Business professionals – deductions you may be able to claim
As a business professional, here are some of the deductions you can and cannot claim.
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, or
- 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.
There are some changes to work-related car expense deductions from 1 July 2015. Below is a breakdown of the methods which applied from and before 1 July 2015.
From 1 July 2015 – two methods
The government has simplified car expense deductions for 2015-16 and future income years. From 1 July 2015, the one-third of actual expenses method and 12% of the original value method have been abolished.
The two methods available from 1 July 2015 are:
- cents per kilometre method
- logbook method
Before 1 July 2015 – four methods
There are four methods for claiming work-related car expenses. The four methods are:
- cents per kilometre
- 12% of original value
- one-third of actual expenses
You can use the method that gives you the greatest deduction.
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.
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, or
- 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 TR 93/30 Income tax: deductions for home office expenses for more information.
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; diaries of use and calculation of home office expenses for more information.
Other work-related expenses
You can claim deduction 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 is 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 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.
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
- you could show that the course was leading to, or was likely to lead to, increased income from your then current work activities, or
- 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, or
- will enable you to get new employment.
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.
- General guides
- More information about specific types of work-related expenses
If you are uncertain about how this information applies to your personal situation, phone us on 13 28 61.
This summary outlines some of the deductions that business professionals may be able to claim.