• ### Common expenses T–W

Details on claiming common engineer expenses for:

#### Tools and equipment

You can claim a deduction for tools and equipment you use to perform your duties as an engineer. For example, calliper or scientific calculator.

You can only claim a deduction for the work-related use of the item.

If the tool or equipment cost you \$300 or less, you can claim a deduction for the full amount in the year you buy it, if:

• you use it mainly for work purposes
• it's not part of a set that together cost more than \$300.

You can claim a deduction for the cost over the life of the item (that is, decline in value), if the tool or equipment:

• cost more than \$300
• is part of a set that together cost more than \$300.

If you bought the tool or item of equipment part way through the year, you can only claim a deduction for the decline in value for the period of the income year that you own it.

You can also claim a deduction for the cost of repairs to tools and equipment that you use for work purposes.

You can't claim a deduction for tools and equipment that your employer or a third-party supplies for use.

Example: depreciating (no immediate deduction)

Amelia is employed as a mechanical engineer and needed a new set of 16 spanners for work. She couldn't afford the \$330 cost for the complete set, so she bought them all individually over the 2021 income year.

Although they only cost \$22 each, Amelia can't claim an immediate deduction for the spanners. This is because they are part of a set she bought in the 2021 income year that cost more than \$300. Amelia can claim a deduction for the decline in value of the set, which in the end cost \$352.

If in a following year, Amelia breaks one of the spanners and has to buy a replacement, she'll be able to claim an immediate deduction for the replacement because it won’t be part of a set she bought in that year that cost more than \$300.

End of example

Example: effective life of tools

Tony buys an electric tool set on 5 September for \$1,500 and only uses it for work-related purposes.

He visits the ATO website and looks up the ruling on the effective life of depreciating assets. The ruling says the effective life of loose electric hand tools is five years.

He works out the deduction for the decline in value of his tool set using the prime cost method in this way:

Asset cost × (days held ÷ 365) × (work use percentage ÷ 5)

He has held the tool set for 300 days and his work use percentage is 100%, that is:

\$1,500 × (300÷ 365) × (100% ÷ 5) = \$246

Tony can therefore claim \$246 for the decline in value of his tool set in the first year. Using the same method, he will also be able to claim \$300 per year in the following four years and \$54 in the final (sixth) year.

End of example

#### Travel expenses

You can claim a deduction for expenses you incur when your work requires you to both:

• travel for work
• sleep away from your home overnight in the course of performing your employment duties.

Expenses you can claim include your accommodation, meals and expenses which are incidental to the travel (incidentals). For example, travelling interstate to oversee on-site projects as part of your role as an electrical engineer.

You can't claim a deduction for travel expenses where you haven't incurred any expenses, because you wither:

• you slept in accommodation your employer provides
• you eat meals your employer provides
• your employer or a third party reimburses you for any costs you incur.

Receiving an allowance from your employer doesn’t automatically mean you can claim a deduction. In all cases, you must be able to show:

• you were away overnight
• you spent the money yourself
• the travel directly relates to earning your employment income
• how you work out your claim.

If you receive a travel allowance you must include it as assessable income in your tax return unless all of the following apply:

• the travel allowance is not on your income statement or payment summary
• the travel allowance doesn't exceed the Commissioner's reasonable amount
• you spent the whole allowance on deductible accommodation, meal and incidental expenses, if applicable.

The Commissioner's reasonable amount is set each year. The amount is used to determine whether an exception from keeping written evidence applies for the following expenses which are covered by a travel allowance:

• accommodation
• meal
• incidentals.

You don’t have to keep written evidence such as receipts if both of the following apply:

• you receive a travel allowance from your employer for the expenses, and
• your deduction is less than the Commissioner’s reasonable amount.

If you claim a deduction for more than the Commissioner’s reasonable amount you need to keep receipts for all expenses, not just for the amount over the Commissioner’s reasonable amount.

Even if you are not required to keep written evidence such as receipts, you must be able to explain your claim and show you spent the amounts. For example, show your work diary, that you received and correctly declared your travel allowance and bank statements.

Example: living away from home allowance

Joe is a civil engineer. He lives in the city with his family and applied for a job to work on a large construction project near a country town for 12 months. He is paid a living-away-from-home allowance by the construction company to meet his accommodation and meal costs whilst working in the country town.

The allowance isn't income and shouldn't be shown on Joe's income statement. He can't claim a deduction for his accommodation and meal costs while living away for work.

End of example

Example: reasonable allowance amount

Alexis travels from Brisbane to Toowoomba for a job, she is away from home for three nights. Her employer pays her a travel allowance of \$110 per night to cover her accommodation, meals and incidentals. The allowance isn't shown on his income statement.

The travel allowance amount paid to Alexis is less than the reasonable allowance amount and she spends all of the travel allowance on her travel expenses.

Alexis chooses not to include her allowance on her tax return because:

• it's less than the reasonable allowance amount
• it's not shown on her income statement
• she spends it all to cover her travel expenses.

This means Alexis can't claim a deduction for her expenses on her tax return.

End of example

• Travel expenses
• TD 2020/5 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2020-21 income year?

#### Union and professional association fees

You can claim a deduction for union and professional association fees you pay. You can use your income statement as evidence of the amount you pay if it's shown on there.

For more engineer expenses, see: