With the deadline looming to lodge your tax return, it's time to start thinking about any expenses you incurred over the financial year as part of your work. You may be able to claim some as a tax deduction and reduce your taxable income.
In general, expenses are claimable when:
- The money spent was a work-related expense
- You spent the money and weren’t reimbursed by your employer
- You have an official record of the expense e.g. receipt, bank statement or diary entry (if your total claim for work-related expenses is $300 or less you will still need to show how you worked out your claim)
- If the cost was for both work and personal use (e.g. home internet) you can only claim a portion of the expense
The Australian Taxation Office (ATO) provides detailed categories of expenses you can claim on its website, that you can refer to for further details. Some of them are outlined below.
1. Vehicle and travel expenses
The ATO has very specific conditions around what trips you can and can’t claim for between home and work, and between workplaces. These conditions may not be as straightforward as you expect, so it’s important to read the relevant section on the ATO website.
2. Clothing, laundry and dry-cleaning
If you purchased occupation-specific clothing, protective clothing or work uniforms, you may be able to claim for the money spent, as well as the costs of cleaning those clothes.
If your employer gives you an allowance for clothing and cleaning, you must show the amount of allowance as part of your income on your tax return.
3. Gifts and donations
Check if any organisations you donate to e.g. your favourite charity, have the ATO’s ‘deductible gift recipient’ status so you can claim for the gifts donated. A gift can be money or other financial assets e.g. property and shares.
Any amount you donate above $2 can be claimed back. For other assets, different rules apply depending on their type and value.
As the name implies, you must have given the gifts voluntarily without receiving material benefit or advantage. This means you can’t claim items such as raffle tickets or fundraising dinners.
4. Home office expenses
Tools and equipment such as computers, furniture and phones used for work purposes may be claimable, either immediately or over a period of time (via depreciation of the asset).
You may also claim for costs incurred from running your home office, including heating, lighting, repairs and cleaning if some of your work is from home. But make sure you’re only claiming the work-related portion and not the portion for private use. If in doubt, speak to an independent tax adviser.
5. Investment income deductions
You may have received interest payments on your savings, dividends from your investments in shares, rental payments from an investment property, or some other type of investment income.
If so, you may be able to claim for costs related to producing this income, such as account-keeping fees and interest charged on money borrowed to buy stocks or rental properties.
Money paid to seek advice on changing the mix of your investment may also be claimable.
6. Educating yourself
If you enrol in eligible education courses and your study is work-related, you may be able to claim a deduction. Please refer to the ATO site for the conditions you must meet and the types of expenses you can claim for this.
7. Other deductions
There are a few other things you may be able to claim that are also considered deductible expenses.
- Books, periodicals and digital information
- Cost of managing your tax affairs
- Union fees and subscriptions to associations
- Personal super contributions
- Income protection insurance
- Interest charged by the ATO
8. Industry-related deductions
Some occupations may have more specific circumstances than others when it comes to claiming expense deductions. The ATO has a list of occupations that you should check against to see what particular spending related to your job is deductible.
Finally, keep all your records from when you lodge your tax return. The ATO may ask you to provide evidence to support any claims you make.
Things you should know
- The Australian income year ends on 30 June. You have from 1 July to 31 October to lodge your tax return for the previous income year. If you use a registered tax agent to prepare and lodge your tax return, you may be able to lodge later than 31 October
- Tax law is subject to change. Double-check on the ATO website
- The information provided is of a general nature and doesn’t take into account your personal, financial situation – we suggest you seek independent taxation and financial advice