Before you learn the "what can I claim on tax" deductions items, you must meet the ATO's 3 golden rules:
- you must have spent the money yourself;
- the expense must be work-related, and you were not reimbursed,
- you must have a record to prove it.*
To manage your deductions Download [Free] ATO Record-Keeping Tool app myDeductions to capture all expense receipts and mileage throughout the year. Receipts are proof!
What is a Tax Deduction?
Deductions are expenses incurred directly related to earning your income. You can claim certain work-related expenses as deductions to reduce the amount of tax you pay. You can also claim certain deductions without receipts.
If you use your personal car for work and travel between two separate jobs or sites on the same day; i.e. if you’re a medical practitioner driving from your usual hospital to another clinic/hospital to work for the same employer.
In limited circumstances, you can claim work-related car expenses if you carry bulky tools or equipment for work: –
- the job requires you to transport the equipment
- the equipment is essential to earning your income
- there is no secure area to store the equipment at the job
- the equipment is heavy, hard to transport and at least 20kgs.
A logbook method may increase your work-related car expenses deduction, however you must have kept a logbook for 12 consecutive weeks and have it updated every 5 years or when your car use materially changes. Additionally, you ensure that you have all written evidence of all work-related car expenses such as registration, insurance, petrol, repairs and maintenance and receipt for the cost of the car for depreciation purposes.
If a logbook was not maintained, what can I claim on tax? You can claim under the cents per kilometre method, the maximum kilometres an employee is entitled to is a cap of 5,000km. Under this method, you don’t need to provide evidence, however you need to provide how you work out your business/work kilometres by producing diary records of work-related trips.
Note: the ATO does not consider travel trips from home-to-work and work-back-home as a work-related expense.
Tax Deduction for Clothing (must be Distinctive to you job).
A deduction can be claimed for clothing and UNIFORM that are distinctive to your job, see picture illustration below. If your total claim of uniform and laundry is more than $150 or your total work-related expenses claim on the tax return exceeds $300, you must have proof of purchase.
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Protective Clothing Tax Deduction
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“What can I claim on tax” are the cost of purchase, hiring or repairing protective clothing such as steel cap shoes, hi-vis vest, non-slip nurse’s shoes, hard hats, safety glasses etc that your employer requires you to wear. Written evidence must be kept for a representative period of at least 1 month for a claim for uniform, protective clothing and laundry etc that are greater than $150 or your total claim on the tax return exceeds $300.
Laundry Tax Deduction
If you wash, dry, and iron your uniform and protective clothing yourself at home, you can work out “What can I claim on tax for laundry” under these 2 reasonable basis:
- $1 per load – if each load contains only work-related clothing.
- 50 cents per load – if private laundry items are included.
If you choose a different basis, the ATO will ask you to explain how you arrive at a claim. You must substantiate evidence if your total work-related expenses is over $300.
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Dry Cleaning Tax Deduction
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If you dry clean work uniform and protective clothing, you can claim a deduction, however the total combine of uniform, laundry and dry-cleaning cannot exceed $150 or if your total claim for work-related expenses exceeds $300.
You are entitled to claim a deduction for self-education expenses if the course or education have sufficient connection with your current role and work activities, i.e. if you are an accountant and is undertaking the CA or CPA course to maintain your skills and knowledge. The first $250 of the fees are not deductible. A summary self-education expenses can be found at ATO website.
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Home Office Expense Covid-19
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“What can I claim on tax for home office expense as a result of Covid-19”? The ATO provides a temporary shortcut method to make it easier for taxpayers to claim deductions for running expenses. This allows a claim for all running expenses incurred during the period 01/03/2020 to 30/06/2020, based on a rate of 80 cents for each hour an individual carries out genuine work activities from home. Working from home deductions for the above period comprises: –
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- Cleaning costs for the dedicated work area
- Electricity expenses related to heating, cooling and power the area being used for work at home
- Computer expenses i.e. ink, printing paper and stationery
- Depreciation of home office furniture & furnishings i.e. desk, chair, computer
- home phone and wifi expenses.
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Under the 80 cents per hour basis, separate claims cannot be made for any of the aforementioned running expenses.
Record required: You will only be required to keep a record of the number of hours worked from home due to Covid-19 being 01/03/2020 to 30/06/2020. This record can comprise timesheets, rosters, diary notes and entries.
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Home Office Expense Pre Covid-19
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If you incurred working from home running expenses prior 01/03/2020 (and or incurred from 01/03/2020 where you do not want to use the 80 cents shortcut method) can claim using the actual cost method.
Tax Deduction Tools
You can claim a depreciation expense on the cost of the tools, equipment and other assets you bought to perform work duties. For instance, if you purchased a computer costing less than $300 you can claim 100% depreciation. Otherwise, if it cost more than $300 then you must use the 2 methods below over the effective life of the tools. The average lifespan of a computer is 3 years, hence the formula is:
Diminishing = computer cost x no.days held / 365days x (200/3years)
Prime Cost = computer cost x no.days held / 365days x (100/3years).
If you use your tools for work-related use and private purpose, you must apportion you claim the work use portion.
Other Work-related Deductions
- indemnity insurance
- professional association membership fees
- Seminars, conferences and education workshops
- union fees
- work briefcase (e.g. medical briefcase)
- income protection insurance
- overtime meals
- Election Expenses
- Working with children checks
Other “what can I claim on tax” Deductions:
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- ATO interest
- Tax Agent’s fees.
- Interest, dividend and other investment income deductions
- Personal concessional super contributions
- un-deducted purchase price of a foreign pension or annuity
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Occupational Specific Deductions
Lastly, under the list of “What can I claim on tax” you can also claim occupation-specific expenses.