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  • Deductions

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    Work-related car expenses

    Cents per kilometre method

    If you claimed a deduction for car expenses using the ‘cents per kilometre’ method, provide the following:

    • a record of how you worked out your business kilometres per car, per income year
    • copies of the purchase or lease documents for your car
    • copies of the car registration certificate or papers
    • details of the business travel you undertook during the income year – for example, you should advise the
      • purpose of the travel undertaken
      • frequency of any work-related travel
      • number of kilometres travelled for work-related purposes
       
    • If your claim relates to the transport of bulky tools and equipment provide a list of all work items carried, the weight and size. If work items are carried in a bag provide the dimensions and weight of the bag
    • details of the types of secure storage available
    • any other evidence confirming that the travel claimed was undertaken in your car in the course of carrying out your employment duties this could include
      • a copy of your job description
      • employment contract
      • the relevant award or workplace/enterprise bargaining agreement.
       
    Common issues

    The following are common issues encountered with cents per kilometre claims:

    • Claiming 5,000km without being able to show how you had travelled 5,000km.
    • Claiming more than 5,000km for a single vehicle in a single year.
    • Claiming for a car that you do not own.

    Work-related car expenses – logbook method

    If you claimed a deduction for car expenses using the ‘logbook’ method, provide the following:

    • details of how your claim was calculated (that is, a description of each item included in the claim and the amount claimed for each item)
    • copies of the purchase or lease documents for your car
    • the calculation for the decline in value (depreciation)
    • copies of the car registration certificate or papers for the period you are claiming car expenses
    • copies of your logbook and odometer records. The logbook must contain
      • when the logbook period begins and ends
      • the car’s odometer readings at the start and end of the logbook period
      • the total number of kilometres the car travelled during the logbook period
      • the number of kilometres travelled for each journey recorded in the logbook (if you made two or more journeys in a row on the same day, you can record them as a single journey). You'll need to record the
        • odometer readings at the start and end of the journey
        • business kilometres travelled
        • reason for the journey
         
      • the business-use percentage for the logbook period
      • the odometer readings at the start and end of each income year you use the logbook method
       
    • copies of original receipts for all car expenses claimed
      • except for fuel and oil receipts if you have used odometer records to estimate your fuel and oil expenses
      • including all fuel and oil receipts if you have not used odometer records to estimate your fuel and oil expenses
       
    • if your claim relates to the transport of bulky tools and equipment provide
      • a list of all work items carried, the weight and size (if work items are carried in a bag provide the dimensions and weight of the bag)
      • details of the types of secure storage available
       
    • any other evidence confirming that the travel claimed was undertaken in your car in the course of carrying out your employment duties – this could include
      • a copy of your job description
      • employment contract
      • the relevant award or workplace/enterprise bargaining agreement.
       
    Common issues

    The following are common issues encountered with log book claims:

    • A log book has not been kept, or has not been kept correctly. You must have a log book to use the log book method, even if your business use was 100%, or your business use was a fixed pattern.
    • Your usage of the vehicle has changed significantly since the log book was kept. As a general rule, a change in the business or private usage of the vehicle that results in the distance the car travels per week changing by more than 10% is considered a significant change.
    • The number of cars you used for work changed, or you used multiple vehicles for work and did not keep concurrent log books.
    • The opening and closing odometer readings for the period during the financial year the car was used for work have not been kept.
    • The use of the car, both private and for work, during the 12 week log book period is not representative of the use of the car throughout the year. A log book may have to be kept for longer than 12 weeks if there is no regular pattern of use of the car.

    Work-related travel expenses

    Travel expenses

    If you claimed travel expenses, provide the following:

    • an employment contract, job description or duty statement showing that you needed to travel in the course of performing your work
    • details of any travel allowances or reimbursements received, including
      • the name of the workplace/enterprise bargaining agreement the allowance is paid under
      • how the allowances or reimbursements were calculated
      • details of the expenses they are paid to cover
       
    • a copy of final payslip for the income year issued by your employer
    • an explanation of how the travel was work related
    • details of any persons that accompanied you and their relationship to you, details of how you worked out the proportion you claimed
    • a travel diary for each trip that was more than 6 nights in duration – the diary must show what you did each day for work or private purposes while travelling
    • details of any private travel, for example a holiday after work-related travel and an explanation of how you apportioned your claim
    • copies of all receipts for all meals, accommodation, flights and incidentals you are claiming.

    You should provide an explanation of how each expense was made in the course of earning your assessable income and cross-reference your receipts and other evidence with the list of expenses.

    Travel expenses using Commissioner’s reasonable amounts

    As you claimed travel expenses using Commissioner’s reasonable amounts, provide the following:

    • an employment contract, job description or duty statement showing that you needed to travel in the course of performing your work
    • details of any travel allowances or reimbursements received, including
      • the name of the workplace/enterprise bargaining agreement the allowance is paid under
      • how the allowances or reimbursements were calculated
      • details of the expenses they are paid to cover
       
    • a copy of final payslip for the income year issued by your employer
    • an explanation of how the travel was work related
    • details of any persons that accompanied you and their relationship to you, details of how you worked out the proportion you claimed
    • information to show you incurred the travel expenses claimed – this could include
      • hotel booking confirmations
      • credit card or bank statements showing accommodation or meal expenses
      • menus from places you ate at
      • the cost of those meals
      • or other evidence
       
    • the number of nights you slept away from home and the location
    • how you calculated the amount claimed including a list of expenses claimed
    • a travel diary for each trip that was more than 6 nights in duration – the diary must show what you did each day for work and/or private purposes while travelling.

    You should provide an explanation of how each expense was incurred in the course of earning your assessable income and cross-reference your receipts and other evidence with the list of expenses.

    The following information relates to meals, accommodation and incidental expenses you incur while away overnight for work if you received a bona fide travel allowance from your employer.

    You cannot claim overnight travel expenses based only on the numbers of days you slept away from home multiplied by the:

    • Commissioner's reasonable amounts, or
    • the daily allowance rate paid by your employer.

    This is unless you incurred that amount on accommodation, meals and incidental expenses.

    Claims not more than the Commissioner’s reasonable amounts

    The following are common issues encountered with travel expense claims not more than the Commissioner’s reasonable amounts:

    • Claiming when you did not receive a bona fide travel allowance, and you do not have written evidence to support your claims.
    • Claiming based on the Commissioner’s reasonable amounts multiplied by the number of nights away, when the expenses incurred were less than this.
    • Claiming a deduction for travel when you received a travel allowance and did not declare the travel allowance as income on your income tax return.

    You can only claim a deduction for the amount you incurred on travel expenses and you must be able to show the travel expenses were actually incurred.

    Claims that exceed the Commissioner’s reasonable amounts

    The following are common issues encountered with travel expense claims that exceed the Commissioner’s reasonable amounts:

    • Not keeping a travel diary for domestic or overseas travel of six nights or more.
    • Claiming when you do not have written evidence to substantiate your expenses.

    See also:

    • TD 2017/19 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2017–18 income year?
    • TD 2018/11 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2018–19 income year?
    • TD 2019/11 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 201920 income year?

    Motor vehicle with a carrying capacity greater than one tonne or more than 9 passengers

    You need to provide:

    • if your claim relates to the transport of bulky tools and equipment provide a list of all work items carried, the weight and size (if work items are carried in a bag provide the dimensions and weight of the bag)
    • details of the types of secure storage available.

    For each vehicle claimed provide:

    • copies of the purchase or lease documents including evidence the carrying capacity was over one tonne or 9 or more passengers
    • copies of the vehicle registration certificate or papers
    • explanation and supporting documents, such as a diary of how you calculated your work use percentage
    • a list of each expense and amount claimed
    • copies of original receipts for all expenses (including fuel and oil costs)
    • the depreciation schedule or details of how you calculated your claim, including the effective life and the method used (prime cost or diminishing value) and an explanation of how you calculated the work-related portion for each item – ensure copies of original purchase receipts or invoices are provided.

    If you borrow a car that is owned or leased by someone else, you may be able to claim costs incurred if you use the car for your work as an employee. These expenses include petrol, oil and repair costs.

    See also:

    • TR 2019/05 Income tax: Effective Life of depreciating assets

    Work-related clothing, laundry and dry-cleaning expenses

    Uniform

    If you claimed the cost of a work uniform that is distinctive (such as one that has your employer's logo permanently attached to it), it must be either:

    • a non-compulsory uniform that your employer has registered with AusIndustry (check with your employer if you are not sure), or
    • a compulsory uniform that can be a set of clothing or a single item that identifies you as an employee of an organisation – there must be a strictly enforced policy making it compulsory to wear that clothing at work – items may include shoes, stockings, socks and jumpers where they are an essential part of a distinctive compulsory uniform and the colour, style and type are specified in your employer's policy.

    You need to provide:

    • a copy of your employer’s uniform policy
    • if your employer doesn’t have a uniform policy, a description of the uniform you were required to wear
    • copies of receipts.

    You can also claim the cost of:

    • occupation-specific clothing which allows people to easily recognise that occupation (such as the checked pants a chef wears when working) and which are not for everyday use
    • protective clothing and footwear to protect you from the risk of illness or injury, or to prevent damage to your ordinary clothes, caused by your work or work environment – items may include fire-resistant clothing, sun protection clothing, safety-coloured vests, non-slip nurse's shoes, steel-capped boots, gloves, overalls, aprons, and heavy duty shirts and trousers (but not jeans).

    You can claim the cost of protective equipment, such as hard hats and safety glasses at Other work-related expenses.

    You can claim the cost of renting, repairing and cleaning any of the above work-related clothing.

    Laundry

    You need to provide:

    • a description of the work-related clothing worn
    • details of how you calculated your claim
    • if the laundry claim exceeds $150, provide receipts.

    Claims for laundry expenses that do not exceed $150 can be based on a cost of:

    • $1 per load if you wash only your work clothes
    • 50 cents per load if you wash other clothes together with your work clothes.

    In order to make a claim for laundry in this manner, the clothing being laundered must be a uniform, occupation specific clothing or protective clothing.

    You cannot claim the cost of purchasing or cleaning plain clothes, such as black trousers, white shirts, suits and stockings, even if your employer requires you to wear them.

    Dry Cleaning

    You need to provide:

    • a description of the work-related clothing worn
    • copies of receipts.

    Protective clothing

    If you claimed protective clothing and footwear to protect you from the risk of illness or injury, or to prevent damage to your ordinary clothes, caused by your work or work environment you need to provide:

    • a description of the protective clothing and equipment you were required to wear
    • copies of receipts.

    COVID-19 Protective items

    If your specific employment duties require you to have physical contact or be in close proximity to customers or clients while carrying out your duties or you are involved in cleaning premises, you can claim a deduction for expenditure on protective items (such as gloves, face masks, sanitiser, antibacterial spray). You need to provide:

    • a description of the protective clothing and equipment you were required to wear
    • copies of receipts.

    To read frequently asked questions on COVID-19 see, Frequently asked questions.

    Work-related self-education expenses

    Self-education expenses related to your work as an employee is available if you work and study at the same time and can satisfy any of these conditions:

    • you are upgrading your qualifications for your current employment
    • you are improving specific skills or knowledge used in your current employment
    • you are employed as a trainee and you are undertaking a course that forms part of that traineeship
    • you can show that at the time you were working and studying, your course led, or was likely to lead, to an increase in income from your current employment.

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

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

    Provide the following:

    • a list of the expenses and the amount of each expense claimed along with
      • full details of the course you undertook
      • the name of the institution where it was undertaken
      • the date you began your course
      • whether you were a full-time or part-time student
      • a copy of the course outline
      • the nature of each expense and the amount claimed
       
    • an explanation as to how the course directly relates to your employment at the time you were undertaking the course – copies of original receipts or other documents to support each item included on the list
    • your employment contract including a job description or a duty statement
    • copies of original receipts or other documents, for example a Commonwealth Assistance Notice (CAN) to support each expense included in your claim.

    You cannot claim a tax deduction for the following expenses:

    • self-education expenses such as tuition fees paid to an education provider by you or the Australian Government under HECS-HELP
    • the cost of accommodation and meals associated with day-to-day living expenses
    • repayments you make (whether compulsory or voluntary) on debts you may have under the following loan schemes
      • HECS-HELP
      • FEE-HELP
      • VET-FEE-HELP
      • OS-HELP
      • SSL
      • SFSS
      • TSL
      • VSL.
       

    See also:

    • TR98/9 Income tax: deductibility of self-education expenses made by an employee or a person in business sets out the circumstances when self-education expenses can be allowable as a tax deduction

    Home office expenses

    Running costs

    There are two ways to calculate your running expenses. You can claim a fixed rate per hour or you can calculate your actual expenses.

    If you are using fixed rate; you need to provide:

    • an explanation of the work performed from your home office
    • copy of your diary, over a representative four-week period, or other evidence that shows how often you worked out of your home office
    • details of how you calculated your claim.

    If you are using actual expenses; you need to provide:

    • an explanation of the work performed from your home office
    • a floor plan of your home, with the home office space identified – this must show the total floor area of the house and the area of the home office
    • the depreciation schedule or details of how you calculated your claim, including the effective life and the method used (prime cost or diminishing value) for each item
    • receipts for the purchase of each depreciating asset
    • copy of your diary, over a representative four-week period, or other evidence that shows how often you worked out of your home office
    • if you claimed electricity, heating, cooling and lighting
      • evidence of the total cost of the utility service for the year of income such as a copy of your utility bills
      • the cost per unit of power used – refer to your utility bill for this information
      • the average units used per hour – this is the power consumption per kilowatt hour for each appliance, equipment or light used
      • the total annual hours used for work-related purposes based on your diary
       
    • if you claimed cleaning expenses provide copies of receipts
    • receipts for any other expenses claimed.

    Occupancy costs

    Employees are generally not able to claim occupancy expenses. You can only claim the work-related proportion of your occupancy expenses in two very limited circumstances where:

    • the space in the home is a place of business and not suitable for domestic use – for example, a doctor or dentist surgery or a hairdresser studio in the home
    • no other work location is provided to an employee by an employer and the employee is required to dedicate part of their home to their employer's business as an office – you can claim the portion of these costs that relate to a clearly identified place of business.

    If you claim occupancy expenses, you don't qualify for the capital gains tax (CGT) main residence exemption for the part of your home that you use for work. If you use your home as a place of business there may be CGT implications when you sell it.

    You will need to provide:

    • an explanation of the work performed from your home office
    • a floor plan of your home, with the home office space identified – this must show the total floor area of the house and the area of the home office
    • if you claimed heating, cooling and lighting, evidence of the total cost of the utility service for the year of income
    • evidence of the amount of rent, mortgage interest, property insurance, land taxes or rates incurred.

    COVID-19 – working from home

    If you worked from home because of COVID-19 during the period from 1 March 2020 to 30 June 2020, a temporary simplified method has been introduced to calculate additional running expenses you incurred as a result of working from home due to COVID-19.

    This method allows you to claim 80 cents for each hour you work from home and covers all deductible running expenses.

    You will need to provide:

    • copy of your diary, timesheet, roster or other evidence that shows how often you worked out of your home

    See also:

    • PCG 2020/3 Claiming deductions for additional running expenses incurred whilst working from home due to COVID-19

    Other work-related expenses

    Mobile and home telephone

    You need to provide:

    • an explanation of how the phone was used for work and how you calculated your claim
    • evidence of the total cost of the service for the year of income
    • one itemised bill with the outgoing private and outgoing work-related calls clearly and distinctly marked and tallied

    OR

    • a diary covering a representative four-week period showing your work-related and private use of the service.

    Internet

    You need to provide:

    • an explanation of how the internet was used for work and how you calculated your claim, including allowing for usage of other members of your household
    • evidence of the total cost of the service for the year of income
    • evidence of how you established the work-related portion – this could be
      • a diary covering a representative four-week period showing your work-related and private use of the service
      • a record of the amount of data downloaded for work as a percentage of the total data downloaded by all members of your household
      • any additional costs incurred as a result of your work-related use, for example, if your work-related use resulted in you exceeding your monthly cap.
       

    Union Dues

    You need to provide:

    • evidence to show you paid the amount of union fees that you are claiming in the income year.

    Memberships and professional registrations

    You need to provide:

    • copies of invoices, payslips or bank statements showing the total amount paid in membership fees for the income year
    • details of why the expense was connected to your work.

    Overtime meal expenses

    You need to provide:

    • evidence (such as an employment contract or payslips) confirming you were paid an overtime meal allowance; the amount paid per occasion and the name of the industrial law, award or agreement under which the allowance was paid
    • information to show you incurred the overtime meal expenses claimed – this could include credit card or bank statements showing meal expenses, menus from places you ate at and the cost of those meals, or other evidence
    • the number of instances you worked overtime and were paid an overtime meal allowance
    • a copy of final payslip for the income year issued by your employer
    • an explanation of how you calculated the amount claimed.

    See also:

    • TD 2017/19 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2017–18 income year?
    • TD 2018/11 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2018–19 income year?
    • TD 2019/11 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 201920 income year?

    Books and magazines/professional library

    You need to provide:

    • an explanation of how each item relates to your employment duties
    • copies of receipts, invoices or other documentation which show you incurred the amount claimed
    • where the expenses are partially private in nature, details of how you worked out the work-related portion of the claim.

    Computer parts consumables and stationery

    You need to provide:

    • copies of purchase invoices or receipts for all items
    • an explanation for how the expenses were connected with your employment duties
    • details of how the work-related portion of your expenses were worked out.

    Purchase of equipment/Depreciation

    You need to provide:

    • an explanation for how each item relates to your employment duties
    • copies of purchase invoices or receipts for all items
    • an explanation of how you calculated the work-related portion for each item
    • the depreciation schedule or details of how you calculated your claim, including the effective life and the method used (prime cost or diminishing value) for each item.

    Work-related items with a purchase price above the immediate deduction threshold of $300, requires a depreciation calculation and only the deductible portion for that relevant income year may be claimed.

    Sun protection

    You need to provide:

    • copies of invoices or receipts for the expenses
    • an explanation of how your employment duties expose you to the sun for prolonged periods
    • details of how you worked out the work-related portion of the expenses.

    All other expenses

    You need to provide:

    • copies of invoices or receipts for the expenses
    • an explanation for how the expenses were connected to your employment duties
    • details of how you worked out the work-related portion of the expenses.

    Low-value pool deduction

    The following cannot be included in a low-value pool:

    • assets you have previously claimed deductions for using the prime cost method
    • assets that cost $300 or less for which you can claim an immediate deduction
    • assets for which you deduct amounts under the simplified depreciation rules for small business entities
    • horticultural plants
    • a portable electronic device (such as a mobile phone, personal digital assistant or laptop computer), computer software, protective clothing, a briefcase or a tool of trade, which is primarily for use in your employment, if your employer provided it, paid for it or reimbursed you for any of its cost, and the benefit was exempt from fringe benefits tax.

    For your employment provide the following:

    • an explanation of how the assets in your pool are used to earn your income
    • evidence to show that you used the assets in your pool to carry out your employment duties (such as a job description, employment contract).

    For each year being audited, provide the following information:

    • a list of the low-cost or low-value asset(s) included in your claim for low-value pool deduction
    • details of how your claim was calculated, including your worksheet used to calculate your claim
    • documents showing the purchase price of the asset(s).

    Interest deductions

    Provide the following:

    • a list of all interest expenses that you have claimed, showing
      • the amount of the expense
      • date of the expense
      • who it was paid to
      • the date any loans were obtained
      • the amount of funds borrowed
      • information about what investments the borrowed funds were used to purchase
      • the income you received from these investments during the income year
       
    • documents to support the expenses you have claimed – for example, copies of bank statements, loan agreements
    • calculations regarding how you determined the amount claimed if the loan funds were used to purchase more than one asset, for example, your family home and some shares
    • if you were able to drawdown funds from your loan or line of credit, provide information about what each of those drawdowns was for.

    If no income has been received during the income year or is less than the expense claimed, also provide:

    • the reason no income or a smaller amount of income was received
    • whether you expect to receive a return on the investment and, if so, when and the amounts you expect to receive
    • whether income has been received in a previous year and, if so, when the amounts were received.

    Dividend deductions

    You need to provide:

    • a list of all dividend expenses you have claimed, showing
      • the amount of the expense
      • date of the expense
      • who it was paid to
      • the date any loans were obtained
      • the amount of funds borrowed
      • the nature of the investments, including whether they are public or private, for example shares in XY Pty Ltd (private company)
      • the income you received from these investments during the income year.
       
    • documents to support the expenses you have claimed – for example, copies of bank statements, management fee and investment advice invoices.

    If no income has been received during the income year, also provide:

    • the reason no income was received
    • whether you expect to receive a return on the investment and, if so, when and what amounts you expect to receive
    • whether income has been received in a previous year and, if so, when and what amounts were received.

    Gifts or donations

    Provide a copy of receipts or any other documents you have to support this claim showing the:

    • names of the recipients of each gift or donation – including the recipient’s Australian business number (ABN)
    • date that each gift or donation was made
    • nature and amount of each gift or donation.

    Cost of managing tax affairs

    Provide copies of invoices or statements showing the expenses incurred. This information should show:

    • the amount of the expense
    • the date of the expense
    • who it was paid to
    • the nature of the services provided and who the services were provided to.

    See also:

      Last modified: 01 Jul 2020QC 24929