myTax 2018 Cost of managing your tax affairs

This section is about:

• expenses you incurred in managing your tax affairs, including fees paid to a recognised tax adviser for doing your tax return
• costs of applications made to the Administrative Appeals Tribunal or appeals to the courts about your tax affairs (litigation costs)
• an interest charge we imposed on you
• amounts we charged you for underestimating a varied goods and services tax (GST) instalment or pay as you go (PAYG) instalment
• expenses for complying with your legal obligations relating to another person's tax affairs.

You incur an expense in the income year when:

• you receive a bill or invoice for an expense that you are liable for and must pay (even if you don't pay it until after the end of the year)
• you do not receive a bill or invoice but you are charged and you pay for the expense.

For more information, see You need to know.

Depreciation and capital allowances tool

You can use the Depreciation and capital allowances tool to work out the total decline in value deduction. To access the tool, select the 'Work it out' link in the Deductions section on the Prepare return screen.

Completing this section

We have pre-filled your tax return with cost of managing your tax affairs information that has been provided to us. Check for cost of managing your tax affairs that are not pre-filled and ensure you add them.

1. For each cost of managing tax affairs expense that has not been pre-filled in your tax return, select Add.
2. Select the Type of deduction and enter information into the corresponding fields.
3. Select Save.
4. Select Save and continue.

Note: If you used the Depreciation and capital allowances tool, fields containing information from the tool cannot be directly adjusted in myTax. To make any adjustments to this information, or to add new assets to the tool, select Work it out.

You need to know

You can claim a deduction for an interest charge that we imposed on you for the:

• late payment of taxes and penalties
• amount of any increase in your tax liability as a result of an amendment to your assessment
• amount of any increase in other tax liabilities, such as GST or PAYG amounts.

You can claim amounts that we imposed on you for underestimating a varied GST or PAYG instalment.

The expense is deductible in the year you incur the interest charge.

However, you cannot claim tax shortfall and other penalties for failing to meet your obligations. For more information about an interest charge we imposed on you, see ATO interest - calculation and reporting.

You also cannot claim for any judgment debt interest that may have arisen in respect of a court case involving your tax affairs.

You can claim a deduction for the litigation costs you incurred in managing your tax affairs. Litigation costs include court and Administrative Appeals Tribunal fees, and solicitor, barrister and other legal costs you incurred in managing your tax affairs.

You can claim a deduction for other expenses incurred in managing your tax affairs. These expenses can include:

• the preparation and lodgment of your tax return and activity statements
• travel to obtain tax advice from a recognised tax adviser
• obtaining a valuation needed for a deductible donation of property or for a deduction for entering into a conservation covenant; for more information see Gifts of property.

Expenses for the preparation and lodgment of your tax return and activity statements include costs associated with:

• buying tax reference material
• tax return preparation courses
• lodging your tax return through a registered tax agent
• obtaining tax advice from a recognised tax adviser
• dealing with us about your tax affairs
• purchasing software to allow the completion and lodgment of your tax return. You must apportion the cost of the software if you also used it for other purposes.

Fees paid to a recognised tax adviser are deductible in the year you incurred them. A recognised tax adviser is a registered tax agent, barrister or solicitor. You can see a list of registered tax agents at Tax Practitioners boardExternal Link or call 1300 362 829.

You cannot claim for the cost of tax advice given by a person who is not a recognised tax adviser

You can also claim any costs you incurred in complying with your legal obligations relating to another person’s tax affairs. This includes:

• complying with the PAYG withholding obligations, for example, where you withheld tax from a payment to a supplier because the supplier did not quote an Australian business number
• providing information that we requested about another taxpayer.

These myTax 2018 instructions are about expenses you incurred in managing your tax affairs.