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Income and deductions
When completing your tax return, you're 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 – you only pay tax on your taxable income.
The expense 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.
This information covers only work-related and other personal deductions. If you have business income, refer to Claiming business deductions.
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Basic rules for claiming deductions
To make a deductions claim, 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.
Vehicle and travel expenses
You can claim vehicle and other travel expenses directly connected with your work, but you can't claim for normal trips between home and work – this is considered private travel.
Clothing, laundry and dry-cleaning expenses
You can claim a deduction for the cost of buying and cleaning occupation-specific clothing, protective clothing and unique distinctive uniforms.
Gifts and donations
You can only make tax deductible gifts or donations to organisations that have the status of deductible gift recipients (DGRs).
Home office expenses
You may be entitled to claim deductions for home office expenses including a computer, phone or other electronic device you are required to use for work purposes. You must keep records. Running costs may be deductible. Occupancy costs are generally not deductible for an employee.
Interest, dividend and other investment income deductions
You can claim a deduction if you are able to show that you incurred expenses earning interest, dividend or other investment income.
You may be able to claim a deduction for self-education expenses if your study is work-related or if you receive a taxable bonded scholarship. In some circumstances, you have to reduce the amount of your claim by $250.
Tools, equipment and other assets
If you buy tools, equipment or other assets to help earn your income, you can claim a deduction for some or all of the cost.
You may be able to claim other deductions not previously mentioned. As a rule of thumb, if you need to spend money to earn income, you can usually claim it – either as an immediate deduction, or over time.
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