Guide to claiming deductions

Basic rules and records you need to keep

The basic rules of claiming a deduction are that you:

must claim the deduction in the same income year that you made the purchase
can't claim an expense that you have been, or will be, reimbursed for
may have to substantiate your claims with written evidence
apply different rules for expenses where you prepay for a service that extends beyond the current income year.

For work-related expenses, you must have made the purchase in the course of earning your assessable (taxable) income and it must not be a private, domestic or capital expense. If the expense was both work-related and private or domestic, you can only claim a deduction for the work-related portion.

From 1 July 2011, you can no longer claim deductions for expenses you incur to maintain your right to receive some government assistance payments. This applies to government assistant payments that are eligible for the beneficiary rebate, including:

Austudy living allowance

ABSTUDY living allowance

Newstart Allowance

Youth Allowance (Student)

Youth Allowance (Jobseeker).

For information on:

expenses for a service that extends beyond the current income year, see Deductions for prepaid expenses

substantiating your claim, see Keeping your tax records.

If GST is included in a work-related expense, it is part of the total expense and therefore part of any allowable deduction.

You cannot claim a deduction for:

fines imposed under a law of the Commonwealth, a state, a territory, a foreign country, or by a court - such as speeding tickets and car parking fines

costs you incur earning income from illegal activities - refer to Income from illegal activities: losses and outgoings.

If your total claim for work-related expenses is:

less than $300, we may ask you to tell us how you worked out your claim and explain why your claim is reasonable, based on the requirements of your occupation - you do not need written evidence; you can make reasonable estimates.
$300 or more, you must have written evidence to prove your claims - the records you keep must prove the total amount, not just the amount over $300.

Written evidence

You must have written evidence to prove your claims if your total work-related expense claims exceed $300. The records you keep must prove the total amount, not just the amount over $300.

You need evidence of all your expenses, even if they are less than $300, if you are claiming a:

travel expense for using a vehicle other than a car
non-work related expense.

Do not send in your receipts or other records with your tax return unless we write to you and request them.

How long you need to keep your records

You must keep your written evidence of:

expenses for the latter of five years from when

your tax return is due to be lodged, or
you lodge your tax return

depreciating assets, for

the entire period over which you claim deductions for the decline in value of those assets, and
a further five years from the date of your last claim

your payment summary for the latter of five years from when

your tax return is due to be lodged, or
you lodge your tax return

other deductions, such as donations, for the latter of five years from when

your tax return is due to be lodged, or
you lodge your tax return

If you are in dispute with us, you must keep your written evidence for the latter of five years from when:

your return is lodged or
the dispute is finalised.

Lost or destroyed records

If you have lost your records or they have been destroyed:

see Reconstructing your tax records in the Guide to Dealing with disasters.

phone us on 13 28 61.

Claiming deductions - home

Sections within Basic rules and records you need to keep

Last Modified: Monday, 23 July 2012