Tax Return Deductions

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Tax deductions are used to reduce the amount of tax you need to pay to the ATO each year, and can help maximise your tax refund amount. When completing your tax return, you can claim deductions for certain expenses related to your income. You can engage a registered tax agent to identify all deductions you may be eligible for.


Work-related expenses


Claiming deductions for work expenses is fairly simple. There are a few basic criteria you will need to meet when claiming a deduction related to your job:

  • You must have spent the money yourself and weren't reimbursed 
  • The expense must directly relate to earning your income 
  • You must have a record to prove it and can provide this to ATO 

If the expense was for both work and private purposes, you can only claim a deduction for the percentage it applied to your work. Work expenses reimbursed to you by your employer are not deductible. For example:

  • You use a vehicle for both work and personal purposes 
  • You wish to claim a deduction on the vehicle expenses as a work expense 
  • You calculate the vehicle is used 75% of the time for work purposes 
  • You can claim deductions for that amount only

Now let’s see how this might look with some simple example figures:

  • You use a vehicle for both work and personal purposes 
  • You calculate vehicle expenses in total throughout the year are $5,000 
  • You wish to claim a deduction on the vehicle expenses as a work expense 
  • The vehicle is used for work purposes 75% of the time 
  • You can potentially claim up to $3,750 in work-related deductions 

Finally, let’s see how this might work if you’re reimbursed by your employer:

  • You use a vehicle for both work and personal purposes 
  • You calculate vehicle expenses in total throughout the year are $5,000 
  • Your employer reimburses you for the cost of fuel 
  • Employer reimbursements for fuel equal $2,500 
  • You wish to claim a deduction on the vehicle expenses as a work expense 
  • The vehicle is used for work purposes 75% of the time 
  • You can potentially claim up to $3,750 in work-related deductions 
  • Minus reimbursements ($2,500) the amount you can claim is $1,250 

The most important point to remember is that you must provide evidence of your expenses for the vehicle. To do this, many people keep a travel logbook which details exactly the amount of time and money spent using the vehicle for both personal and business purposes.


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The ATO can seek information from your employer if they think you have claimed a deduction for an expense that you have already been reimbursed for.

How to claim your tax deduction


You can claim your deductions on your tax return, however this will vary depending on how you earn income and which area of your income you are claiming deductions for. You can read more about each type of tax return in their relative guides:

  • Individuals claim deductions in their individual tax return 
  • Sole traders claim deductions in their individual sole trader tax return under the Business and Professional Item section 
  • Partnerships claim deductions in their partnership tax return 
  • Trusts claim deductions in their trust tax return 
  • Companies claim deductions in their company tax return
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The ATO makes it fairly simple to claim deductions, provided you are using the correct return form. If you are unsure about your eligibility for deductions, you may wish to speak to a registered tax agent.


COVID-19 Tax Deductions for Working From Home

In response to the effects of COVID-19, the Australian Government has introduced a ‘Shortcut Method’ of claiming deductions on the 2019/2020 tax return if you are an employee working from home. You can claim a deduction of 80 cents for each hour you work from home from 1 March 2020 to 30 June 2020 if:

  • You are working from home in a similar capacity to your normal situation - i.e. the only change is your working environment 
  • You have incurred additional expenses as a result of working from home 
  • You do not have a specific area in your home - such as a personal office - you can work from 
  • You include the amount you are claiming in the ‘other work-related expenses’ question in your tax return and include ‘COVID-hourly rate’ as the description when claiming deductions 

You can use this method to claim deductions on your additional running expenses, including:

  • Utilities - such as electricity and gas heating expenses 
  • Depreciation and repair of items valued at less than $300 
  • Cleaning costs 
  • Smartphone costs and depreciation
  • Internet costs 
  • Office supplies - i.e. printing ink, paper, pens 
  • Depreciation of work equipment - e.g. laptop 

If you use the shortcut method, you can't claim any other expenses for working from home for that period (1 March 2020 - 30 June 2020). You must also only claim the hours you worked from home - you cannot claim for time spent on a lunch break or taking part in household activities or chores.


Types of Deductions


Vehicle deductions

Expenses you can claimExpenses you can’t claim
Driving between separate workplaces - such as your second job

Driving to meet clients

Driving to multiple work sites through the day - if you work in construction

Driving to make house calls or visit various medical practices - if you are a doctor
The cost of travel between home and work, even if the distance is significant or you work irregular and non-traditional hours

You can claim a deduction for transporting bulky and heavy equipment if you meet the following conditions:

  • Your employer required you to transport the equipment to work 
  • Doing so was essential to earning your income 
  • Storing the equipment at work was unsuitable or unavailable 
  • The item is considerably sized and at least 20 kilograms (heavy and bulky equipment) 
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You need to keep a record of your work-related car expenses using either a logbook or cents-per-kilometre calculation.

Travel deductions

Expenses you can claimExpenses you can't claim
Travel expenses if you are required to travel overnight from your usual work location

Meals and accommodation

Air fares

Petrol

Parking fees and tolls
Travel expenses if you are travelling for personal reasons and add on a work-related component - such as attending a conference you did not know about

Education and Professional Development deductions

Expenses you can claimExpenses you can’t claim
Self-education expenses if your course relates directly to your current job - such as professional development, marketing training or first-aid trainingIf your study is only related in a general way or is designed to help get you a new job - such as study to move from one position to another.

Clothing deductions

Expenses you can claimExpenses you can’t claim
Buying, hiring, mending or cleaning certain uniforms that are unique to your job

Protective clothing that your employer requires you to wear
The cost of buying or cleaning plain clothing worn at work - such as a business suit, dress shoes or a tie

Hairdressing, cosmetics, hair and skin care products unless related to air travel

Home Office deductions

Expenses you can claimExpenses you can't claim
Depreciation of office equipment

Work-related phone calls and internet access

Electricity for heating, cooling and lighting costs

Equipment purchased for work valued below $300
Rates

Mortgage interest

Rent

Insurance

Job-specific deductions


The individual occupation-specific deductions below are an example of common deductions made by various professionals. They are not an exhaustive list, and if you are uncertain about which are applicable to your personal situation, you can speak to a tax adviser or registered agent.

Medical Professionals


Medical professionals - including doctors, dentists, vets, and more - can claim deductions on:

  • Professional indemnity insurance 
  • Medical journal subscriptions and publications 
  • Medical professional association membership fees 
  • The work-related portion of phone expenses 
  • Medical equipment and insurance for that equipment 
  • Compulsory doctor’s uniforms, lab coats and surgical caps 

Office Workers


Office workers can claim deductions for a number of expenses, including:

  • The cost of seminars and conferences 
  • Technical or professional publications 
  • Union and professional association fees 
  • Costs relating to time spent working from home or remotely 

Military Personnel


Military personnel in Australia can claim the cost of fitness expenses if their role within the Australian Defence Force (ADF) requires a minimum level of fitness above the normal, accepted standard - such as a physical training instructor, dive instructor, or member of the Australian Special Forces. 

Military personnel may also claim various expenses related to their role, including the cost of:

  • Protective equipment such as sunglasses, sunhats and sunscreens 
  • Safety equipment such as harnesses, goggles and breathing masks 
  • Union fees 
  • Steel-capped boots, high-vis vests, fire-resistant and sun-protection clothing 

Miners


Miners commonly claim deductions for their work, as much of the time they are required to travel and stay away from their normal place of residence. Miners may be able to claim:

  • Deductions for meals when travelling away from home overnight 
  • Deductions for the cost of overtime meals where they are working overtime and paid an overtime meal allowance 

They can also claim a number of other reductions, including the cost of:

  • Sunscreen and sunglasses if required to work outside 
  • Phone expenses directly related to their work 
  • Union fees 
  • Renewing licences for operating machinery 
  • Steel-capped boots, high-vis vests, fire-resistant and sun-protection clothing 
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While Miners can claim deductions for renewing their operating licences, they cannot claim deductions for obtaining them.

Flight Attendants


If you are a flight attendant you can claim various deductions related to your travel and work-related expenses, including the cost of:

  • Luggage and bags used for work-related purposes 
  • Phone expenses for calls, emails and texts related to work 
  • Union and professional association fees 
  • Visa applications when required to enter a country as part of your job 
  • Some meals 

Teachers


Teachers are generally eligible for a number of deductions, provided they directly relate to their work. This can include expenses for:

  • Phone and internet usage 
  • School trips and camps 
  • First aid courses 
  • Seminars and conferences 
  • Protective equipment, including sun hats and sunscreen 
  • Union and professional association fees

However, common deductions teachers cannot claim include:

  • Gifts purchased for students 
  • Student personal expenses, such as paying for lunch, trip fees, or textbooks 

Cleaners


Cleaners may claim deductions for tools or equipment which is a required part of their job. These deductions only apply to equipment you purchase - not equipment you already own - however you may be able to claim the business-related portion of its use. For example:

  • You own a heavy-duty floor cleaner to polish floors 
  • You use this at both your home and in your role as a cleaner 
  • You use the floor polisher 80% of the time for business use 
  • You can claim the expenses related to that portion only

Cleaners may also be able to claim the costs of:

  • Phone expenses related to work 
  • Union fees 
  • Protective clothing 
  • Specialist cleaning uniforms or equipment 
  • Aprons, overalls, gloves and breathing masks 

Construction


Construction workers can claim deductions for uniforms specific to their job, and certain work-related equipment and tools, including:

  • Steel-capped boots, high-vis vests, fire-resistant and sun protection clothing 
  • Depreciation for tools and equipment valued over $300 
  • Purchase-price deductions for tools and equipment valued under
  • $300 Safety equipment such as harnesses, goggles and breathing masks 
  • Union fees 
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You can’t claim a deduction on any equipment or tools either used privately, or which are supplied by your employer or another worker for your use.

Real Estate Agents


Real Estate Agents can claim deductions for expenses related to buying or cleaning uniforms specific to their job alone - i.e. not clothes you would normally wear outside of work. If your clothing has a company logo, this is a deductible item of clothing.


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You can only claim the work-related part of expenses. You can’t claim a deduction for any part of the expense that relates to personal use.


How to maximise your deductions


The easiest way to get the most out of your tax return is to use a tax agent. Not only will they ensure your tax return is complete, but their fee is also tax-deductible. You can claim this as a deduction on the tax return in the following year. 

A tax agent provides numerous benefits for anyone submitting a tax return, as you can:

  • Claim the tax agent fee as a tax deduction 
  • Claim more deductions 
  • Claim correctly and avoid fines from the ATO 
  • Learn how to make calculations 
  • Learn tax tips for organising your finances 

Learn more about choosing a tax agent or find a tax agent near you.


Summary


Tax deductions are a way many Australian workers in a wide number of industries and roles can reduce the amount of tax they pay, and increase their refund amount from the ATO. 

Certain deductions are only applicable for certain professions, while other deductions may only apply for certain items or expenses. If you are unsure which deductions you can claim, speak to a registered tax agent.


Tax Deductions FAQ

How do you get the biggest tax refund?


You can get the biggest tax refund by carefully tracking your expenses related to your business or employment throughout the year and providing these to the ATO when lodging your tax return. If you are unsure of which deductions you can claim or the required supporting documents, you can speak to a registered tax agent.


What can I claim on my 2020 tax return?


The expenses you can claim as deductions on your 2020 tax return will vary depending on how the expenses relate to your profession, and your personal circumstances. You can find a list of common deductions in this guide.


What is tax deductible in Australia?


Generally, if the expense relates to your employment and is a requirement of your role, you can claim a deduction on part of the cost. If you the expense relates to both personal and work use - such as a vehicle driven for both purposes - you can only claim the portion used for business.


Claiming tax deductions without receipts


To claim deductions on your tax return, you will need to show proof of the expense. The ATO will request proof of expenses if they question any deductions you have listed, which is generally why Australians will engage a tax agent. Nearly 75 per cent of Australian employees use a tax agent to lodge their return and maximise their deductions.