Frequently Asked Questions About Tax Deductions
This is a guide to help you claim what tax deductions you are entitled to, and to get your tax return correct before you lodge it.
How do Tax Deductions Work?
When you lodge your tax return you are entitled to claim work related expenses you incurred while working. To be able to claim these deductions you must:
- have a record to prove it
- have not been reimbursed for the cost and
- the expense is related to your job
If you are claiming an expense that you use for both work and private purposes, you can only claim the work related portion of the cost.
What Income Do I Need to Declare?
Your income includes:
- Income Statements from your employer
- Pension payments
- Foreign income from overseas
- Interest and dividends
- Investment properties
- Business income
The ATO now receives most of these details electronically and the information is used to match the income you declare in your tax return. If these details are not the same, the ATO will write to you seeking an explanation and possibly charge penalties.
Can I Claim Self-Education Deductions?
You can’t claim a self-education deduction if you are undertaking a course to open up a new line of employment. You need to be sure that the education undertaken has the necessary connection to the income you are currently earning.
Can I Claim Using My Home Office To Work From Home?
You can claim a set rate per hour (currently 52 cents) to cover running costs like electricity, furniture etc if you are using your home office to do work at home after hours. You cannot claim a percentage of rent or the interest on your mortgage.
The ATO indroduced a shortcut method (80 cents per hour) to calculate home office expenses for working from home during the Covid pandemic that covers your phone, internet, electricity, stationery and equipment depreciation.
Can I Claim The Use Of My Car?
If you use your own car for work purposes, you can claim a deduction using the cents per kilometre method or logbook method. You can claim a deduction for:
- using your car in the course of performing your work duties
- attending work-related conferences or meetings away from your normal workplace
- travel directly between two separate places of employment and one of the places is not your home
- travel from your normal work place to an alternative workplace
- travel from your home to an alternative workplace and then to your normal workplace
You can find more detailed information on claiming expenses for your car here.
Can I Claim The Cost Of My Work Clothes?
You can claim a deduction for the cost of buying and cleaning:
- occupation-specific clothing that is not everyday in nature and allows the public to easily recognise your occupation e.g. a member of the Australian Defence Force, chef, flight attendant, police officer
- protective clothing and footwear that protects you from the risk of illness or injury. The clothing must provide a sufficient degree of protection e.g. fire-resistant clothing, hi-vis safety vests, non-slip nurse’s shoes, steel-capped boots
- compulsory uniform that is unique and distinctive to the organisaton you work for e.g. the employer’s logo is permanently attached and the clothing is not available to the public
Can I Claim My Mobile Phone?
If you use your phone or internet for both work and private use, you will need to work out the percentage that reasonably relates to your work use. If other members in your household also use these services, you need to take into account their use in your claim.
If your employer provides you with a phone for work use and they are billed for the usage or they reimburse you, you can’t claim a deduction.
Can I Claim A Donation To A Go Fund Me Page?
You may be able to claim a deduction when the gift or donation is $2 or more and it is made to a deductable gift receipient.
You can’t claim gifts or donations as a deduction when it is for:
- raffle or art union tickets
- fundraising items such as chocolates, badges and pens
- fundraising dinners
- go fund me pages
- made under salary sacrifice arrangements
Can I Claim The Cost Of Tools/Equipment I Need For Work?
A deduction can be claimed for some or all of the cost for tools and equipment you purchase for work purposes. If you also use the equipment for personal use, you claim the portion used for work. The cost of the asset will affect the type of deduction you can claim:
- you can claim an immediate deduction for items that cost $300 or less
- for items that cost more than $300 you can claim a deduction for their decline in value. You can also claim the cost of repairing and insuring tools and equipment if need be.
Other Work-Related Expenses
If you spend money to earn income you can usually claim it, either as an immediate deduction or over time. Other common work related deductions that may be claimable:
- books, periodicals and digital information
- income protection insurance
- union fees, subscriptions to professional associations
- professional registration fees
- travel expenses e.g. parking, tolls, flights and accommodation
You can’t claim any items that are reimbursed or provided by your employer.
If your unsure as to whether you can claim an expense, keep the receipt and ask when you meet with one of our tax agents.
