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Below is some important and insightful information on the best practices with ATO on how to claim deductions through tax.  If you're unclear on any of the information below, or require further detailed information, please call our office on (03) 9374 8400

http://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/

  • Last modified: 24 May 2016
  • QC 31967

When completing your tax return, you're entitled to claim deductions for some expenses, most of which are directly related to earning your income.

To claim a work-related deduction:

  • you must have spent the money yourself and weren't reimbursed
  • it must be related to your job
  • you must have a record to prove it (there are some limited exceptions).

If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.

Follow the links below for specific deductions you can claim:

Are you always on the go? Save time and keep your tax organised with ourmyDeductions app.

See also:

 

Vehicle and travel expenses

You can claim vehicle and other travel expenses directly connected with your work, but generally you can't claim for normal trips between home and work – this is considered private travel.

You need to keep records of your travel expenses.

Follow the links below for more information about:

See also:

 

Travel between home and work and between workplaces

While trips between home and work are generally considered private travel, you can claim deductions in some circumstances, as well as for some travel between two workplaces.

If your travel was partly private and partly for work, you can only claim for the part related to your work.

In this section:

What you can claim

You can claim the cost of travelling:

  • directly between two separate workplaces – for example, when you have a second job
  • from your normal workplace to an alternative workplace (for example, a client's premises) while still on duty, and back to your normal workplace or directly home
  • if your home was a base of employment – that is, you started your work at home and travelled to a workplace to continue your work for the same employer
  • if you had shifting places of employment – that is, you regularly worked at more than one site each day before returning home
  • from your home to an alternative workplace for work purposes, and then to your normal workplace or directly home
  • if you needed to carry bulky tools or equipment that you used for work and couldn't leave at your workplace – for example, an extension ladder or a cello.

What you can't claim

You can't claim the cost of driving your car between work and home just because:

  • you do minor work-related tasks – for example, picking up the mail on the way to work or home
  • you have to drive between your home and your workplace more than once a day
  • you are on call – for example, you are on stand-by duty and your employer contacts you at home to come into work
  • there is no public transport near where you work
  • you work outside normal business hours – for example, shift work or overtime
  • your home was a place where you ran your own business and you travelled directly to a place of work where you worked for somebody else
  • you do some work at home.

 

Watch

Duration 51m. A transcript of Transporting bulky tools and equipment is also available.

See also:

Itinerant work

You cannot count your home as a workplace unless you carry out itinerant work.

If you do itinerant work (or have shifting places of work) you can claim the cost for driving between workplaces and your home. The following factors may indicate that you do itinerant work:

  • Travel is a fundamental part of your work, as the very nature of your work, not just because it is convenient to you or your employer.
  • You have a 'web' of work places you travel to, throughout the day.
  • You continually travel from one work site to another.
  • Your home is a base of operations – if you start work at home and cannot complete it until you attend at your work site.
  • You are often uncertain of the location of your work site.
  • Your employer provides an allowance in recognition of your need to travel continually between different work sites and you use this allowance to pay for your travel.

See also:

 

Car expenses

If you are claiming a deduction for using your own car (including a car you lease or hire), it is treated as a car expense.

If you use someone else's car for work purposes, you may be able to claim the direct costs (such as fuel) as a travel expense.

If the travel was partly private, you can claim only the work-related portion.

On this page:

See also:

When you can claim and can't claim for car expenses

When you can claim

You can claim a deduction for work-related car expenses if you use your own car in the course of performing your job as an employee, for example, to:

  • carry bulky tools or equipment
  • attend conferences or meetings
  • deliver items or collect supplies
  • travel between two separate places of employment (for example, when you have a second job)
  • travel from your normal workplace to an alternative workplace and back to your normal workplace or directly home
  • travel from your home to an alternative workplace and then to your normal workplace or directly home (for example, if you travel to a client's premises)
  • perform itinerant work.

If you receive an allowance from your employer for car expenses, it is assessable income and the allowance must be included on your tax return. The amount of the allowance will usually be shown on your payment summary.

When you can't claim

Most people can't claim the cost of travel between home and work because this travel is private.

 

Calculating your deductions

There are some changes to work-related car expense deductions from 1 July 2015. Below is a breakdown of the methods and calculations which applied from and before 1 July 2015.

From 1 July 2015 – two methods

The government has simplified the car expense deductions for 2015–16 and future income years. From 1 July 2015, the one-third of actual expenses method and 12% of original value method have been abolished.

The two methods available from 1 July 2015 are:

  • cents per kilometre method (with some changes)
  • logbook method (with no change to its rules)

Cents per kilometre method

The cents per kilometre method is available for use with some changes. Separate rates based on the size of the engine are no longer available from 1 July 2015. Under the revised method, individuals use 66 cents per kilometre for all motor vehicles for the 2015–16 income year. The Commissioner of Taxation will determine the rate for future income years.

  • Your claim is based on 66 cents per kilometre for 2015–16 income year
  • You can claim a maximum of 5,000 business kilometres per car
  • You don't need written evidence but you need to be able to show how you worked out your business kilometres (for example, by producing diary records of work-related trips).

Where you and another joint owner use the car for separate income-producing purposes, you can each claim up to a maximum of 5,000 kilometres.

Logbook method

  • Your claim is based on the business-use percentage of the expenses for the car.
  • Expenses include running costs and decline in value but not capital costs, such as the purchase price of your car, the principal on any money borrowed to buy it and any improvement costs.
  • To work out your business-use percentage, you need a logbook and the odometer readings for the logbook period. The logbook period is a minimum continuous period of 12 weeks.
  • You can claim fuel and oil costs based on either your actual receipts or you can estimate the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year.
  • You need written evidence for all other expenses for the car.

See also:

Before 1 July 2015 – four methods

For 2014–15 and earlier income years, there are four different methods for claiming work-related car expenses when using your own car, or one you leased or hired under a hire-purchase agreement.

The four methods are:

You may need to make some adjustments to your claim if the car is jointly owned.

If you use a borrowed car or a vehicle other than a car for work purposes, you can claim the costs you incur (such as fuel costs) as a travel expense. You can't use any of the methods described here to calculate your claim.

See also:

Cents per kilometre method

  • Your claim is based on a set rate for each business kilometre
  • You can claim up to a maximum of 5,000 business kilometres per car.
  • You don't need written evidence but you need to be able to show how you worked out your business kilometres (for example, by producing diary records of work-related trips).

Where you and another joint owner use the car for separate income-producing purposes, you can each claim up to a maximum of 5,000 kilometres.

12% of original value method

  • Your claim is based on 12% of the original cost of your car or 12% of its market value at the time you first leased it
  • The cost or value is subject to a car limit for the year you first used or leased the car
  • Your car must have travelled more than 5,000 business kilometres in the income year (or, if you used the car for only part of the year, it would have travelled more than 5,000 business kilometres had you used it for the whole year)
  • You don't need written evidence but you need to be able to show how you worked out your business kilometres.

As a joint owner, you can deduct your share of 12% of the cost of the car. For example, where there are two joint owners, you can each claim a deduction of 6% of the cost of the car.

One-third of actual expenses method

  • Your car must have travelled more than 5,000 business kilometres in the income year (or, if you used the car for only part of the year, it would have travelled more than 5,000 business kilometres had you used it for the whole year)
  • You claim one-third of all your car expenses, including private costs (but excluding capital costs, such as the purchase price, the principal on any money borrowed to buy your car and the cost of any improvements)
  • For fuel and oil costs, you can keep receipts to work out the amounts or you can estimate them based on odometer records that show readings from the start and the end of the period you had the car during the year
  • You need written evidence for all the other expenses for the car, as well as records that show the car's engine capacity, make, model and registration number.

As a joint owner, you can deduct one-third of your share of jointly incurred expenses and depreciation, and one-third of expenses wholly incurred by you.

Logbook method

  • Your claim is based on the business-use percentage of the expenses for the car.
  • Expenses include running costs and decline in value but not capital costs, such as the purchase price of your car, the principal on any money borrowed to buy it and any improvement costs.
  • To work out your business-use percentage, you need a logbook and the odometer readings for the logbook period. The logbook period is a minimum continuous period of 12 weeks.
  • You can claim fuel and oil costs based on either your actual receipts or you can estimate the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year.
  • You need written evidence for all other expenses for the car.

See also:

 

Owned or leased cars

You can claim a deduction for using a car that you owned, leased or hired under a hire-purchase agreement using one of the two deduction methods.

You may not be considered to own or lease the car if you do not make financial contributions such as the initial purchase, lease, hire-purchase agreements, and loan or lease payments – even though you pay for expenses such as registration, insurance, maintenance or other running costs.

This does not stop you from claiming a deduction for the expenses you pay, but you cannot use either of the two methods available from 1 July 2015.

If you have a family or private arrangement where you are effectively the owner of the car, even if you are not the registered owner, we will treat the car as if you owned it and you can claim expenses. For example, we would allow you to claim for a family car that was given to you as a birthday present, even if it was not registered in your name, if you used it as your own and you paid all the expenses.

See also:

 

Other travel expenses

Other travel expenses you may be able to claim include:

  • travel expenses you incurred for meals, accommodation and incidentals while away overnight for work, such as going to an interstate work conference (generally, you can't claim for meals if your travel did not involve an overnight stay)
  • the costs you actually incur (such as fuel costs) when using a borrowed car or a vehicle other than a car for work purposes
  • air, bus, train, tram and taxi fares
  • car-hire fees.

You may have to show that you have reduced your claim to exclude any private portion of your trip.

If your travel expenses are reimbursed you cannot claim a deduction.

Watch

Duration 1m19s. A transcript of Need to claim overnight work related expenses is also available.

 

If you receive a travel allowance

If you are paid a travel allowance:

  • you must declare the allowance on your tax return as income
  • you are entitled to claim a deduction for the actual expenses you incur, less any private component.

If you get paid an allowance for some travel expenses (including overtime meal allowances, and domestic and overseas travel allowances), you do not have to keep written evidence of your expenses provided your claim does not exceed the reasonable allowance amount we set for each year.

If you want to claim more than the reasonable allowance amount we set, you need to keep evidence of your expenditure.

See also:

 

Keeping travel expense records

There are specific record-keeping requirements for travel expenses, depending on whether your travel allowance is shown on your payment summary, whether your travel was domestic or overseas, the length of your travel and your occupation.

Vehicle expenses - other than a car

If you are eligible to claim expenses for using a borrowed car or a vehicle other than a car, you need to keep receipts for:

  • fuel and oil
  • repairs and servicing
  • interest on a car loan
  • lease payments
  • insurance
  • registration.

 

Travel expenses

If your travel allowance is shown on your payment summary and you want to make a claim against it, you must have written evidence for the whole of your claim, not just the excess over the reasonable amount.

The records you need to keep for travel expenses for fares, accommodation, food, drink and incidentals depend on the length of your trip and if it is domestic or international.

If you travel for six or more nights in a row, you may need to keep a travel diary (see tables below) in which you record the dates, places, times and duration of your activities and travel. The purpose of a travel diary is to allow accurate calculation of the employment-related and private elements of your trip. If the travel was partly private, you can claim only the work-related part.

If you did not receive a travel allowance

  Domestic travel Overseas travel
Written evidence Travel diary Written evidence Travel diary
Travel less than 6 nights in a row Yes No Yes No
Travel 6 or more nights in a row Yes Yes Yes Yes

If you did receive a travel allowance

If you received a travel allowance and your claim does not exceed the reasonable allowance amount:

  Domestic travel Overseas travel
Written evidence Travel diary Written evidence Travel diary
Travel less than 6 nights in a row No No Written evidence is required for overseas accommodation expenses but not for food, drink and incidentals No
Travel 6 or more nights in a row No No Written evidence is required for overseas accommodation expenses - but not for food, drink and incidentals

Members of an international air crew - No if you limit your claim to the amount of allowance you received

Other people - Yes

If you received a travel allowance and your claim exceeds the reasonable allowance amount:

  Domestic travel Overseas travel
Written evidence Travel diary Written evidence Travel diary
Travel less than 6 nights in a row Yes No Yes No
Travel 6 or more nights in a row Yes Yes Yes

Members of an international air crew - No if you limit your claim to the amount of allowance you received

Other people - Yes

See also:

Award transport payments

If you receive an allowance from your employer for transport expenses or car expenses and it is paid to you under an award, it is assessable income and must be included on your tax return. You may also be able to claim a deduction for work-related transport expenses covered by these payments.

To work out how much you can claim, you need to know the award amount because this affects whether you need written evidence to support your claim.

If you choose to claim no more than the award amount, you don't need written evidence.

If you want to claim more, you will need written evidence for the whole of your claim.

Car expense reimbursement

The award transport payment sets a 'car expense reimbursement' amount for a certain number of kilometres. If you travel additional kilometres in your car and they are not covered by the award transport payment, you can make the claim on your tax return. You can use the logbook method (you will need written evidence) or the cents per kilometre method.

If you are already claiming kilometres under the award transport payment, you can't also count them as business kilometres under either the cents per kilometre or logbook method. However, they are counted as part of the total kilometres travelled for the logbook method.

Alternatively, you can choose not to link any part of your claim for work-related car expenses to the award amount. If this is the case, when you make your claim on your tax return, don't claim car expenses covered by your award transport payment. You can then use any of the four methods to calculate your car expenses.

Treat any work-related kilometres covered as business kilometres. You will need to provide the written evidence required by the method you selecting when calculating your deduction.

See also:

 

Clothing, laundry and dry-cleaning expenses

You can claim a deduction for the cost of buying and cleaning occupation-specific clothing, protective clothing and unique, distinctive uniforms.

To make a deduction you may need to have written evidence that you purchased the clothing and diary records or written evidence of your cleaning costs.

If you received an allowance from your employer for clothing, uniforms, laundry or dry-cleaning, make sure you show the amount of the allowance on your tax return.

Follow the links below for more information about:

Occupation-specific clothing

You can claim for clothing that is specific to your occupation, is not everyday in nature and allows the public to easily recognise your occupation - such as the checked pants a chef wears.

You can't claim the cost of purchasing or cleaning clothes you bought to wear for work that are not specific to your occupation, such as a bartender's black trousers and white shirt, or a suit.

See also:

 

Protective clothing

You can claim for clothing and footwear that you wear to protect yourself from the risk of illness or injury posed by your income-earning activities or the environment in which you are required to carry them out. To be considered protective, the items must provide a sufficient degree of protection against that risk.

Protective clothing includes:

  • fire-resistant and sun-protection clothing
  • safety-coloured vests
  • non-slip nurse's shoes
  • rubber boots for concreters
  • steel-capped boots, gloves, overalls, and heavy-duty shirts and trousers
  • overalls, smocks and aprons you wear to avoid damage or soiling to your ordinary clothes during your income-earning activities.

Ordinary clothes (such as jeans, drill shirts, shorts, trousers, socks, closed shoes) are not regarded as protective clothing if they lack protective qualities designed for the risks of your work.

You can't claim the cost of purchasing or cleaning ordinary clothes you wear for work that may also protect you. For example, you can't claim for normal, closed shoes, even though you wear them to protect your feet.

 

Work uniforms

You can claim for a uniform, either compulsory or non-compulsory, that is unique and distinctive to the organisation you work for.

Clothing is unique if it has been designed and made only for the employer. Clothing is distinctive if it has the employer's logo permanently attached and the clothing is not available to the public.

You can't claim the cost of purchasing or cleaning a plain uniform.

 

Compulsory work uniform

This is a set of clothing that identifies you as an employee of an organisation with a strictly enforced policy that makes it compulsory for you to wear the uniform while you're at work.

You may be able to claim a deduction for shoes, socks and stockings where they are an essential part of a distinctive compulsory uniform and where their characteristics (colour, style and type) are specified in your employer's uniform policy.

You may be able to claim for a single item of distinctive clothing, such as a jumper, if it's compulsory for you to wear it at work.

 

Non-compulsory work uniform

You can't claim expenses incurred for non-compulsory work uniforms unless your employer has registered the design with AusIndustry.

Shoes, socks and stockings can never form part of a non-compulsory work uniform, and neither can a single item such as a jumper.

See also:

 

Cleaning of work clothing

You can claim the costs of washing, drying and ironing eligible work clothes, or having them dry-cleaned.

You must have written evidence, such as diary entries and receipts, for your laundry expenses if both:

  • the amount of your claim is greater than $150, and
  • your total claim for work-related expenses exceeds $300 - not including car, meal allowance, award transport payments allowance and travel allowance expenses.

If you don't need to provide written evidence for your laundry expenses, you may use a reasonable basis to work out your claim. For washing, drying and ironing you do yourself, we consider that a reasonable basis for working out your laundry claim is:

  • $1 per load - this includes washing, drying and ironing - if the load is made up only of work-related clothing, and
  • 50 cents per load if other laundry items are included.

If you choose a different basis to work out your claim, we may ask you to explain that basis.

 

Dry-cleaning expenses

You can claim the cost of dry-cleaning work-related clothing. If your total claim for work-related expenses exceeds $300 - not including car, meal allowance, award transport payments allowance and travel allowance expenses - you must have written evidence to substantiate your claim.

See also:

Gifts and donations

You can only claim a tax deduction for gifts or donations to organisations that have the status of deductible gift recipients (DGRs).

Deductions for gifts are claimed by the person that makes the gift (the donor).

For you to claim a tax deduction for a gift, it must meet four conditions:

  • The gift must be made to a deductible gift recipient. We call entities that are entitled to receive tax deductible gifts 'deductible gift recipients' (DGRs).
  • The gift must truly be a gift. A gift is voluntary transfer of money or property where you receive no material benefit or advantage.
  • The gift must be money or property, which includes financial assets such as shares.
  • The gift must comply with any relevant gift conditions. For some DGRs, the income tax law adds extra conditions affecting the types of deductible gifts they can receive.

 

How much to claim

The amount you can claim depends on the type of gift. For gifts of money, it is the amount of the gift but it must be $2 or more. For gifts of property, there are different rules, depending on the type of property and its value.

A tax deduction for most gifts is claimed in the tax return for the income year in which the gift is made. However, you can elect to spread the tax deduction over five income years in certain circumstances.

Bushfire and flood donations

If you made one or more donations of $2 or more to bucket collections conducted by an approved organisation for bushfire and flood victims, you can claim a tax deduction equal to your contribution without a receipt provided the contribution does not exceed $10.

What you can't claim

You cannot claim as a gift or donation items that provide you with some personal benefit, such as:

  • raffle or art union tickets
  • items such as chocolates and pens
  • the cost of attending fundraising dinners, even if the cost exceeds the value of the dinner
  • membership fees
  • payments to school building funds made, for example, as an alternative to an increase in school fees
  • payments where you have an understanding with the recipient that the payments will be used to provide a benefit for you.

See also:

Home office expenses

You may be entitled to claim deductions for home expenses including a computer, phone or other electronic devices you are required to use for work purposes, as well as a deduction for running costs.

As an employee, generally you can't claim a deduction for occupancy expenses, including rent, mortgage interest, council rates and house insurance premiums.

Claiming a computer, phone or other electronic device as a work-related expense

If you are an employee and required to use your computer, phone or other electronic device for work purposes, you may be able to claim a deduction for your costs.

See also:

 

Running costs

If you perform some of your work from a home office, you may be entitled to a deduction for the costs you incur in running it, including:

  • for home office equipment, such as computers, printers and telephones, the cost(for items costing up to $300) or decline in value (for items costing $300 or more)
  • work-related phone calls (including mobiles) and phone rental (a portion reflecting the share of work-related use of the line) if you can show you
    • are on call, or
    • have to phone your employer or clients regularly while you are away from your workplace
  • heating, cooling and lighting
  • the costs of repairs to your home office furniture and fittings
  • cleaning expenses.

See also:

 

Records you must keep

You must keep records of home expenses, such as:

  • receipts or other written evidence of your expenses, including receipts for depreciating assets you have purchased
  • diary entries you make to record your small expenses ($10 or less) totalling no more than $200, or expenses you cannot get any kind of evidence for, regardless of the amount
  • itemised phone accounts from which you can identify work-related calls, or other records, such as diary entries (if you do not get an itemised account from your phone company)
  • a diary you have created to work out how much you used your equipment, home office and phone for business purposes over a representative four-week period.

See also:

Interest, dividend and other investment income deductions

You can claim a deduction for expenses incurred in earning interest, dividend or other investment income.

You cannot claim a deduction for receiving an exempt dividend or other exempt income.

Follow the links below for more information about:

See also:

 

Interest income expenses

You can claim account-keeping fees where the account is held for investment purposes - for example, a cash management account. You will find these fees listed on your statements or in your passbooks.

If have a joint account, you can only claim your share of fees, charges or taxes on the account. For example, if you hold an equal share in an account with your spouse, you can only claim half of any allowable account-keeping fees paid on that account.

See also:

 

Dividend and share income expenses

You can claim a deduction for interest charged on money borrowed to purchase shares and other related investments from which you derived assessable interest or dividend income.

Only interest expenses incurred for an income-producing purpose are deductible.

If you used the money you borrowed for both private and income-producing purposes, you must apportion the interest between each purpose.

What you can claim

  • Ongoing management fees or retainers and amounts paid for advice relating to changes in the mix of investment.
  • A portion of other costs if they were incurred in managing your investments, such as
    • travel expenses
    • the cost of specialist investment journals and subscriptions
    • borrowing costs
    • the cost of internet access
    • the decline in value of your computer.
  • If you were an Australian resident when a listed investment company (LIC) paid you a dividend, and the dividend included a LIC capital gain amount, you can claim a deduction of 50% of the LIC capital gain amount.

What you can't claim

You can't claim a fee charged for drawing up an investment plan unless you were carrying on an investment business.

Some interest on money borrowed to purchase shares, units in unit trusts and stapled securities, which is attributable to capital protection under a capital protected borrowing, is not deductible and is treated as a payment for a put option.

Forestry managed investment scheme deduction

If you make payments to a forestry managed investment scheme (FMIS), you may be able to claim a deduction for these payments if you:

  • currently hold a forestry interest in an FMIS, or held a forestry interest in an FMIS during the income year, and
  • have paid an amount to a forestry manager of an FMIS under a formal agreement.

You can only claim a deduction if the forestry manager has advised you that the FMIS satisfies the 70% direct forestry expenditure rule in Division 394 of the Income Tax Assessment Act 1997.

See also:

 

Self-education expenses

You may be able to claim a deduction for self-education expenses if your study is work-related or if you receive a taxable bonded scholarship. In some circumstances you have to reduce the amount of your claim by $250.

Follow the links below for more information about:

 

Eligible courses

Self-education expenses are deductible when the course you undertake leads to a formal qualification and meets the following conditions.

The course must have a sufficient connection to your current employment and:

  • maintain or improve the specific skills or knowledge you require in your current employment, or
  • result in, or is likely to result in, an increase in your income from your current employment.

You cannot claim a deduction for self-education expenses for a course that does not have a sufficient connection to your current employment even though it:

  • might be generally related to it, or
  • enables you to get new employment.

Taxable bonded scholarship recipients

You can claim a deduction for self-education expenses if, in doing the course, you are satisfying study requirements to maintain your right to a taxable bonded scholarship. If you are employed by the scholarship provider, normal work-related self-education rules apply.

Expenses you can claim

You can claim the following expenses in relation to your self-education:

  • accommodation and meals (if away from home overnight)
  • computer consumables
  • course fees
  • decline in value for depreciating assets (cost exceeds $300)
  • purchase of equipment or technical instruments costing $300 or less
  • equipment repairs
  • fares
  • home office running costs
  • interest
  • internet usage (excluding connection fees)
  • parking fees (only for work-related claims)
  • phone calls
  • postage
  • stationery
  • student union fees
  • student services and amenities fees
  • textbooks
  • trade, professional, or academic journals
  • travel to-and-from place of education (only for work-related claims).

Some travel for journeys cannot be claimed, but you may be able to offset the cost of these journeys against the $250 reduction.

If an expense is partly for your self-education and partly for other purposes, you can only claim the amount that relates to your self-education as a deduction.

See also:

Expenses you can't claim

You cannot claim the following expenses in relation to your self-education:

  • repayments of Higher Education Loan Program (HELP) loans (although the fees paid by some HELP loans are)
  • Student Financial Supplement Scheme (SFSS) repayments
  • home office occupancy expenses
  • meals (unless sleeping away from home), where not sleeping away from home.

See also:

$250 reduction

Self-education expenses are broken into 5 categories. If all of your self-education expenses are 'category A' items then you have to reduce your deduction by $250.

However category 'E expenses' can be used to offset the $250.

Expenses you can offset against the $250 reduction

While you can't claim a deduction for the following expenses, they can be taken into account in determining whether you have to reduce your overall claim.

  • childcare
  • computer purchase
  • fares, travel or car expenses for these journeys
    • for work-related self-education, the second leg of a trip if you went from home to your place of education and then to work, or the other way around
    • if you receive a taxable bonded scholarship and are not employed by the scholarship provider, travel from home to your normal place of education and back.

See also:

 

Tools, equipment and other assets

If you buy tools, equipment or other assets to help earn your income, you can claim a deduction for some or all of the cost.

If the tools are used for both work and private purposes you will need to apportion the amount you claim. If you have a computer that is used for private purposes for half of the time you can only deduct 50% of the cost.

The type of deduction you claim depends on the cost of the asset:

  • for items that don't form part of a set and cost $300 or less, or form part of a set that together cost $300 or less, you can claim an immediate deduction for their cost
  • for items that cost more than $300, or that form part of a set that together cost more than $300, you can claim a deduction for their decline in value.

Examples of tools, equipment or assets:

  • calculators
  • computers and software
  • desks, chairs and lamps
  • filing cabinets and bookshelves
  • hand tools or power tools
  • protective items, such as hard hats, safety glasses, sunscreens and sunglasses
  • professional libraries
  • safety equipment
  • technical instruments.

You can also claim the cost of repairing and insuring your tools and equipment and any interest on money you borrowed to purchase these items.

If you use items for both personal and work-related purposes you need to keep records, such as a diary, so that, if requested, you can show how you apportioned the amount of private use and work-related use.

Watch

Duration 51ss. A transcript of Transporting bulky tools and equipment is also available.

See also:

Other deductions

As a rule of thumb, if you need to spend money to earn income, you can usually claim it - either as an immediate deduction or over time.

To be a legitimate expense claim, you have to be able to show: 

  • you need to incur the expense to earn the income, and 
  • the expense is not private or domestic in nature.

See also:

Books, periodicals and digital information

If the item cost less than $300 you can claim an immediate deduction where it satisfies all of the following requirements:

  • It is used predominantly for earning assessable income that is not income from carrying on a business.
  • It is not part of a set of assets acquired in the same income year that costs more than $300.
  • It is not one of a number of identical or substantially identical items acquired in the same income year that together cost more than $300.

If the item cost more than $300, or is part of a set that cost more than $300, you can add it to your professional library and claim a deduction for the decline in value.

See also:

Cost of managing tax affairs

You can claim a deduction for expenses you incur in managing your own tax affairs, including:

  • preparing and lodging your tax return and activity statements
  • travel, to the extent that it is associated with obtaining tax advice - for example, the travel costs of attending a meeting with a recognised tax adviser
  • appealing to the Administrative Appeals Tribunal or courts in relation to your tax affairs
  • obtaining a valuation needed for a deductible gift or donation of property or for a deduction for entering into a conservation covenant.

Expenses relating to preparing and lodging your tax return and activity statements include the costs of:

  • buying tax reference material
  • lodging your tax return through a registered tax agent
  • obtaining tax advice from a recognised tax adviser (a registered tax agent, barrister or solicitor)
  • dealing with us about your tax affairs.

You generally incur the fees in the year you pay them.

See also:

Election expenses

You can claim a deduction for election expenses, including a candidate's costs of contesting a:

  • local government election - your deduction for local government body election expenses cannot exceed $1,000 for each election contested, even if the expenditure is incurred in more than one year of income
  • state or territory election
  • federal election.

If you claim a deduction for any election expense and you get a reimbursement, you must include the reimbursement as income on your tax return.

See also:

 

Income protection insurance

You can claim the cost of premiums you pay for insurance against the loss of your income. You must include any payment you receive under such a policy on your tax return.

If the policy provides for benefits of an income and capital nature, only that part of the premium attributable to the income benefit is deductible.

You can't claim a deduction for a premium or any part of a premium:

  • for a policy that compensates you for such things as physical injury
  • where the policy is taken out through your superannuation and insurance premiums are deducted from your super contributions.

For example, you can't claim a deduction for:

  • life insurance premiums
  • trauma insurance premiums
  • critical care insurance premiums.

Interest charged by the ATO

You can claim a deduction for interest we charge on:

  • late payment of taxes and penalties
  • any increase in your tax liability as a result of an amendment to your assessment
  • any increase in other tax liabilities, such as goods and services tax (GST) or pay as you go (PAYG) amounts
  • any underestimation of your tax liability when you vary an instalment for GST or PAYG.

You can claim any interest charge we impose in the year in which it is incurred:

  • when you are charged the interest if your income tax assessment is amended
  • in the year in which the interest accrues on your account where there is an increase in other tax liabilities.

Claiming mobile phone, internet and home phone expenses

If you use your own phones or internet for work purposes, you may be able to claim a deduction if you paid for these costs and have records to support your claims.

If you use your phones or internet for both work and private use, you will need to work out the percentage that reasonably relates to your work use.

Substantiating your claims

You need to keep records for a 4-week representative period in each income year to claim a deduction of more than $50. These records may include diary entries, including electronic records, and bills. Evidence that your employer expects you to work at home or make some work-related calls will also help you demonstrate that you are entitled to a deduction.

When you can’t claim a deduction for your phone

Employer provided phone

If your employer provides you with a phone for work use and is billed for the usage (phone calls, text messages, data) then you are not able to claim a deduction. Similarly, if you pay for your usage and are subsequently reimbursed by your employer, you are not able to claim a deduction.

 

How to apportion work use of your phone

As there are many different types of plans available you will need to determine your work use using a reasonable basis.

Incidental use

If your work use is incidental and you are not claiming a deduction of more than $50 in total, you may make a claim based on the following, without having to analyse your bills:

  • $0.25 for work calls made from your landline,
  • $0.75 for work calls made from your mobile, and
  • $0.10 for text messages sent from your mobile.

Usage is itemised on your bills

If you have a phone plan where you receive an itemised bill, you need to determine your percentage of work use over a 4-week representative period which can then be applied to the full year.

You need to work out the percentage using a reasonable basis. This could include:

  • the number of work calls made as a percentage of total calls
  • the amount of time spent on work calls as a percentage of your total calls
  • the amount of data downloaded for work purposes as a percentage of your total downloads.

Example - phone calls are itemised on your bill

Julie has an $80 per month mobile phone plan, which includes $500 worth of calls and 1.5GB of data. She receives a bill which itemises all of her phone calls and provides her with her monthly data use.

Over a 4-week representative period Julie identifies that 20% of her calls are work-related. She worked for 11 months during the income year, having had 1 month of leave. Julie can claim a deduction of $176 in her tax return (20% x $80 x 11 months).

End of example

 

Usage is not itemised on your bills

If you have a phone plan where you don’t receive an itemised bill, you determine your work use by keeping a record of all your calls over a 4-week representative period and then calculate your claim using a reasonable basis.

Example - non-itemised account

Ahmed has a prepaid mobile phone plan which costs him $50 per month. Ahmed does not receive a monthly bill so he keeps a record of his calls for a 4-week representative period. During this 4-week period Ahmed makes 25 work calls and 75 private calls. Ahmed worked for 11 months during the income year, having had 1 month of leave.

Ahmed calculates his work use as 25% (25 work calls /100 total calls). He claims a deduction of $138 in his tax return (25% x $50 x 11 months).

End of example

 

Bundled phone and internet plans

Phone and internet services are often bundled. When you are claiming deductions for work-related use of one or more services, you need to apportion your costs based on your work use for each service.

If other members in your household also use the services, you need to take into account their use in your calculation.

If you have a bundled plan, you need to identify your work use for each service over a 4-week representative period during the income year. This will allow you to determine your pattern of work use which can then be applied to the full year.

A reasonable basis to work out your work related use could include:

Internet:

  • the amount of data downloaded for work as a percentage of the total data downloaded by all members of your household
  • any additional costs incurred as a result of your work-related use – for example, if your work-related use results in you exceeding your monthly cap.

Phone:

  • the number of work calls made as a percentage of total calls
  • the amount of time spent on work calls as a percentage of your total calls
  • any additional costs incurred as a result of your work-related calls – for example, if your work-related use results in you exceeding your monthly cap.

Example 1 – apportioning bundled services

Sujita has a $100 per month home phone and internet bundle. The bill identifies that the monthly cost of Sujita’s phone service in her bundle is $40, and her internet service is $60. Sujita brings in her mobile phone plan of $90 per month and receives a $10 per month discount. Her total costs for all services are $180 per month.

Sujita worked for 11 months during the income year, having had 1 month of leave.

Based on her itemised accounts, Sujita determines that the work related use of her mobile phone is 20%. Sujita also uses her home internet for work purposes and based on her use she determines that 10% of her use is for work. Sujita does not use her home phone for work calls.

As the components are part of a bundle Sujita can calculate her work related use as follows:

Step 1 – work out the value of each bundled component

Mobile phone

$90 per month minus the $10 per month discount

= $80 per month

Internet

$60 per month as identified on her bill

Home phone

Sujita does not need to determine the home phone costs as she does not use this service for work purposes.

Step 2 – apportion your work related use

Home internet use

10% work related use x $60 per month

= $6 work related use per month x 11 months

Sujita can claim $66

Mobile phone use

20% work related use x $80

= $16 per month x 11 months

Sujita can claim $176

In her tax return Sujita claims a deduction of $242 for the financial year ($66 home internet use + $176 mobile phone use)

Sujita cannot claim work related use of her home phone as she did not use it for work.

End of example

Example 2 - apportioning bundled services

Des has a $90 per month home phone and internet bundle, and unlimited internet use as part of his plan. There is no clear breakdown for the cost of each service. By keeping a record of the calls Des makes over a 4 week representative period, he determines that 25% of his calls are for work purposes. Des also keeps a record for 4 weeks of the data downloaded and determines that 30% of the total amount used was for work.

Des worked for 11 months during the income year, having had 1 month of leave.

As there is no clear breakdown of the cost of each service, it is reasonable for Des to allocate 50% of the total cost to each service.

Step 1 – work out the value of each bundled component

Internet

$45 per month ($90/2 services)

Home phone

$45 per month ($90/2 services)

Step 2 – apportion your work related use

Home phone

25% work related use x $45 per month x 11 months

= $124

Internet

30% work related use x $45 per month x 11 months

= $149

In his tax return Des claims a deduction of $273 ($124 + $149) for the year.

End of example

If you purchased a smart phone, tablet or other electronic device and use it for work, you can claim a deduction for a percentage of its cost.

See also:

 

Overtime meals

If you get paid an overtime meal allowance under an industrial instrument (such as an award) and buy food and drink on overtime, you can claim up to the reasonable allowance expense amount we have set without getting written evidence.

However, you can still only claim the amount you have actually spent.

If you need to claim more than the reasonable allowance expense amount, you need to keep written evidence of your expenses.

Generally, you must include amounts received as overtime meal allowances as income on your tax return. However, if your award overtime meal allowance was not shown on your payment summary and was not more than the reasonable allowance amount for each meal, you don't have to include the amount on your tax return providing that you:

  • have fully spent the allowance, and
  • don't claim a deduction for overtime meal expenses.

See also:

Personal super contributions

If you made contributions during the year to a complying superannuation fund or a retirement savings account (RSA) you may be able to claim a deduction for those contributions if you are between 18 and 75 years old and you are:

  • self-employed – that is, a sole trader or a partner in a partnership
  • not employed or you earn less than 10% of your total income from employment.

If you want to make (or vary) a claim for a tax deduction for personal contributions, you must provide a valid notice of intent to your super fund or retirement savings account (RSA) provider and have this notice acknowledged (in writing) by your fund.

A valid notice can be given by any of the following methods:

If you:

  • claim a tax deduction for a super contribution you have made, that contribution will be subject to 15% tax in the fund
  • claim a tax deduction (and it is allowed), you are not eligible for the super
    co-contribution for the amount that you claim.

See also:

 

Project pool deductions

If you have capital expenditure directly connected with a project, you may be able to claim a deduction for capital expenditure allocated to a project pool.

A project is carried on if it involves some form of continuing activity - not a less-active investment, such as a rental property.

The project must be:

  • operated for a taxable purpose
  • carried on or proposed to be carried on for a taxable purpose which was abandoned, sold or otherwise disposed of before or after it started to operate.

You cannot claim a deduction for:

  • private or domestic expenditure, such as the cost of constructing a driveway at your home
  • capital expenditure directly connected with a project undertaken in carrying on a business.
  • See also:
  • Guide to depreciating assets (NAT 1996)

Seminars, conferences and education workshops

You can claim the cost of attending seminars, conferences or education workshops that are sufficiently connected to your work activities. This can include formal education courses provided by professional associations.

If attendance involves travel, you may have to show that you have reduced your claim to exclude any private portion of any trip.

See also:

Undeducted Purchase Price of a foreign pension or annuity

If you have income from a foreign pension or annuity you may be entitled to claim a deduction to reduce the taxable amount if your pension or annuity has an undeducted purchase price (UPP).

Only some foreign pensions and annuities have a UPP. The UPP is the amount you contributed towards the purchase price of your pension or annuity - your personal contributions.

If your pension is from another country and you think you are entitled to claim a deductible amount, complete a Request for a determination of the deductible amount of UPP of a foreign pension or annuity.

Union fees and subscriptions to associations

You can claim a deduction for:

  • union fees
  • subscriptions to trade, business or professional associations.

You can only claim payments of levies to a strike fund where the fund is used solely to maintain or improve the contributors' pay.

Most unions and associations send members statements of the fees or subscriptions paid.

See also:

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