Smart ways to split bills and save on tax.
Shared living can be the first time many people get into the habit of sharing bills to save money.
And people sharing a property while working in different professions can split bills to maximise kickbacks at tax time.
These learned money management skills can also get you on the right path to tracking your own expenses.
Remember, even if you have the best relationship with your sharing partner, diaries and records are still going to become your best friend.
Related: Weird places people hide money around the home
Internet splitting at tax time
The best way to keep track of any shared expenses is to keep a diary. This often doesn’t have to be a gruelling year-long event. If you plan to claim expenses by logging your use, Australian tax laws may require you to keep a diary of your internet use for four weeks. You can use this window to estimate the proportion of your use that was work-related. If you are halving bills, your costs will simply be calculated on your 50 per cent of the total bill.
Totalling work-related expenses at home
Some common expenses around your home that could be handy to claim at tax time include computers bought for work and work-related phone calls. You may even be able to claim your portion of repairs on a computer or depreciation on new items you buy for the house.
Meanwhile, if you share a house and work in the same industry, you may find great cost-splitting advantages and tax offsets from furnishing your home with reference books, technical journals and any subscriptions to trade magazines.
Related: 5 ways to simplify your tax return
Know your limits
If you know your total claim for work-related expenses is going to be more than $300, you will need to get into the habit of keeping written evidence. You may be asked to prove how you worked out your claim and explain why your claim is reasonable, based on the requirements of your occupation.
If you are claiming less than $300, you do not need written evidence provided you can make reasonable estimates.
When splitting accounts with a partner
Any income from interest or dividends on joint accounts will need to be split – usually in half if you have an equal share. Meanwhile, you may claim deductions for expenses such as account-keeping fees if you held the account for investment purposes. But remember, if you held an equal share in an account with your spouse, you can only claim half of any allowable account-keeping fees paid on that account.
Related: Love and joint bank accounts, when to pop the question
Sharing a car
With special rules for claiming expenses on jointly-owned cars, you may find it easiest to keep a diary and work on the cents/km method. This means you can claim up to a maximum of 5000km on your income-producing use.
If you both use your joint car for work purposes, you could both claim up to the maximum of 5000km each. However, with the deduction for the cost of cars set at 12 per cent, the two joint owners can only claim a deduction of 6 per cent each.
Around the house
If you share a home office where people in your household spend time generating income, you may be able to claim expenses on your portion of heating, cooling and lighting, the costs of repairs to your home office furniture and fittings, and cleaning expenses. Again, a diary can be created to work out usage over a four-week period.
Splitting bills can often be the first step towards keeping costs down. Following up on all eligible claims for tax purposes could see you fully maximise your savings.
Was this article useful? Use the feedback button below or comment and share your tips on our facebook page
Moneyhound Product Picks this Month: