When completing your tax return, you are entitled to claim deductions for some expenses that are directly related to earning your income. You subtract these allowable deductions from your total income to arrive at your taxable income.
|
To complete your tax return:
|
You may be able to claim deductions for expenses that directly relate to your work as an employee (work-related expenses) or your investment income.
Basic rules and records you need to keep
The most basic rules when you claim a deduction are:
- Claim the deduction in the same income year that you made the purchase.
- Don't claim an expense that you have been, or will be, reimbursed for.
- Claim for expenses in earning your assessable (taxable) income - but not private, domestic or capital expenses.
- Keep written records.
Work-related car expenses
If you have expenses from using your car to earn income you can claim deductions for costs such as petrol and car parking. However, you cannot claim the cost of normal domestic and private travel, such as holidays or trips between your home and your workplace. You can claim car expenses directly connected with your work. If your car expenses were partly private and partly for work, you can only claim the work-related part.
|
A car is a motor vehicle designed to carry a load of less than one tonne and less than nine passengers.
To claim a deduction for work related expenses for other types of vehicles, see Work-related travel expenses.
|
Work-related travel expenses
If you have expenses from travelling, including using someone else's car, to earn income, you can claim deductions for costs such as petrol, car parking, airfares, train fares and accommodation. However, you cannot claim the cost of normal domestic and private travel, such as holidays or trips between your home and your workplace. You can claim travel expenses directly connected with your work. If your travel was partly private and partly for work, you can only claim the work-related part.
|
Work-related travel includes expenses for vehicles with a carrying capacity of one tonne or more, or nine or more passengers (for example, utility trucks and panel vans) and for motorcycles.
Claim work-related car expenses for work-related expenses for using your car.
|
Work-related clothing, laundry and dry-cleaning expenses
You can claim a deduction for the expense of buying and cleaning:
- clothing that is specific to your occupation, is not everyday in nature and would allow the public to easily recognise your occupation (such as the checked pants a chef wears)
- special work clothing and footwear that you wear to protect yourself from the risk of illness or injury
- your work uniform, if it
- has been designed and made only for your employer
- has your employer's logo permanently attached, and
- is not available to the public.
You cannot claim for everyday clothes, even if your employer tells you to wear them.
Other work-related expenses
Many individuals also claim other work-related expenses. You must have incurred the expense in the course of earning your assessable income and it must not be private, domestic or capital in nature. If something is used for personal and work-related uses, keep a diary of your use for four weeks and use that to estimate the proportion that was work-related.
Common expenses people claim are:
- buying a computer to use for your work
- work-related phone calls and the work-related proportion of your Internet access charges
- the work-related proportion of your expenses for repairing your computer
- reference books, technical journals and trade magazines
- union fees and subscriptions to trade, business or professional associations.
Self-education expenses
You can claim a deduction for self-education expenses when your course of study is directly connected to your current employment by either:
- maintaining or improving the specific skills or knowledge you require
- resulting in, or being likely to result in, an increase in your income.
You can also claim a deduction for self-education expenses if you receive a taxable bonded scholarship and doing the course satisfies study requirements to maintain your right to the scholarship.
You can claim a deduction for expenses such as travel, computers and some course fees.
Interest and dividend deductions
If you earn income from interest or dividends, you can claim deductions for expenses, such as:
- account-keeping fees if you held the account for investment purposes
- management fees and fees for investment advice relating to changes in the mix of your investments.
If you were not the sole holder of an account, you can only claim your share of fees, charges or taxes on the account. For example, if you held an equal share in an account with your spouse, you can only claim half of any allowable account-keeping fees paid on that account.
Gifts or donations
You can claim a tax deduction for a gift if it:
- is made to a deductible gift recipient (DGR)
- is truly a gift
- is a gift of money or property that is covered by one of the gift types, and
- complies with any relevant gift conditions.
You cannot claim a deduction if you get a benefit, such as raffle tickets and fundraising chocolates.
Cost of managing tax affairs
You are entitled to deductions for the expenses of managing your tax affairs, including payments to recognised tax advisers and the cost of tax reference material and travel to obtain tax advice.
Other deductions
Other deductions you may be able to claim include:
- the deductible amount of undeducted purchase price (UPP) of a foreign pension or annuity - if you have income from a foreign pension or annuity
- personal superannuation contributions - if you are not an employee or less than 10% of your income is from employment
- a deduction for a project pool - if you incur capital expenditure that is directly connected with a project you carry on (or propose to carry on)
- other deductions, such as
- election expenses for local, territory, state or federal candidates
- income protection, sickness and accident insurance premiums
- foreign exchange losses
- business expenses you incurred after you finished carrying on a business.
Last Modified: Monday, 23 July 2012