• Business professionals – deductions you may be able to claim

    As a business professional, here are some of the deductions you can and cannot claim.

    Car expenses

    You can claim the cost of travel you undertake in the course of performing your duties as an employee.

    Your home to work travel is not deductible, even if:

    • you do minor work-related tasks while travelling to and from work, such as collecting mail
    • you travel between home and work more than once a day
    • you work outside normal business hours, for example, shift work or overtime
    • you are required to be on call
    • your home is a place of business and you travel directly to a place of employment where you work for somebody else
    • there is no public transport available.

    Home to work travel is only deductible in limited circumstances, for example, if you are engaged in itinerant work.

    Methods of working out your car expenses

    The deduction you can claim must be worked out using one of two methods. The records you must keep will depend on:

    • the estimated amount of business kilometres you travelled for the income year
    • which method you use for claiming car expenses.

    See also:

    The logbook method

    To work out your deduction using the logbook method, you must keep:

    • a logbook
    • odometer records
    • receipts and other written evidence for all your car expenses – you can use your odometer readings to estimate your fuel and oil costs instead of keeping receipts.

    The cents per kilometre method

    When working out your deduction using the cents per kilometre method:

    • you don't need receipts or other written evidence, but we may ask you to show how you worked out your estimate of business kilometres
      • by using a diary of work-related travel
      • by basing your costs on a regular pattern of travel
       
    • you can only claim up to the first 5,000 business kilometres you travel.

    Car expenses are claimed at item D1 Work-related car expenses on your tax return.

    Travel expenses

    Travel expenses relating to the attendance at conferences, seminars and other work-related events are deductible to the extent that they relate to your income-producing activities. You will need to apportion your travel expenses where you undertake both work-related and private activities. Travel costs to and from the location of the work-related event will only be deductible where the primary purpose of the travel was to attend the event.

    You may be able to claim meal, accommodation and incidental expenses you incurred while away overnight for work, for example, going to an interstate work conference. Generally, if your travel did not involve an overnight stay, you cannot claim for meals even if you received a travel allowance.

    You cannot claim deductions for expenses you incur while living away from home.

    Decline in value

    You can claim a deduction for the cost of purchasing tools or equipment (if $300 or less) which you use for your work. If they cost more than $300, you must depreciate the asset using the decline in value rules. The publication Guide to depreciating assets has more information.

    As a general rule, desktop computers are depreciated over a period of four years, and laptops can be depreciated over three years. You must apportion the amount of your claim where the equipment:

    • has been used in part for private purposes
    • was not available for use during all of the financial year.

    Home office expenses

    You can only claim occupancy expenses (such as rates, mortgage interest, rent and insurance) where your home office is considered to be a place of business.

    If your employer has an office in the city or town where you reside, your home office will not be a place of business, even if your work requires you to work outside normal business hours.

    See our taxation ruling TR 93/30 Income tax: deductions for home office expenses.

    You can claim the additional running expenses (such as heating/cooling and lighting expenses, cleaning costs, depreciation, leasing charges and the cost of repairs to furniture and furnishings in the home office) for your home office by apportioning the actual costs incurred or using a fixed rate of 45 cents an hour. You need to keep a record of the time spent in your home office on employment activities. The record should cover a representative period and a reasonable time (generally four weeks).

    See our law administration practice statement PS LA 2001/6 Home office and electronic device expenses.

    Other work-related expenses

    You can claim deductions for other work-related expenses, such as mobile phone calls, home telephone calls and internet usage. You must apportion expenses between work-related and private use. If you don’t have an itemised account from your phone company, your personal records (such as diary entries which cover a representative four week period) are acceptable to establish a pattern of use for the entire year.

    Union and professional association fees

    Union fees and professional association memberships are deductible. However, worker-entitlement fund contributions (for example, welfare fund contributions) and similar charges are generally not deductible.

    Entertainment expenses

    Entertainment expenses are generally not deductible. This includes the cost of business lunches, and attendance at sporting events, gala or social nights, concerts or other similar types of functions or events. This is the case even if you discuss business matters at the occasion.

    Self-education expenses

    To claim a deduction for self-education expenses, you must have met one of the following conditions when you incurred the expense:

    • the course maintained or improved a skill or specific knowledge required for your then current work activities
    • the course was leading to, or was likely to lead to, increased income from your then current work activities
    • other circumstances existed which established a direct connection between the course and your then current work activities.

    You cannot claim a deduction for self-education for a course that:

    • relates only in a general way to your current employment or profession
    • will enable you to get new employment.

    More information

    Although there is no specific taxation ruling for business professionals, the principles in TR 95/9 Income tax: employee lawyers – allowances, reimbursements and work-related deductions are applicable across many professional forms of employment, and are relevant to business professionals.

    See also:

      Last modified: 15 Aug 2017QC 18955