How to claim deductions

How tax deductions work

You can claim some of your expenses as deductions in your tax return.

The expenses you can claim are mostly related to earning your income, but there are a few (such as donations) that aren't related to earning income.

Deductions reduce your taxable income.

It works like this:

your assessable income (money you earn from work or investments)

minus your allowable deductions (such as costs you incur to earn your income)

equals your taxable income (the amount you actually pay tax on).

Work-related expenses

To claim a deduction for a work-related expense:

• you must spend the money yourself and not get a reimbursement
• the expense must directly relate to earning your income
• you must have a record to prove it (usually a receipt).

You claim these deductions in your tax return at the sections about work-related expenses. For instructions, see How to lodge your tax return.

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 the expense is incurred for both work and private purposes, you must apportion your deduction. You can only claim a deduction for the work-related use.

You can't claim a deduction if your employer pays for the expense or reimburses you for it. If we think your employer may reimburse you for an expense, we may check with them.

Expense directly relates to income

You may be able to claim deductions for work-related expenses you incur in the course of your employment duties or while performing your work duties as an employee. There must be a close connection between the expense and what you do for work.

Just because your employer asks you to buy something for work, it doesn’t mean you can automatically claim it as a deduction.

Each expense may have different criteria for working out if it directly relates to your income.

For more information, see Deductions you can claim to help you as an employee to decide:

• whether your expenses are deductible
• what written evidence and other records you need to keep to show you incurred the expense and how you work out your claim.

Recording and claiming your expenses

When you claim a deduction you need to keep records that show you incurred the expense.

You can use the myDeductions tool in the ATO app to help keep track of your:

• work-related expenses (such as vehicle trips)
• general expenses (such as gifts and donations).

You can upload these records when lodging online with myTax or share them with a registered tax agent at tax time to make lodging your tax return easier.

Other expenses you can claim

There are a few expenses you can claim as a deduction even though they don't relate to your work.

These include:

• gifts and donations
• expenses related to earning income from investments
• personal super contributions
• income protection insurance
• the cost of managing your tax affairs.

You claim these in your tax return at the specific expense category (where available) or as an Other deduction. For instructions, see How to lodge your tax return.

For more information on these expenses, see Deductions you can claim.

Deductions in your occupation or industry

Our occupation and industry specific guides have information about income, allowances and deductions you may be eligible to claim. These guides are tailored to your occupation or industry.

Information in other languages

A summary of common expenses may be available in your language:

1. Select your language from the other languages' homepage.
2. Select the heading Individuals.
3. Check the list to see if a summary is available.