Tax Deductions

Pretty much everyone who works or earns an income can claim some sort of deduction when it comes time to do your income taxes. Correctly claiming deductions (so you don’t over claim and get into trouble or under claim and pay too much tax) can be quite convoluted. There are specific deductions that apply only to certain industries or situations.

To get it right – consult with your tax agent. That is their job – to make sure you pay your fair share and no more!

Here is a simple guide about the most common kinds of deductions. Its to give you an idea. It doesn’t include everything – just the basics.

WARNING!

You must have spent the money yourself to claim it. If your work paid for it or reimbursed you – it didn’t cost you anything so you can’t claim it as a deduction.

KEEP RECORDS. If you can’t prove it – then you can’t claim it!

You can only claim for things related to your employment or income – that makes you money, that bring in wages or income. That also means that if only part of what you purchased or spent was related to earning income – then you can only claim for that percentage (and you have to KEEP RECORDS to back up what that actual percentage is).

Car and travel expenses

(LOGBOOKS! If you can’t prove it – then you can’t claim it!)

You can’t really claim for going to work but you might be able to claim a deduction if going to work involves you having incurred an expense. An example would be having to take large and bulky equipment home with you at night.

You can claim in situations where you have to travel to different work places during your working day or visit clients. In other words, use your car for work – not just to get to work.

You can claim for travel expenses if you have to travel overnight. You can also claim for stuff like meals and accommodation, fares and anything related to that travel where you incurred an expense because of your work related travel. But KEEP RECORDS and remember – if your employer paid for it (or reimbursed you for it) then its not an allowable deduction.

Also, it has to be real work related travel. You can’t claim for that glorious two weeks trip to Surfers Paradise just because you visited the Queensland branch of the office for half an hour.

Clothing expenses

To claim deductions for clothing it must be clothing worn only for work. Things like uniforms or protective clothing/equipment. That can include the purchase cost, mending and cleaning. But you can’t claim for normal clothing that you can wear outside of work. You might not be caught dead in a suit and tie outside of work and only have purchased one for work. But it’s still is normal clothing – so you can’t claim it.

Meals

The way to look at it is that it’s only an allowable deduction if if it’s an expense you normally wouldn’t have to pay. So you can’t claim for lunch because you would eat lunch anyway. But if you worked overtime and had to buy yourself something to eat rather than just go home and make dinner – then that’s an allowable expense.

Self education expenses

You can only claim if it’s directly related to the work you do (not just “kind of related”). So, for example, if you do a course just so you can change jobs or just to add an extra string to your bow – then that’s not an allowable deduction.

If you are studying something that is work related but has a personal or non work related component then you can claim for the percentage of the expense that is work related (KEEP RECORDS!)

But you can claim for resources like text books, publications or subscriptions to periodicals directly related to the work you do.

Home office

This is a big one because of COVID that has resulted in so many people working from home. You should consult the blog we did last year about home offices which you can read about HERE. It goes into some detail about this one (and the Australian Tax Office has put in place some special and temporary rules around this).

Phone and internet

If you have to do work related stuff using your own devices – a computer or phone, for example, then you can claim that percentage of use that is work related.

Tools and other equipment

Basically, if it cost more than $300 then you can claim a deduction for the cost over a number of years (this is called depreciation). But if you spent under $300, then you can just a deduction for the whole cost.

Does it cost you money?

Anything that is for work but you have to pay for it, can be claimed as a deduction. Equipment, tools, subscriptions to professional journals, professional or union membership fees, seminars and conferences, work related insurance. But make sure it really is for work. If it’s for both work and personal use then you have to have records that prove what percentage of the expense is due to your work/income and what part isn’t.

Want some advice? Call us on 1300 268 800 for a free initial consultation.