If you have to spend your own money as part of your employment, you might be entitled to a tax deduction.
However, when you make a claim it’s important to remember the tax office’s three golden rules.
One, you must have spent the money yourself and weren’t reimbursed – so you cannot claim that taxi fare the boss paid you back for!
Two, it must be directly related to earning your income – so unless you are an outdoor worker and you wear your new sunglasses on the job, you won’t be able to claim them. Lastly, keep your receipts – you need a record to prove it!
The ATO app has a tool called myDeductions that helps you keep track of your work-related expenses throughout the year. At tax time you can upload deductions to your tax return, or email them to your agent. Find out more at ato.gov.au/myDeductions.
You may be able to claim car expenses if you use your car for work – for example, if you attend work-related meetings away from your normal workplace, or you travel directly between two separate places of employment (home doesn’t count).
You can either use a logbook or the cents per kilometre method to calculate your claim.
Travel between home and work is a private expense, so you can’t usually claim these trips unless, in limited circumstances, you must carry bulky tools or equipment to work (e.g., an extension ladder or wheelbarrow), which your employer requires you to use and there is no secure area to store them at work.
Some workers can claim a deduction for work clothing that they purchased themselves. But there are a few conditions. Your claim must be for either:
- a unique and distinctive uniform (e.g., it has your employers logo on it, is a compulsory uniform or is registered with AusIndustry);
- occupation-specific items that you would not wear outside your workplace (think chef’s chequered pants and hat);
- protective clothing to avoid injury from your work activities (e.g., steel-capped boots for some tradies or non-slip shoes for a nurse).
One of the biggest mistakes people make is trying to claim a deduction for plain clothing they bought for work.
This means you can’t claim things like a business suit or black pants and white shirts, even if your employer makes you wear them or you only wear them for work.
And remember, for claims under $150 you are not required to keep records but you do need to be able to show how you calculated your claim.
The ATO considers a reasonable basis for working out your claim for laundry (washing, drying and ironing) is $1 per load if it is made up of only work-related clothing, or 50c per load if you include other laundry items.
If you regularly work from home, you may be able to claim a deduction for some expenses.
There are two main types of expenses you may be able to claim a portion of:
- “running costs” such as heating, cooling, lighting and the decline in value of furniture; and
- in very limited circumstances, “occupancy expenses” such as your mortgage interest, insurance, land taxes and rates.
To calculate your claim for running costs, you can use a rate of 45c an hour.
Alternatively, you can claim the work-related proportion of your actual running costs.
You can only claim occupancy expenses where a space in your home is set aside exclusively as a place of business, for example a doctor or dentist surgery or a hairdresser studio in a home.
Internet and phone
You can claim phone and internet costs if your employer requires you to use these services but, as with all work-related expenses, you can only claim the portion of your bill that is actually work-related.
If you use your phone occasionally for work and are not claiming a deduction of more than $50 in total, you can claim:
- 25c for each work call made from your landline;
- 75c for each work call made from your mobile; and
- 10c for each text messages sent from your mobile
If you are claiming for phone and internet costs of more than $50, you need to work out what percentage of your usage is for work and apply that rate to your bill to work out your claim.
Keep a record of how you have worked out your claim as the ATO may ask for this.
Other expenses you may be able to claim include union and professional association membership fees, and tools and equipment you use for work.
Remember to keep your receipts to prove your claims.