It’s well known that the cost of getting your tax return prepared by an agent is a deductible expense.
Less well known is that as well as the agent’s fee you can also claim any incidental costs that relate to having your return prepared, including accommodation, meals, taxi fares and travel insurance.
However, great care needs to be taken when claiming those expenses. Recent guidance issued by the ATO highlights that such costs are only fully deductible where the sole purpose of a trip is to meet your tax agent.
If you combine the trip with a private purpose, such as a visit to family or friends or maybe a shopping expedition, all incidental costs must be apportioned.
The tax office says that where the travel is undertaken equally for the preparation of a tax return and another private purpose, and the costs relate equally to each purpose, half the travel and incidental costs will be deductible.
Where the preparation of the tax return is incidental to another purpose, only expenses directly related to the preparation of the tax return (such as the cost of parking outside the agent’s office or a taxi fare) will be deductible.
If you intend to claim the 66¢ per kilometre rate for using your car to drive to the tax agent, the kilometres count towards the maximum 5000 you can claim using this method, potentially reducing the amount you can claim for work-related purposes.