Claiming deductions 2016
You may be able to claim deductions for work-related expenses you incurred while performing your job as an employee. You incur an expense in an income year when:
- you receive a bill or invoice for an expense that you are liable for and must pay (even if you don't pay it until after the end of the income year), or
- you do not receive a bill or invoice but you are charged and you pay for the expense.
These expenses include:
- car expenses, including fuel costs and maintenance
- travel costs
- clothing expenses
- education expenses
- union fees
- home computer and phone expenses
- tools and equipment expenses
- journals and trade magazines.
You may also be able to claim some deductions which are not work related. They are:
- interest and dividend deductions for investments
- deductions for gifts and donations
- a deduction for the cost of managing your tax affairs.
For more information and examples explaining the meaning of 'incurred', see Taxation Ruling TR 97/7- Income tax: section 8-1 - meaning of 'incurred' - timing of deductions.
Goods and services tax
This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.
End of attention
If your expense includes an amount of goods and services tax (GST), the GST is part of the total expense and is therefore part of any deduction. For example, if you incurred union fees of $440 which included $40 GST, you claim a deduction for $440.
Foreign employment payment summary
If you received a PAYG payment summary - foreign employment then any deductions that you are entitled to claim in respect of the income shown on that payment summary must be claimed at items D1 to D6, where relevant.
All foreign deductions must be translated (converted) to Australian dollars before you complete this item. For more information on how to translate your foreign deductions see Foreign exchange (forex) or you can phone 13 28 61 to get information about the exchange rates.
You must have incurred the expense in 2015-16.
The expense must not be private, domestic or capital in nature. For example, the costs of normal travel to and from work, and buying lunch each day are private expenses. If you incurred an expense that was both work-related and private or domestic in nature, you can claim a deduction only for the work-related portion of the expense.
If you incurred an expense that was capital in nature you may be able to claim a deduction for the decline in value of the depreciating assets you acquired. See Decline in value of a depreciating asset.
If you incurred an expense for services paid in advance, see Advance expenditure to decide what part of the expense is deductible in 2015-16.
You cannot claim a deduction for an expense to the extent that:
- someone else paid the expense, or you were, or will be, reimbursed for the expense, or
- the payment or reimbursement is a fringe benefit (including an exempt benefit).
If you were partially reimbursed for the expense, you can only claim the part that was not reimbursed.
Record keeping for work-related expenses
You must be able to substantiate your claims for deductions with written evidence if the total amount of deductions you are claiming is greater than $300. The records you keep must prove the total amount, not just the amount over $300. The $300 does not include car and meal allowance, award transport payments allowance and travel allowance expenses. There are special written evidence rules for these claims which are explained at the relevant items.
If the total amount you are claiming is $300 or less, you need to be able to show how you worked out your claims, but you do not need written evidence.
If you have prepaid an amount for a service costing $1,000 or more, and the service extends for a period of more than 12 months or beyond 30 June 2017 (such as a subscription to a journal relating to your profession), then you can claim only the portion that relates to 2015-16. You can also claim the proportion of your pre-paid expenses from a previous year that relate to 2015-16. For more information, see Deductions for prepaid expenses 2016.
If you received an allowance that you showed at item 2 on your tax return, you may be able to claim a deduction for your expenses covered by the allowance but only to the extent that you actually incurred those expenses in producing your employment income and the basic rules discussed on the previous page are satisfied. For example, if you received a tools allowance of $500 and your tool expenses were $300, you include the whole amount of the allowance at item 2 on your tax return and claim a deduction of $300 at item D5.
Decline in value of a depreciating asset
You may be able to claim a deduction for the decline in value of a depreciating asset which you held during 2015-16 to the extent that you used it to produce income that you show on your tax return.
A depreciating asset is an asset that has a limited effective life and can reasonably be expected to decline in value over the time it is used. Depreciating assets include items such as tools, reference books, computers and office furniture.
The decline in value of a depreciating asset is worked out on the basis of its effective life. You can either make your own estimate of its effective life or use the Commissioner's effective life determinations (see Taxation Ruling TR 2015/2 - Income tax: effective life of depreciating assets for assistance with both).
You might be able to claim an immediate deduction for the full cost of depreciating assets costing $300 or less provided certain conditions are met. For more information, see Guide to depreciating assets 2016.
Where to go next
Provides information about claiming deductions for work and non work-related expenses.