurance
- Any clothing or items that have protective benefits when you are in contact with clients or in a public space, such as a face mask or gloves
- Any expenses related to buying and insuring equipment or tools specifically required for your work, such as a dictaphone or a briefcase to carry files
- Any meals you buy and eat when you work overtime, but only if you get an overtime meal allowance under an industrial law, award or enterprise agreement and it's included in your assessable income
- Journals, periodicals and magazines that are specifically related to your job as a lawyer
- Stationery that you use for work such as logbooks, diaries and pens
- Supreme Court library fees, but only if they are paid on an annual basis and are not a one-off fee
- Self education costs for attending any courses, training or seminars specifically related to your current line of work, such as a Masters of Criminal Law, if you're already working in this area of law
- Phone and internet expenses for any work-related usage on your personal phone or device, provided they are not already covered by your employer
- Travel expenses such as accommodation and meals if you travel for work and need to stay away from home overnight (for example, if you a representing a client interstate) and pay these expenses yourself
- Working from home office expenses such as heating or cooling, and repairs to equipment
What can't I claim?
There are several key expenses you can't claim, including:
- Any regular clothing worn to your workplace that could also be worn outside of work (such as a suit or a white shirt) even if you only wear it for work and bought it specifically to wear to work
- Any social or sporting club membership or sponsorship fees, even if you use this to manage clients or professional relationships
- Any entertainment such as business meals, sporting events or concerts (even if you discuss business when you're there)
- The cost of any meals or snacks consumed during the course of a normal work day, even if you are given an allowance by your employer to cover the meal expense
- Any education expenses that are not directly related to your current job, for example if you're a legal secretary and studying law at night with the intention of getting a new job in the future as a lawyer
- The costs of any gifts or cards you purchase for clients
- Any costs relating to defending yourself if you are suspended from practice
- Any grooming costs, including hairdressing services and buying items of make up, even if it's a requirement of your job to be well presented
- Any costs incurred when travelling between your home and your workplace, even if you live a long distance away
What records do I need to keep?
As a lawyer, you know the importance of good record-keeping and this is especially true at tax time. So you need to stay on top of your documents and have a comprehensive set of receipts if you want to get a good tax refund. It's a good idea to create an easy and reliable system to help you keep on top of this throughout the year.
Remember, you don't need to keep physical receipts, and it's acceptable to keep a digital copy (such as a photo of a receipt or an email receipt) provided it is possible to read:
- The name of the supplier
- Amount of the expense
- Nature of the goods or services
- Date the expense was paid
- Date of the document
You also don't need to keep receipts for expenses under $10 (as long as these don't cumulatively come to more than $200).
What happens if I make a mistake in my tax return?
A calm and measured approach is always best and we strongly recommend dealing with it as soon as possible. It's essential that you take great care in putting together the information and supporting documentation when filing your tax return, and only claim deductions that are genuine to avoid penalties and possibly even prosecution from the ATO.
It's easy to make an innocent mistakes sometimes, and if you lodge yourself and realise you've submitted incorrect or unsubstantiated claims then you should contact H&R Block immediately and we will assist you in making the necessary amendments.
Still have some questions about lodging your tax return? Talk to H&R Block. Our experienced tax consultants will be able to help. Call 13 23 25 for details or find your nearest office and book an appointment online.
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