Employees guide for work expenses
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Part C - Commonly claimed expenses
Table of contents
This section covers common scenarios where you might consider claiming a deduction. Each deduction you claim must meet either the basic deduction conditions or the requirements of the capital allowance provisions for the decline in value of a depreciating asset. Consider these for each deduction each time.
The deductibility of an expense depends on the specific duties that you do in your employment. This means that an expense that is deductible by one person may not be deductible by another, even if they have similar jobs.
This list is not exhaustive and does not cover every situation that may apply to you.
Normally accommodation expenses are private and not deductible. Accommodation can only be deductible if you are travelling and sleep away from your home overnight for work. You are not travelling and sleeping away from home overnight for work if you choose to stay at a location that is closer to your usual workplace, or you are living away from home.
Example - accommodation expenses
Shaun is a salesperson working between Geelong and Warrnambool in southern Victoria. Once a month he is required to visit stores in and around Warrnambool and this requires him to stay overnight away from his home in Little River. The cost of the hotel room Shaun pays for when staying overnight in Warrnambool is deductible, as long as the cost is not reimbursed by his employer.
This includes, for example: talent agents, employment agents, recruitment agents, modelling agents and booking agents.
You cannot claim a deduction for upfront costs of joining or using the services of an employment and recruitment agency or an agent to get work. This is because the expense is incurred before you start the employment.
If your employment contract allows for the renegotiation, review or extending of the contract, the costs of doing so will be an allowable deduction. Such expenses are incurred in gaining your employment income.
Example - agent fees
Zahra joins an acting agency to help further her career. She pays a setup fee as part of joining the agency. Zahra is offered a contract to be one of the leads in a TV series for one year with a mutual option to extend the contract. The show turns out to be a large success and her agency negotiates to extend the contract for another year.
Zahra is not able to claim the costs of joining the agency as it enables her to get work. She can claim the costs to renegotiate her contract as it is part of her employment activity.
You can claim a deduction for the cost of renewing an annual practicing certificate, membership or accreditation if you need it to work in your field.
These can include trade licenses for plumbers, electricians and carpenters, crane, hoist and scaffolding licences for construction workers, responsible service of alcohol and gaming licences for hospitality workers and registration for nurses, teachers and doctors.
However, if you are required to have a practicing certificate, professional membership or accreditation before you can be employed in an occupation, the initial cost of obtaining it is not deductible. This is because you incurred the expense to enable you to start your employment, not during the course of your employment.
Example - ongoing expense
Brenden needs an annual practicing certificate to work as a nurse. He can claim a deduction for the cost of renewing this each year. He incurs the expense in gaining his employment income.
Example - prerequisite expenses
Drew has finished his legal training in Townsville and is looking to start his career as a solicitor. To practice as a solicitor, Drew needs to apply to the Supreme Court of Queensland to be admitted as a lawyer and then apply for a practicing certificate. Until he is granted both, he cannot practice law.
Drew is not entitled to claim a deduction for the cost of his admission or practicing certificate because he incurs it so he can start earning employment income. Once he is employed, he will be able to deduct the cost of renewing his practice certificate each year, as it allows him to continue earning his employment income.
You can only claim a deduction if the expense is related to your current employment.
This also includes, for example: briefcases, laptop bags, luggage and handbags.
If you use a bag or a case to carry items for work, you are entitled to a deduction to the extent that it is used for work purposes. Work items include laptops, tools, client briefs and protective gear but do not include private and domestic items like gym gear, food or a personal phone or tablet. Your job must require you to transport work items and the bag must be suitable for that purpose.
If the bag or case cost you $300 or less, and you use it for work only, you can claim a deduction for the whole cost in the year you purchase it. Otherwise you can claim a deduction for the decline in its value over its effective life (see Decline in value under capital allowances ).
If you use a bag or case to carry both work and private items, you can only claim the work-related portion and you need to apportion the expense between work-related and private use.
Example - bag for personal items
Francisco is employed as a banker. He buys a holdall bag for $250. He uses it every day to take his lunch, personal tablet and gym clothes to work. Francisco cannot claim a deduction for the bag, as he only uses it to transport private items to and from work.
Example - bag for a work laptop
Maria is employed as an account executive. Her job requires her to regularly attend meetings with clients. She has to take her work laptop, phone and the client's file with her to the meetings. She frequently works from home and sometimes goes directly to a client meeting before heading into the office. She buys a bag for $565 that she uses to carry her work laptop and phone, chargers and client briefs. She carries her cash and cards, personal phone and other personal items in a smaller clutch bag. As Maria's bag is suitable to carry all the items that are necessary for her to transport, Maria can claim a deduction for the decline in value of the bag over its effective life.
Luggage includes items generally used for overnight or longer trips, such as overnight bags, suitcases and carry-ons which tend not be used on a day to day basis. If you use luggage for travel overnight for work you may be able to claim a deduction for the decline in value of the luggage, or if it cost $300 or less, an immediate deduction under the capital allowance provisions. You need to apportion the cost of the luggage if it is used also for private travel.
Example - cabin crew
Ibrahim works as cabin crew on long haul international flights. He buys luggage to use exclusively for work for $200. He can claim an immediate deduction for the luggage, as it is under $300.
You cannot claim a deduction for account keeping fees or overdraft fees you incur, as these are not incurred in earning your employment income.
You can claim a deduction for a transaction fee that you are charged when you make a work-related purchase.
Example - transaction fees
Adrienne buys deductible work-related books from an international retailer, and is charged an international transaction fee by her bank. Because the purchase is a work-related expense, Adrienne can also claim the cost of the international transaction fee imposed by her bank.
This includes, for example: online subscriptions, online resources, library subscriptions, academic journals and database subscriptions.
Books, periodicals and digital information expenses incurred as part of earning your employment income may be deductible (either outright or for their annual decline in value) if the content is sufficiently connected to your employment. Examples include midwifery journals for obstetric nurses, annotated legislation for lawyers, automotive reference manuals for mechanics and subscriptions to online technical journals for engineers.
Example - digital subscription
Amy works as an editor and proof reader for a publishing house. She subscribes to a comprehensive online dictionary service that she uses many times a day. Amy only uses the online dictionary for work purposes. As the subscription is solely used for work, she would be able to claim a deduction for the cost of her subscription.
In some circumstances, you may be able to deduct car expenses to the extent you use your car for deductible transport. You will first need to check whether you are entitled to claim transport expenses .
Not all vehicles are a 'car' for the purposes of claiming your expenses. A car is defined as a motor vehicle (excluding motorcycles and similar vehicles) designed to carry a load of less than 1 tonne and fewer than nine passengers.
If your vehicle is a car, you may claim a deduction using either:
- the cents per kilometre method, or
- the logbook method.
You can choose which method to use in any given year, and you can use different methods for different cars.
If your vehicle does not meet the definition of a car, you may still be able to claim deductions for your transport expenses.
You can claim a deduction for using a car that you owned, leased or hired under a hire purchase agreement using the cents per kilometre or logbook method. You cannot claim expenses under these methods for cars owned or leased by other people such as your employer or spouse.
However, if you can show that there is a family or private arrangement that made you the owner or lessee you may still claim expenses even if you are not the registered owner.
Example - family arrangement
When Rory turned 18 she bought a car from her parents for $1,000. Since then, she has paid for all the insurance, fuel, registration and other running costs and no one else has used the car but her. The registration has not been updated and the car is still showing in her mother's name.
Rory is still eligible to claim her work-related car expenses. Even though the registration has not been changed to her name, she would be treated as the owner because she can demonstrate that she bought the car from her parents and that she is now responsible for all of the ownership and running costs of the car.
If you have access to the car under a salary sacrifice arrangement or a novated lease, it is usually your employer who is leasing the vehicle from the financing company and making it available for your use. As you do not own or lease the car yourself, you are not be entitled to claim any deductions for using the car, but can claim additional expenses, like parking and tolls associated with your work use of the car.
Example - salary sacrifice car under a novated lease
Amy uses a salary sacrifice arrangement to get the use of a car under a novated lease. She starts parking at her office every day, which costs $20. She drives to meetings at a different office and parks in the short-term parking bays which cost $5. She is not reimbursed for the expense.
Amy can't claim her parking expenses at the main office as these are not incurred in deriving her assessable income. She also cannot claim any of the expenses related to the running of her car as it is on a salary sacrifice arrangement. She can claim the $5 parking expense as the expense is incurred in travelling from one work site to another.
A car is a luxury car if its cost exceeds the car limit in the financial year when you purchase it or acquire the lease. Leased cars are treated as if they are purchased if they are luxury cars. This means that for the purposes of calculating the decline in value of the vehicle, the cost element is limited to the car limit.
If you use someone else's car for work, you may be able to claim direct costs, such as fuel and car parking fees, to the extent that they relate to your work use of the car.
Under the cents per kilometre method, you can claim a set rate for each work-related kilometre travelled. The maximum number of work-related kilometres you can claim under this method is 5,000.
You do not need written evidence to show exactly how many kilometres you have travelled, but you must make a reasonable estimate calculation. You must be able to show how you worked out your deduction, and this may be aided by documents such as calendars and diary records.
Example - reasonable estimate
Once a week, Johan makes a 27 km round trip in his own car travelling from head office in the city to visit clients. In addition, he makes a 106 km round trip to visit clients at another location, once a month. When Johan consults his diary at the end of the financial year, he works out he was at work for 47 weeks, but he missed one weekly meeting as he was sick. He works out his estimated business kilometres as:
Number of weekly trips × Distance of weekly trip = Total weekly trip kilometres
46 × 27 = 1,242 km
Number of monthly trips × Distance of monthly trip = Total monthly trip kilometres
12 × 106 = 1,272 km
Total weekly trip kilometres + Total monthly trip kilometres = Total monthly trip kilometres
1,242 + 1,272 = 2,544 km
Where a car is owned jointly, each owner can claim up to 5,000 work-related kilometres in respect of the car.
Example - joint owners
Sean and Ashleigh own a car together. While Ashleigh mostly uses the car for her work travel as a real estate agent, Sean occasionally uses it for his own deductible work-related travel.
At the end of the financial year, Ashleigh works out that she has used the car for 4,900 km of work-related travel, and Sean works out that he has used the car for 450 km of work-related travel. Although the total of work-related travel in the car is over 5,000 km, as joint owners, they can each claim their full work kilometres, as their use is each under 5,000 km.
You do not need to keep written records of all your expenses but you will need to be able to show how you worked out your work-related kilometres.
The logbook method allows you to claim the work-related portion of your actual car expenses. These include deductions such as fuel and repairs and the decline in value of capital costs such as the purchase price and improvements. To use this method, you must substantiate most of your car expenses and keep a valid logbook and odometer records.
For the logbook to be valid you must identify an income year for which you are keeping it, choose a period of at least 12 weeks for the logbook to cover and record the journeys that are related to your work-related activities (work-related journeys). One logbook can be used for up to five years.
During the record-keeping period, you must record each journey in the logbook by entering the following:
- the day the journey began and ended
- the car's odometer reading at the start and end of the journey
- how many kilometres the car travelled on the journey
- why the journey was made.
If you make two or more work-related journeys in a row on the same day, you can record them as one journey. You need to record each journey at the end of the journey, or as soon as possible afterwards. You cannot recreate a logbook at a later date.
Example - journey listing
Camilla drives her own car from her office to a client's premises (Thompson Consulting) to have a sales meeting. She returns to the office straight after the meeting. She records the journey in her logbook as soon as she returns.
18 March 2019
Odometer reading start
Odometer reading end
Reason for journey
Head Office to sales meeting with Thompson Consulting
Camilla records both trips as one journey as they were in a row.
The logbook must also contain:
- the dates the logbook period begins and ends
- the car's odometer reading at the start and the end of the period
- the total number of kilometres that the car travelled during the period
- the number of kilometres that the car travelled in the course of earning your assessable income
- the percentage of use for work-related activities.
In addition to a valid logbook, you must keep odometer records for the whole period you own or lease the car during the income year. For example, if you own the car for the whole income year, you must record the odometer reading on 1 July and on 30 June.
You must retain your logbook and odometer records until the end of the latest income year in which you rely on them to support your claim and then for another five years after that.
Calculate your work-related use percentage as follows:
Work-related kilometres for the income year / Total kilometres the car travelled in the period you held it = Work-related use percentage
You calculate the work-related kilometres by making a reasonable estimate which must take into account:
- any logbook, odometer records or other records you have
- any variations in the pattern of use of the car, and
- any changes in the number of cars you used to undertake your work-related activities.
Although you are required to calculate work-related kilometres by making a reasonable estimate taking the above factors into account, you can generally apply the work-related use percentage established by your logbook to work out your work-related kilometres if your pattern of use for the period you held the car during the year is consistent with the travel you undertook during that logbook period.
However if the work-related use of your car has changed, for example because you have a different job or you have changed the number of cars you use to undertake work-related activities, you will need to calculate your business kilometres by making a reasonable estimate and recalculate your work-related use percentage. Depending on how different your use is, you may need to keep a new logbook.
Example - working out the percentage
Tim decides to keep a logbook for an income year. He owns the car for the entire year so he records the odometer reading on the first and last days of the income year (1 July and 30 June respectively). Tim's odometer records show that he travelled a total of 17,000 km during the year. During the 12-week logbook period, Tim drove 4,000 km of which 2,400 km was work-related travel.
Tim works out that his work-related travel throughout the year is consistent with the travel he made during the period he kept his logbook. He estimates that he drove 10,200 km for work purposes.
Total logbook work-related kilometres / Total logbook kilometres = Logbook work use percentage
2,400 / 4,000 = 60%
Total kilometres travelled × Logbook work use percentage = Work-related travel kilometres
17,000 × 60% = 10,200 km
To work out the percentage of work-related travel, Tim made the following calculation:
[ Work-related travel kilometres / Total kilometres travelled ] × 100 = work use percentage
[ 10,200 / 17,000 ] × 100 = 60%
If Tim changes jobs part way through the following income year, he cannot rely just on his logbook to work out his work-related kilometres. He may need to produce a new logbook if there are changes in how he travels for work.
A logbook is valid for up to five years, but you may start a new logbook at any time, or the Commissioner can request that you start a new one. You must keep a logbook for the first year for which you use the method with a car, but if you get a new car during the five years, you can nominate the new car to replace the original car.
When you have worked out the percentage of your work travel, you can work out your deduction.
Example - working out deduction
Tim has kept a compliant logbook and worked out that his work-related travel percentage is 60%. Tim can claim 60% of his actual expenses, including the decline in value on the car.
Tim's actual expenses
Decline in value
Fuel and oil costs
Compulsory third party insurance
Total expenses × Work use percentage = Claimable deduction
5,400 × 60% = 3,240
Tim also spent $800 to improve the muffler system on the car, but as that is a capital expense he cannot claim it as an immediate deduction, and would claim the decline in value. Tim is entitled to claim a deduction for the decline in value of the muffler system under the capital allowance provisions.
To claim a deduction under the logbook method you need to keep substantiation records for all of the car expenses you incur except for petrol and oil as well as a valid logbook. Substantiation records for petrol and oil costs can be kept, but they do not need to be as they can be estimated based on the odometer readings and the average price of petrol.
You will need to keep records for any expenses you incur.
- Substantiation requirements
- Parking fees
- Law Administration Practice Statement PS LA 1999/2 Calculating joint car expense deductions
- Taxation Determination TD 97/19 Income tax: substantiation: car expenses: how do you calculate the cost of fuel and oil when using the 'one-third of actual expenses' method or the 'logbook' method, if you have not kept written evidence of the expense?
You cannot claim a deduction for the cost of child care or before or after school care. It is a private expense that does not have the relevant connection with earning your employment income.
With a few exceptions, clothing is a private expense. Conventional clothing cannot be deducted as a work-related expense. 'Conventional clothing' is ordinary everyday clothing worn by people regardless of their occupation.
However, some types of clothing are deductible when they have sufficient connection with your employment activities. These types include:
- protective clothing
- compulsory uniforms
- registered non-compulsory uniforms
- occupation-specific clothing.
Each category has different criteria that must be met for the clothing to be deductible.
You can claim a deduction for the cost of clothing and footwear you wear to protect yourself from specific risks of injury or illness at work. The clothing has to have features or functions that take it out of the class of conventional clothing. These sorts of items could include:
- heavy duty occupational wet weather gear
- protective boots such as steel-capped boots or rubber boots for concreters
- boiler suits that protect ordinary clothing
- fire resistant clothing
- non-slip nurses shoes.
There has to be a link between your work-related activities, the risk presented by your work environment, and the form and function of the clothing to mitigate that risk.
Example - lack of risk
Wade is an accountant who works in an office in the suburbs. He buys steel-capped boots, which he wears only to work. While the boots provide protection, his office environment does not require the protection that the boots provide. Wade cannot claim a deduction for the boots.
Ordinary clothes you wear at work (such as jeans, drill shorts, closed shoes, socks) are not protective clothing if they lack protective qualities designed for the risks of your work environment. Protective clothing needs to be able to cope with more rigorous conditions where conventional clothing would be inadequate. Examples of this include chainsaw-proof pants and abrasion-resistant clothing.
Example - changing to protective clothes
Ryan starts work on a building site and wears cotton drill pants and a drill safety shirt to work every day. He wears them as they are comfortable to work in and, though they aren't very durable, they provide some protection.
Ryan wears them at work and never in his private time. He cannot claim a deduction for the expense of buying them, because the clothing only provides a small amount of protection from injury and they are mostly fulfilling the private need of having to be clothed.
After a couple of weeks on the site, Ryan notices he is getting sunburnt through his shirt and that his pants are getting ripped and exposing his legs to potential harm. He buys some UPF 50 work shirts and some heavy duty abrasion-resistant work trousers and starts wearing them to work. Ryan can claim a deduction for these expenses as they are specifically protecting him from harm at work.
- Taxation Ruling TR 2003/16 Income tax: deductibility of protective items
- Taxation Ruling TR 97/12 Income tax and fringe benefits tax: work-related expenses: deductibility of expenses on clothing, uniform and footwear
- Protective items
You can claim a deduction for a compulsory uniform. A compulsory uniform must be sufficiently distinctive to your particular organisation so that a casual observer can clearly identify you as working for a particular employer, or identify the products or services provided by your employer. To be considered compulsory, you must be expressly required to wear it by a workplace agreement or policy, which is strictly and consistently enforced. Conventional clothing is not a compulsory uniform even if your employer requires you to wear it, or you pin a name badge to it.
Shoes, socks and stockings are private, except in very limited circumstances such as where the employer has express guidelines that stipulate specific characteristics of the colour, style and type of those items and other accessories as an integral and distinctive part of the uniform. This differentiates them from ordinary clothing as they have become an integral part of a compulsory uniform.
Example - conventional clothes worn with a uniform
Rick works at a supermarket. He is required to buy and wear a shirt with the supermarket's logo embroidered on it. The employee guidelines include a requirement to wear black pants and closed black shoes, but don't stipulate any other qualities of those items. Rick can claim a deduction for the cost of the shirts as they are a compulsory uniform, but he cannot claim the cost of the pants or shoes. Even though his employer requires him to wear a specific colour, they are not distinctive enough to make them part of his uniform and are still conventional clothes.
If wearing a uniform is not compulsory, you will not be entitled to a deduction for the clothing items comprising the uniform unless the full non-compulsory uniform is approved and entered on the Register of Approved Occupational Clothing and you wear the uniform at work.
However, single items of clothing, such as a shirt, will not be registered for these purposes. Shoes, socks, and stockings will also not form part of a registered non-compulsory uniform. These items are not deductible.
You can claim a deduction for occupation-specific clothing that distinctively identifies you as a person associated with a particular profession, trade, vocation, occupation or calling.
Clothing that is considered occupation specific are items like a cleric's ceremonial clothing, a judge's robes or a chef's chequered pants. The fact an item may be traditionally worn in a profession does not make it occupation specific if it may be worn by a number of professions.
Example - occupation-specific clothing
Joe is a chef with two jobs. When working at a restaurant he wears the traditional chef's uniform of chequered pants, white jacket and chef's toque. He also works on a food truck, but just wears jeans and a t-shirt at that job. Joe can claim his traditional chef's uniform, but not his other outfit. The chef's clothing is particular and relevant to his profession, but the jeans and t-shirt are conventional clothes.
Conventional clothing is ordinarily not deductible. The fact that your employer requires you to wear specific clothing does not make the clothing deductible. In most cases the cost of conventional clothing is a private expense that does not have the relevant connection with earning your employment income.
Example - conventional clothing
Matt works as a sales assistant in a clothing store. His employer requires him to wear clothes of the kind available in the store. Matt earns his employment income mostly from the activity of selling clothes.
Although he must wear clothing in accordance with his employer's requirements, this is not sufficient to make the clothing deductible. There is no direct connection between his clothing expenditure and his work-related activity of selling clothes.
- Taxation Ruling TR 94/22 Income tax: implications of the Edwards case for the deductibility of expenditure on conventional clothing by employees
If you pay your agency a commission for work you've gained, you can deduct the commission you actually incur. In other words, if your agency charges you a commission for work they have obtained for you, you may be entitled to a deduction. To claim the deduction you must either pay the commission to the agency separately or the agency must deduct the commission from the fee you receive.
Example - agency commission
Geoff is employed as an agency nurse. He works one night at a hospital and is paid $600. Geoff must pay $48 commission to the agency. Geoff's assessable income includes the $600 but the $48 commission is an allowable deduction. Geoff incurs these fees in the course of earning his wages as an agency nurse.
This includes, for example: apps, subscriptions, anti-virus and anti-spyware software, virtual private networks, programs.
You can claim a deduction for the decline in value when you purchase and use a computer for your employment. You need to apportion expenses if you use the computer for work and private purposes.
If software is included as part of your purchase price for the computer system, you do not need to break up the costs to calculate the decline in value.
Additional software you purchase, or software that is separately purchased can be deducted if it costs $300 or less. If it is more than $300, you can deduct its decline in value.
Software includes physical CDs, apps that you pay to download, and annual subscriptions to software or services. You need to apportion expenses if you use the software for work and private purposes.
You can also claim a deduction for the cost of repairs to your computer. However, you need to apportion the cost of repairs if you use the computer for work and private purposes.
Example - deductible expense
Mateo works from home two days a week. He buys a computer which comes with the operating system already installed. He pays for an annual subscription for antivirus software and uses gift cards that he has previously bought to buy some software that he needs for his work.
Mateo can claim a deduction for the decline in value of the computer and operating system. He can also claim a deduction for the anti-virus software, and the software he buys using the gift cards. If Matteo also uses the computer or software for personal use, he will need to apportion the expense and claim a deduction only for the percentage of his work use.
You can claim a deduction for the cost of attending conferences, seminars, training courses and other events to maintain or increase the knowledge, capabilities or skills you need to earn your income in your current employment.
The costs you can claim include fares to attend the venue where the conference, seminar or course is held and registration costs. If you need to travel and stay away from home overnight to attend a conference, seminar, training course or other event, you can also claim the cost of accommodation and meals.
If there is a non-work component to attending the conference, seminar, training session or other event, then you may not be able to claim all of your expenses. If the non-work component is incidental to the course (such as catered lunches or a reception for delegates), then you can still claim all of the expenses to attend the conference, seminar or course. However if the dominant purpose is non-work, and the conference, seminar or course is merely incidental, you can only claim the direct costs for the conference, seminar or course.
Example - dominant purpose - holiday
Jodie is holidaying in Cairns when she becomes aware of a half-day work-related seminar nearby. Jodie attends the seminar, and can claim the cost of attending, but she cannot claim her airfares to and from Cairns, or her accommodation and meals, as the primary purpose of her travel is private.
Example - dual purpose
Megan flies to London for a 10-day international, work-related conference. Megan stays over for an extra four days to do some sightseeing. As the sightseeing is not an incidental part of the conference or the trip as a whole, Megan can only claim the work-related portion of the airfares (10 days/14 days) and the accommodation and meals for the 10 days she attends the conference. Megan cannot claim the cost of accommodation and meals for the four days of private travel.
Example - dominant purpose - work-related
Gary, a qualified architect, attends an eight-day work-related conference in Hawaii on modern trends in architecture. One day of the conference involves a sight-seeing tour of the island, and a networking game of golf is held on the final afternoon of the conference. As his main purpose is work-related, Gary can deduct the total cost of the conference (air fares, accommodation and meals).
- Meals (food and drink)
- Overnight travel expenses
- Self-education and study
- Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business
You cannot claim a deduction for the cost of acquiring or renewing your driver's licence. Drivers licences are a private expense, even if driving is an essential part of your employment and you must have a licence as a condition of your employment. You can, however, claim a deduction for additional costs you incur to obtain a special licence or condition on your licence in order to perform your duties.
Example - heavy vehicle licence
Rhonda is a long-haul truck driver who needs a driver's licence and a heavy vehicle permit to work. Her driver's licence renewal costs her $45 per year and it costs $73 to apply for the heavy vehicle permit. The $45 to renew her licence is not deductible because it is a private expense. The cost of the heavy vehicle permit ($73) is deductible as it is an additional expense she incurs to fulfil her work responsibilities.
You cannot get a deduction for the cost of any fines you get when you travel to work, or during work, including parking fines, speeding fines, or penalties (for example for overloading your truck).
You can claim a deduction if it is necessary for you, as a designated first aid person, to undertake first aid training to assist in emergency situations at work.
You cannot claim a deduction if your employer pays for the training, or reimburses you.
Example - first aid course
Leanne is required to hold a first aid qualification to be a flight attendant as she is required to use these skills and knowledge in the event of an emergency whilst in flight. Leanne can claim a deduction for the cost of the first aid course.
You cannot claim the cost of attending functions or participating in entertainment involving food, drink or recreation. This includes events, dinners, dances and cocktail parties, even if they are attended exclusively by your work colleagues, you discuss work at the functions and they are compulsory. These are not deductible expenses.
Example - cost of attending work functions not deductible
Leroy, a business development manager, attends a number of functions such as lunches, cocktail parties and dinners where he engages with potential new clients as part of a strategy to build the customer base of the company that employs him.
Despite the fact that Leroy conducts work-related discussions at these functions, he cannot claim a deduction for the cost of attending these functions. The expense is for entertainment (food and drinks).
You cannot claim a deduction for the cost of buying or repairing prescription glasses or contact lenses. These are private expenses.
You can only claim a deduction for the cost of sunglasses, and glasses with filtering and glare-reducing qualities similar to sunglasses (such as photochromatic glasses or anti-glare glasses) if wearing them:
- has the necessary connection with earning your employment income, and
- protects you from the risk of illness or injury at work.
You need to apportion expenses if you use the glasses for work and private purposes.
Example - prescription sunglasses and glasses
Sergei works as a landscaper and spends most of his days outdoors in the sun. He gets prescription sunglasses to help protect his eyes from the glare. When he is doing planning work in his office he wears his regular prescription glasses.
Sergei can claim a deduction for his prescription sunglasses as they protect him from the risk of illness or injury while performing his work-related activity. The prescription glasses he wears in the office offer no protection and have the character of a private expense so he would not be able to claim a deduction for the cost of those glasses.
As Sergei wears his prescription sunglasses on his days off, he apportions the cost of his sunglasses to account for his private use.
- Taxation Ruling TR 2003/16 Income tax: deductibility of protective items
- Taxation Ruling IT 2477 Income tax: deductibility of tinted glasses used by a visual display unit (VDU) operator
- Apportioning work-related expenses
Except in very limited circumstances, gym fees and other fitness expenses (such as gym clothes, skipping ropes, weights and other fitness equipment) are private expenses, and cannot be claimed as a deduction. This is the case even if you are required to pass medical examinations and fitness tests to maintain your employment.
Members of the regular Australian Defence Force, police officers and firefighters cannot claim their fitness expenses.
However, there are very limited circumstances where employees who require an extremely high level of fitness can claim a deduction for these expenses. This will be the case where strenuous physical activity is an essential and regular element of your work.
Example - private fitness expense
Mahendra is an intelligence officer for the Royal Australian Navy. He prepares intelligence briefings and generally carries out intelligence analysis tasks. Most of this work is done at his desk. Mahendra has a membership at a private gym and goes there three times a week to maintain the fitness levels required for his employment in the Navy.
Mahendra cannot claim the costs of his gym membership, as it is a private expense. While Mahendra needs to keep a level of fitness for his employment, his role does not entail strenuous physical activity as part of the performance of his duties.
Example - deductible fitness expense
Nola is a trapeze artist and tumbler with a circus. She has a gym membership and also takes regular Pilates and yoga classes. She also trains and rehearses with her company to develop new trapeze and tumbling routines, and performs six nights a week.
Nola would be able to claim her fitness costs. Her job is to rehearse and perform trapeze and tumbling acts for the circus which is a strenuous physical activity that is essential and regular part of her duties. Maintaining an extremely high level of physical fitness is essential to her job.
Example - deductible expense and private expense
Bill is a police academy physical training instructor. He regularly attends a commercial gym to ensure that he can perform his specific duties. Bill's fitness expenses for the year include gym fees and the cost of a tracksuit. As Bill's ordinary duties require regular strenuous physical activity, he can deduct his gym fees, but not the cost of the tracksuit. The tracksuit is conventional clothing, so the expense is private in nature.
If Bill was a general duties police officer, he would not be entitled to claim a deduction for his gym fees. Although he would have to maintain a standard level of fitness, his role would not involve strenuous physical activity. Bill's expenses in these circumstances would be private.
- Taxation Determination TD 93/114 Income tax: is a police officer, who is required to maintain an adequate level of physical fitness in order to undertake police duties, entitled to claim a deduction for fitness related expenditure?
Expenses relating to the use or ownership of a home are domestic and are not deductible. However, in specific cases some expenses may be allowed as a deduction if there is a sufficient connection with your employment activities.
If you work from home, you may be entitled to claim some running expenses of a home office. This may include heating, cooling, lighting, cleaning and depreciation of home office furniture and equipment. You cannot claim your home occupancy expenses such as rent, mortgage interest, water, and rates.
Example - working from home
Calvin is employed as a software developer by ABC Pty Ltd, a company based in the Melbourne CBD. Calvin lives in a rented property in Geelong and wants to limit his need to commute to the office in the Melbourne CBD. His employer gives him permission to work frequently from home, but he needs to come into the office for team meetings and on other days as required.
Calvin sets up a spare room as his work office and he doesn't use it for any other purpose. Calvin would be able to claim running expenses in respect of his home office but would not be able to claim any portion of his rent as it is a cost of maintaining a place to live and domestic in nature (that is, an occupancy expense).
If claiming for a home office, you can only claim the additional running expenses incurred as a result of working from home.
Example - additional running expenses
Ian occasionally works from home. As Ian has a dedicated room to work from, he is entitled to claim the additional running expenses for heating and cooling that he incurs as a result of working from home during the day.
If Ian had instead worked from his dining room or living room when other family members were present, he would not be entitled to claim a deduction for the running expenses such as the cost of lighting or heating and cooling as he incurs no additional cost as result of working from home in those circumstances.
If you are entitled to claim running expenses, you can claim the work-related portion of the following expenses:
- heating, cooling and lighting
- cleaning costs
- computer consumables (such as printer paper and ink), and stationery
- home office equipment such as computers, printers, furniture and telephones - for these you can claim the
- the full cost for items up to $300
- decline in value for items over $300.
You can claim running expenses either at the fixed rate or as actual expenses.
Fixed rate for running expenses
Instead of keeping records of all of your actual expenses for heating, cooling, lighting, cleaning and the decline in value of furniture, you can claim a deduction of 52 cents for every hour you work at home. To use this method you need to keep a record of the actual hours you spend working at home or keep a diary of a four-week period that represents your usage over the income year.
You still need to have documents to substantiate your other expenses, such as phone expenses, internet expenses and computer consumables.
Example - fixed rate
Rosemary keeps a diary over a four-week period and works out that she has spent 16 days and a total of 128 hours working at home. This averages out to 32 hours per week.. Based on her work diary, this is a representative sample of the hours she works at home for the entire year of income. Rosemary works for 48 weeks in the income year, so she works out that she spent a total of 1,536 hours working from home for the income year (32 hours per week x 48 weeks).
Rosemary uses a work-supplied computer so she cannot claim a deduction for that. However, she has bought a ream of paper, printer ink and stationery that has been used solely for work purposes costing $250.
She calculates her home office expenses as follows:
1,536 hours × 52 cents/hour
If you have a dedicated work area, you can claim additional running costs and the decline in value of office furniture used in the area for work purposes.
To calculate the cost of lighting and heating/cooling you need to use the following formula:
A × B × C
- A is the cost per unit of power used
- B is the average units used per hour
- C is the total annual hours the area used for work-related purposes.
Invoices for cleaning and the purchase of depreciating assets used for work purposes will also be required to claim the actual cost. Only the actual cost of cleaning the dedicated work area can be claimed. If you are claiming a deduction for the decline in value of the depreciating assets you need to apportion the expenses if you use these assets for work and private purposes..
- Taxation Ruling TR 93/30 Income tax: deductions for home office expenses
- Phones and other telecommunication devices
- Internet expenses
- Decline in value under the capital allowance provisions
- Apportioning work-related expenses
Some employment-related insurance policies may be deductible, depending on what the policies cover.
You can claim the cost of premiums you pay for insurance against the loss of your employment income. If the policy provides a benefit of an income nature during a period of disability (income protection or continuing salary cover) as well as a capital sum to compensate for injury, only the expense related to the income portion of the policy is deductible. You cannot claim a deduction for policies that are taken out through your superannuation where the premiums are deducted from your contributions.
Example - apportioned deduction
Dee takes out an income protection and personal injury policy through her insurer. She pays $250 a month, of which $175 is for the income protection cover and $75 is for the personal injury cover. Dee can claim $175 a month for the insurance policy. The remaining $75 is not deductible, because it is capital in nature.
You can deduct the cost of professional indemnity insurance for work-related purposes. If the insurance is paid for by your employer or later reimbursed, you cannot claim the deduction.
Example - professional indemnity insurance not deductible
Ezra is required to have professional indemnity insurance in his role as a financial planner. As part of his salary package, his employer has agreed to pay his insurance each year he is employed at the firm. As Ezra did not incur the expense he is unable to claim a deduction.
You can also claim a deduction for interest incurred on money borrowed to pay for work-related expenses. This includes tools and equipment and other items or services. You must be able to show that the interest relates specifically to the work-related expenses that you have paid for and claimed as a deduction. You can deduct the interest only to the extent that the expenses are deductible.
- For further information on the general principles regarding the deductibility of interest expenses refer to paragraphs 2 and 3 of Taxation Ruling TR 95/25 Income tax: deductions for interest under section 8-1 of the Income Tax Assessment Act 1997 following FC of T v. Roberts: FC of T v. Smith
- For examples on how to do the calculation refer to paragraphs 53 to 73 in Taxation Ruling TR 2000/2 Income tax: deductibility of interest on moneys drawn down under line of credit facilities and redraw facilities
You can claim a deduction for the cost of your internet use to the extent it relates to your employment activities. You need to apportion expenses if you use the internet for work and private purposes. You apportion your use by keeping records showing a detailed usage pattern.
Keeping a diary for a four-week representative period is the easiest way to determine the extent of your deduction. If you do not have a representative period, you will need to keep records for the full year. You cannot claim a deduction for installation or set-up costs.
- Apportioning work-related expenses
- Law Administration Practice Statement PS LA 2001/6 Verification approaches for home office running expenses and electronic device expenses .
Example - apportioning internet expenses
Sometimes, Sam works from home connecting to his office via a virtual desktop. He keeps a work diary for a four-week period and compares it to his data usage on his home internet. Sam calculates his work use percentage on either the time used or download amounts for the work and private use.
Sam chooses to calculate his claim based on the download amounts. His household uses 240 GB of data in the four-week period, and Sam calculated that he used 48 GB while he was on work duty. This gives him a work use percentage of:
Data used for work / Total data use = Work use percentage
48 / 240 = 20%
Sam's internet costs $60 per month so the total claim he could make in the month would be:
Total bill for each month × Work use percentage = Monthly amount to be claimed
$60 × 20% = $12
As Sam took all of December off he wouldn't be able to claim for that month, so his total deduction at the end of the year would be:
Monthly amount to be claimed × Number of months = Total claim amount
$12 × 11 = $132
You can claim a deduction for the cost of cleaning and maintaining clothing that falls into one or more of the categories of deductible clothing (see Clothing expenses ). You can also deduct laundry expenses for clothing supplied by your employer. If your employer launders your clothing or reimburses you, you cannot claim a deduction.
When working out your laundry expenses (including washing, ironing and drying) we consider that a reasonable basis for working out your laundry claim is:
- $1 per load if the load is just made up of work-related clothing, or
- 50c per load if other laundry items are included.
Repair and dry cleaning expenses are based on the actual cost you incurred for those services.
You may not require written evidence for your laundry expenses if your claim for laundry expenses is $150 or less. This is even if your total claim for work-related expenses is more than $300. However this $150 substantiation exception does not increase the $300 work-related total expenses substantiation exception to $450.
Example - laundry expenses
Jelani receives a uniform from her employer. She washes, dries and irons her uniforms as their own load of washing twice a week. Jelani works 48 weeks during the year. Her claim of $96 for laundry expenses is worked out as follows:
Number of claimable laundry loads per week × Number of weeks = Total number of claimable laundry loads
2 × 48 = 96
Total number of claimable laundry loads × Reasonable cost per load = Total claim amount
96 × $1 = $96
Jelani also claims $250 in union fees for her job, but no other work-related expenses. As her total claim for laundry expenses is under $150 ($96) she does not have to provide written evidence of her laundry expenses. As her total claim for work-related expenses is over $300 ($346), Jelani will have to keep written records of her other work expenses (that is her union fees). Although Jelani is not required to substantiate her claim for laundry, if asked, she will still be required to explain how she calculated her claim.
- Taxation Ruling TR 98/5 Income tax: calculating and claiming a deduction for laundry expenses
- Substantiating laundry expenses
You cannot claim a deduction for items that you use to take your food or drink to work, or use at work, even when travelling overnight for work. These are private expenses.
Example - travel mug
Olivia is a train driver. As the train sways, she uses a travel mug to drink out of while she is driving. Olivia is not entitled to claim a deduction for her travel mug. It is a private expense. This would be the case even if Olivia used the travel mug on a shift where she was required to sleep away from home overnight.
With limited exceptions relating to travel and overtime, the cost of food and drink is private and not deductible.
Example - purchasing food at work
Scarlett works evenings at the candy bar in a movie theatre. She gets a long break on which she buys dinner, and she usually buys some peanuts and water to snack on throughout her shift. Scarlett cannot claim a deduction for the snacks or evening meal. The cost of the food and drink she has bought is private and has no relevant connection to her employment activities.
Similarly, you cannot claim the cost of a meal purchased when you are going between different jobs.
Example - moving between jobs
Owen is a bank teller. He finishes work at 5pm and commences work at a liquor store at 6pm. Before starting work at his second job, Owen buys an evening meal. The cost of the food and drink is private and has no relevant connection to his employment activities.
You can generally claim the cost of meals when you are required to travel and stay away from home overnight for work.
- Overnight travel expenses
- Conferences, seminars and training courses
- Taxation Ruling TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees' travel expenses?
You may also be able to claim a deduction for the cost of a meal you buy and eat while working overtime.
The cost of newspapers, news services and other news subscriptions are private and you cannot claim a deduction for them under normal circumstances. The benefits of staying informed on news matters will usually be no more than incidental to your work and the expense too remote from your income earning activities to be deductible.
You can claim a deduction if you can show there is sufficient connection between your specific employment duties and the content of the specific publication. You need to apportion expenses if you use the publication for work and private purposes.
You can also claim a deduction for the cost of buying or subscribing to magazines that have content specifically related to your employment and that are not general in nature.
Example - newspaper
Judy is a real estate agent who subscribes to the local paper to keep abreast of real estate. As the real estate section only appears in the Wednesday and weekend editions, Judy can claim a portion of the cost of the Wednesday, Saturday and Sunday newspapers.
Example - deductible professional journal
Jason is a civil engineer who subscribes to an engineering technical journal. Jason can claim a deduction as the content specifically relates to his work.
You can claim accommodation (see Accommodation ), meals (see Meals (food and drink) ) and incidental expenses when you travel in the course of performing your employment duties and are required to sleep away from your home overnight for work.
Incidental expenses are minor, but necessary expenses associated with your work-related travel. They might include a car parking fee, a bus ticket, or a charge for using the phone or internet for work-related purposes at your overnight accommodation. These are deductible to the extent that your accommodation and meals are deductible.
Only those expenses you incur while travelling for work purposes are deductible. You need to apportion your accommodation, meal and incidental expenses if the travel is for work and private purposes. If you add a few days onto a work trip to visit a relative you cannot claim the cost of your accommodation, meals and incidentals during that time.
Receiving an allowance from your employer does not automatically entitle you to a deduction for overnight travel expenses.
There are special substantiation rules for accommodation, meals and incidental expenses.
Example - attending a meeting
Beth is an executive in a large banking company. She travels from her usual workplace in Melbourne to Sydney for a three-day meeting. Beth can claim the cost of her flights, accommodation, meals and incidental expenses such as taxi fares from her hotel to the meeting venue each day. She incurs the expenses in the course of performing her employment duties. Therefore they are deductible.
On duty while away from home
Employees who are on duty while sleeping at a workplace near their home, such as a personal carer living on site, or an overnight supervisor at a boarding house are not sleeping away from home overnight for work. This is also true of employees who choose to sleep near their workplace rather than returning home between shifts. Accommodation and meal costs in these instances are not deductible
Relocating or living away from home
You can't claim accommodation, meals or incidental expenses you incur in the course of relocating or living away from home. These expenses are private or domestic.
Although meals are a private expense, in limited circumstances meals eaten on overtime can be deductible. You can claim a deduction for the cost of a meal you buy and eat while working overtime if you receive an overtime meal allowance under an industrial award or enterprise agreement and the allowance is reported on your income statement and declared in your return.
An amount for overtime meals that has been folded into normal salary or wages, for example under a workplace agreement, is not considered to be an overtime meal allowance.
There are special substantiation rules for overtime meals - refer to Substantiating overtime meals .
Example - overtime meal
Moana completes her eight-hour shift and is asked to work for an additional three hours. She is given a meal break and paid a meal allowance of $20 under her enterprise bargaining agreement. Moana buys and eats a meal costing her $21 during her overtime. Moana can claim a deduction for $21 as the expenditure on meals she eats while on duty for extended hours is incurred in earning her employment income, and is not private in nature.
Example - food consumed after overtime
Michael is asked to work three hours overtime after finishing his normal shift. He is given a meal break and paid a meal allowance of $20 under his enterprise agreement. Michael takes his break but doesn't buy any food. After his overtime shift finishes, he buys some food on the way home. Michael cannot claim a deduction for this food, as he didn't incur the expense as part of earning his assessable income.
You cannot claim a deduction for parking expenses that you incur to go to your workplace. This is a private expense.
You can claim a deduction for parking expenses when they relate to a work journey and are not reimbursed by your employer.
Example - non-deductible parking expense
Carissa is an engineer working in the city centre. There is no parking for employees in her building, so Carissa pays for car parking nearby. Carissa cannot claim a deduction for the cost of the car parking.
Example - deductible parking expense
Karlyn works for a law firm. She has to rush some legal documents to the court before it closes for the day. Karlyn drives and parks directly in front of the court and pays a fee for parking. Karlyn can claim the cost of the car parking.
You cannot claim a deduction for the cost of pay television or streaming services. This is a private expense.
Example - non-deductible pay television
Glenn is a pilot for a domestic airline. He subscribes to a pay television service that has a real time weather channel. Glenn checks the weather channel in the morning before flights as he does some preliminary planning for his flights that day. Glenn's employer also supplies weather information to him when he arrives at the airport. He is expected to use this information in his flight planning.
Glenn cannot claim any part of the cost of his pay television subscription, as the benefit he gains from the subscription is too remote and the proportion that relates to his work is incidental.
Generally the costs related to personal appearance, including cosmetics or makeup, skin care, shaving products, haircuts, hairdressing and hair products are not deductible as they are private expenses. The fact that your employer expects you to maintain certain standards of grooming or pays you an allowance to cover your grooming expenses does not make the expense deductible.
Example - cosmetics not deductible
Isabella works as an executive assistant to the managing director of a large international company. She is required to be well groomed at all times at work and her employer has advised that her presentation will be regularly monitored. In recognition of the importance of grooming to her employer, Isabella is paid a grooming allowance of $50 a week.
Even though Isabella buys cosmetics that she uses solely for work with the allowance she receives, and her employer expects her to be well groomed, she cannot claim a deduction. The connection between Isabella's expenditure on cosmetics and her employment activities is insufficient. The character of the cosmetics remains private.
Example - haircuts not deductible
Hugo is in the army and is required to maintain a short hairstyle. Hugo cannot claim a deduction for the cost of haircuts, as this is a private expense.
In limited circumstances there may be sufficient connection between personal appearance expenditure and earning your employment income to make the expenditure deductible.
Example - performer incurring hairdressing and makeup expenses
Johannes is employed to perform in a touring production that runs for six months. The role requires him to keep his hair in a short buzz cut, and he buys makeup to age his appearance by 20 years. As the makeup and hairdressing expenses have a sufficient connection to the earning of his employment income, Johannes can claim a deduction.
- Taxation Ruling TR 96/18 Income tax: cosmetics and other personal grooming expenses
You can claim a deduction for expenses you incur on phone and other telecommunication devices, including data, if you use the devices for work purposes. If the device cost more than $300, you can only claim its decline in value as a deduction.
You need to apportion expenses if you use your phone or devices for work and private purposes. You cannot claim a deduction for installation and set up costs.
Example - connection expense
Mark is transferring his home phone and internet connection to the NBN. He must pay a one-off fee for the cost of the modem and connection. He cannot claim a deduction for this fee. The expense is capital in nature.
You cannot claim a deduction for obtaining or maintaining a silent number. Obtaining and maintaining a silent number preserves anonymity and privacy, and is therefore private in nature.
Example - silent number
Hunter is an employee lawyer who works on criminal cases. He maintains a silent home telephone number due to the fact that he does not wish to expose his family to threatening calls. The additional cost of maintaining the silent telephone number is not deductible. The expense is not incurred in the course of earning his employment income. It is a private expense.
- Law Administration Practice Statement PS LA 2001/6 Verification approaches for home office running expenses and electronic device expenses
This includes, for example: safety gear and occupational health and safety equipment.
Various kinds of safety equipment, such as safety helmets, knee pads or earmuffs don't necessarily fit under the definition of clothes.
These items may be deductible if they meet the following criteria:
- you are exposed to risk of injury or illness carrying out your employment
- the risk is not negligible or remote
- the item provides protection from that risk, and would reasonably be expected to be used in the circumstances
- you use the item in the course of carrying out your employment activities.
Example - helmet and safety visor
Wiremu works on a building site. He is required to wear a helmet and safety visor on site and if he doesn't wear them, he is at risk of being injured. There is connection between the expense he incurred on the helmet and safety visor and the protection the items provide for him during his employment. Wiremu can claim a deduction for the cost of the helmet and safety visor.
Example - Non-deductible protective item
Kate is a manager who works in an air-conditioned building. She applies moisturiser to her face and hands while at work. The risk of illness from Kate's work environment is not sufficient to make it necessary for her to use moisturiser to counter that risk. Kate cannot claim a deduction as there is no connection between her expenditure and her employment activities.
You cannot claim a deduction for the cost of a transfer in work location for an existing job, or taking up a new job. This is the case even if relocating is a condition of your employment. Where you chose to live and the expenses related to it never have a sufficient connection to earning your employment income and remains private or domestic.
Example - relocation due to transfer
Cailyn, a Commonwealth public servant is transferred by her department from a state office to the central office in Canberra. Cailyn cannot claim a deduction for her removal or relocation costs, as the move is private in nature and does not have the necessary connection with earning her employment income.
Example - relocation due to promotion
Otto is a regional sales manager for Tasmania. His employer offers him a promotion to become the national sales manager for Australia. A condition of accepting the job is that he moves to the head office in Sydney. Otto is not able to claim for any of his removal or relocation expenses as his decision to move is private in nature and does not have sufficient connection with earning his employment income.
You cannot claim a deduction for the cost of educating your children (or any other students), including school fees, university fees and TAFE fees. This has no relevant connection with earning your employment income, and is a private expense.
Example - private school fees
Troy, a single father, works two jobs so that he can afford private school fees for his twins Yasmine and Jasmine. Troy cannot claim a deduction for the school fees. The expense has no connection to Troy's employment income and is private in nature.
Self-education and study includes courses undertaken at an educational institution (whether it leads to a formal qualification or not), attendance at work-related conferences or seminars, self-paced learning and study tours.
You can claim a deduction for study and self-education expenses if your course relates directly to your current employment and:
- maintains or improves the specific skills or knowledge you require in your current employment - such as a trainee accountant studying commerce part-time at university, or
- results in, or is likely to result in, an increase in your income from your current employment - such as a lawyer upgrading their Bachelor of Law with a Masters of Law.
Example - maintains or improves specific skills or knowledge
Cyril is employed as communications officer at a large company. He enrols in a weekend seminar on emergency communications, which is part of the duties he performs at work. The course deepens his knowledge on communications issues and directly ties into the work he does from day to day and is therefore deductible.
Example - does not maintain or improve specific skills or knowledge
Brunhilde works at the university computer labs. Her duties consist of mostly making sure the labs are kept tidy, setting up new computers and providing some minor technical support for students. She is studying a Masters of Computer Science - Data Science. Even though there is some minor connection between the work she performs and her study, the duties she undertakes with her job and the specific knowledge she gains from her study are unrelated. She cannot, therefore, claim a deduction for the costs of obtaining the Masters degree.
You cannot claim a deduction for study or self-education for a course that:
- doesn't have a connection with your current employment or relates only in a general way to your current employment or profession - such as undertaking a full-time fashion photography course and working as a casual sales assistant on the weekends, or
- may enable you to get employment or change employment - such as moving from employment as a personal care assistant to a nurse, or from employment as a nurse to a doctor.
Example - different work activities
Terry works as an orderly in a hospital. He is also studying a Bachelor of Nursing to become a registered nurse. The duties of an orderly are to ensure the wards are kept tidy, to lift and turn patients and transport them in wheelchairs and moveable beds, to make beds and serve food. They do not administer medication or maintain medical records for patients.
Terry's employer promises him a job as a registered nurse (which would lead to an increase in pay) if he successfully completes the course. The duties of a registered nurse include assessing and evaluating patients, working in consultation with doctors and specialists to care for patients, maintaining medical records, administering medication and monitoring for side effects and implementing nursing care plans.
While Terry works with nurses when he is carrying out his duties, becoming a registered nurse would significantly change his work activities. When he completes the degree, although he will be engaged with the same employer, he will change jobs and have significantly different responsibilities. He will also enter into a new employment contract.
The study will allow him to obtain a new job and increase his income, but there is not a sufficient connection with his present employment activities. Terry cannot claim a deduction for the expense of his study.
Example - deductible study expense
Renee is employed as a senior manager in a business consulting firm. Her employer offers an increase in pay grade for staff members who gain a Masters of Business Administration. Renee enrols in the course and, once she completes it, receives the pay increase. Renee can deduct her self-education expenses as it has led to increased income from her current employment activities.
If your self-education expenses are deductible, you can claim expenses such as course fees, student and amenities fees, textbooks, academic journals and stationery expenses. If any of the assets cost over $300 you may be able to claim a decline in value of the asset. If you have set aside a home office, you may also be able to claim home office running expenses, but not occupancy expenses.
Travel, meals and accommodation
Meals and accommodation are private in nature and not deductible, except in very limited circumstances. However, if you are required to be away from home for one or more nights for your self-education, you may be able to claim your transport, meal and accommodation costs.
Example - interstate study travel
Renee is studying her Masters of Business Administration at an interstate university. The will result in an increase in her income from her current employment and her self-education expenses relating to the course are deductible. She mostly does the course online, but occasionally she has to attend the university in person.
Renee needs to attend a four-day workshop to complete a subject. She flies in on the morning of the first day and flies out on the evening of the last day. The cost of the flights, meals and accommodation while she is studying are deductible, as she has had to spend three nights away from home.
You may also be able to claim your daily travel from your home to your place of education and back, and from your place of work to your place of education and back.
However, you cannot claim the cost of the last stage of your journey if you go from your home to your place of education and then to work, or your place of work to place of education and then home.
Example - daily travel for study
Arjun is a solicitor who is studying his Masters of Law. Arjun has to attend two classes each week. One is on Saturday morning and one is on Tuesday afternoon. He drives from home to class on Saturday morning, and then drives straight back home. Arjun could claim both trips between home and the university when he attends a class on a Saturday as a self-education expense.
On Tuesdays, Arjun drives to work. He then drives to university and heads home straight after. He would only be able to claim the cost of the trip from work to university on those days.
If you receive a taxable scholarship and you are not employed by the scholarship provider, you are unable to claim the cost of travel from your home to your normal place of education and back.
It is important to keep records of travel related to self-education even where the expense may not be deductible.
While course fees may be deductible, fees incurred under the Higher Education Contribution Scheme Higher Education Loan Program (HECS-HELP) scheme are not deductible. HECS-HELP is the Australian Government loan scheme that covers degrees at universities and other higher education providers that offer Commonwealth supported places. These are usually at the undergraduate level.
With other deductible course fees you claim the deduction when the debt is incurred, not when the repayment is made. Debts are generally incurred when they become a legal obligation you need to pay back.
Example - when the expense is incurred
Tara enrols in two subjects for her Masters of Business Administration course. The subjects have a census date of 22 March, meaning if she pulls out prior to that date she does not have to pay the course fees. Due to an unexpected increase in her workload, Tara withdraws from one subject on 17 March. On 22 March Tara incurs the cost of the one subject she is still enrolled in, even though she has deferred payment through the FEE-HELP system.
The repayments you make on debts you have under the schemes such as the Higher Education Loan Program, Trade Support Loan Program, Student Financial Supplement Scheme and Student Start-up Loan are not deductible.
Generally the first $250 of self-education expenses are not deductible, and you must reduce your overall claim for self-education by that amount. You can, however, offset the $250 reduction through expenses that are not normally deductible. These expenses include:
- childcare expenses while attending self-education activities
- travel expenses for the last stage of travel from your home to place of education and then to your workplace, or workplace to your place of education and then to your home
- if you are a taxable scholarship recipient who is not employed by the scholarship provider, the travel expenses from your home to your normal place of education and back
- capital expenses related to self-education, such as the purchase of a desk.
Example - $250 reduction
Tobias incurs deductible self-education expenses of $2,100 in the income year. He also incurs $80 of childcare and $70 of travel that are not ordinarily deductible self-education expenses. Tobias calculates his deduction for self-education expenses in the following way:
$250 reduction amount - Self education expenses not normally deductible = Reduction amount
$250 - ($80 + $70) = $100
Deductible self education expenses - Reduction amount = Total claim amount
$2,100 - $100 = $2,000
You can claim a deduction for the cost of diaries, pens, logbooks, or other stationery that has the necessary connection with earning your employment income.
Example - diary
Phillip is a salesperson. His duties require him to meet with several different clients every day. Phillip prefers to keep a paper diary to record his meetings with clients so he buys one at the start of each year. Phillip is entitled to a deduction for the cost of the diary.
You can only claim a deduction for the cost of sunscreen if wearing it:
- has the necessary connection with earning your employment income, and
- protects you from the risk of illness or injury at work because your employment duties require you to spend prolonged periods outdoors.
You need to apportion your expenses for sunscreen if you use it for work and private purposes.
You cannot claim a deduction for sunscreen if:
- your work does not require you to perform your duties in the sun, or
- you purchase a cosmetic with added sunblock protection.
Example - deductible sun protection
Jackie, a teacher, buys a bottle of high protection sunscreen to wear once a week at the school sports afternoons held outdoors, which she is required to attend. She also wears a sunhat and sunglasses to protect herself from exposure to the sun. She does not wear that particular sunscreen at any other time. Jackie can claim a deduction for the cost of the sunscreen, as well as the sunglasses and sunhat. If Jackie uses the sunglasses and sunhat for private purposes as well, she will have to apportion her deduction for those items.
- Taxation Ruling TR 2003/16 Income tax: deductibility of protective items
You can claim a deduction for tolls you incur when they relate to a work journey.
Example - deductible toll
Kath, an employee hairdresser is required by her employer to travel from her usual salon to one of their other salons for a meeting. She drives her car and uses a tollway to get to the other salon. Kath can claim a deduction for the cost of the road toll as she is undertaking a work-related journey.
You can claim a deduction for the cost of tools or equipment if you use them for a work-related purpose. You need to apportion the cost of the tools or equipment if you use them for work and private purposes.
Tools and equipment are generally depreciating assets. If it is a depreciating asset and it cost you more than $300, or is a part of a set that cost you more than $300, you need to claim a deduction for its decline in value over the effective life of the asset.
Example - private use of tools
Deric works as an aircraft maintenance engineer and buys a coupler kit to use at work. He also occasionally uses the coupler kit to maintain his personal plane on the weekends. Deric calculates that during the income year he uses the kit for his personal plane for 10% of the time. He therefore reduces his deduction by this amount.
- Apportioning work-related expenses
- Decline in value under the capital allowance provisions
- Depreciating assets
You can claim a deduction for the cost of insuring tools and equipment to the extent of their work-related use.
Example - insuring tools
Mark, an employee carpenter has an extensive collection of tools that he uses solely at work. He has portable and valuable items cover in case his tools are ever lost, damaged or stolen at work. Mark can claim a deduction for the cost of the insurance for the tools.
You can claim a deduction for the cost of repairs to tools and equipment to the extent of their work-related use.
Example - repairs to tools
Rod is a tree lopper. The chainsaw that Rod uses solely for work breaks down and needs to be repaired. Rod can claim the entire cost of repairing the chainsaw.
This includes, for example: flights, taxis, ride-share and ride-sourcing costs and other public transport costs.
You can claim transport expenses when you travel in the course of performing your employment duties. This includes the cost of driving your car, flying or catching a train, taxi or bus.
You cannot claim a deduction for transport expenses incurred in travelling between home and work as this is a private expense. This doesn't change even if:
- you do incidental tasks on the way, such as stop at the post office to collect mail for your employer, or
- you work outside usual business hours or are on call.
Example - private travel to work
Tim works at his local cinema. He is often required to work late into the night. The only available bus does not operate past 7pm so Tim has to drive to and from work. The cost of this trip is not deductible as it is private in nature. The expense is incurred to put Tim in the position to earn his employment income.
- Travel between home and work and between workplaces
- Car expenses
- To determine if the vehicle you use is a car, refer to What is a car?
Where the nature of your job creates a practical necessity to transport bulky tools or work equipment by car between home and work, the journey may be a deductible work journey rather than ordinary private travel to and from work. This will only apply if:
- the tools or work equipment are essential for the performance of your employment duties
- the tools or work equipment are bulky, meaning they are of such large size or weight that transportation by car or other private vehicle is the only realistic option, and
- transporting the items between home and work is a practical necessity (for example, there is no appropriate storage for such items at the workplace, or the items need to be transported to a different work site on a subsequent day).
These requirements are necessary for the cost of the trip to be deductible. It will not be sufficient if you transport items merely as a matter of choice. For example, if your employer provides reasonably secure storage, your decision to transport items home will be a matter of choice and not a practical necessity. The cost of the trip will not be deductible.
Example - bulky equipment
Masahito is employed to play double bass in an orchestra. The orchestra plays in a number of locations and he often travels directly from home to the various venues. He practices regularly at home, which is also the only place available to store his instrument when not being used. When the double bass is in its case, it is over 2 m tall and 75 cm wide and is awkward to transport. Masahito can claim a deduction for the car travel between home and his workplaces. The need to transport his cumbersome double bass by car to the different workplaces means that the journeys are not ordinary home to work travel.
Example - non-bulky tools
Yandi works at a mobile phone repair booth in the shopping mall. There is no room to store her tools at the kiosk so her employer expects her to bring her tools to and from work. Yandi keeps her tools in a tool box that is 30 cm by 20 cm by 10 cm. The toolbox is easy to carry in her backpack when she takes it home each day. While there is no place to store the tools and she needs them to do her work, the tools themselves are not bulky and would not affect the way she travels to and from work. Those journeys still have the character of private home to work travel and the travel expenses would not be deductible.
Example - transport of tools due to personal choice
Marcus is a short haul truck driver who decides it is important to take his truck repair tool kit with him on every trip. The tool kit needs two people to move it and there is nowhere for him to store the tools safely at the home depot. His employer supplies a basic tool kit for minor repairs in each truck and, if the trucks break down, employees must call the duty mechanic to come out and do the repairs. While the tools would be considered bulky and there is no safe space to store them at work, he does not require the tools to do his job. Marcus would not be able to claim a deduction for his travel to work as it is his personal choice to carry tools that are not relevant to his driving duties. His employment has not created a need to transport bulky tools between home and work. The costs of travelling between home and work are private expenses.
Example - secure storage available
Merinda works as a fitter and turner on a mine site that she drives to every work day. Her work depot is surrounded by a fence and people need to come through a security gate to get on to the premises. There is a building supplied for staff to store their tools when not on duty. The staff have their own personal tool lockers which have combination locks.
Merinda requires a number of tools to do her job, so her toolkit is large and heavy. Although there is room to store the toolkit in her locker, she takes it home every day. Although her tools would be considered bulky, Merinda has a secure place to store them at the work depot and it is her personal decision to transport them between home and work each day. Her work has not created a practical need to transport bulky tools between home and work, and so the daily trips remain ordinary private journeys. She would not be able to claim a deduction for her travel.
- Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work -- deductions, allowances and reimbursements for transport expenses .
- Taxation Ruling IT 2543 Income tax : transport allowances: deductibility of expenses incurred in travelling between home and work
If your work is itinerant, you will be entitled to claim a deduction for transport expenses incurred in travelling between home to work. Your work is itinerant if you have shifting places of work. The following factors may indicate you do itinerant work:
- travel is a fundamental part of your work
- you have a web of workplaces you travel to throughout the day, that is you have no fixed place of work
- you continually travel from one work site to another
- you are often uncertain of the location of your worksite
- your home is a base of operations that is, you start work at home and must go to another site to complete it
- your employer provides an allowance in recognition of the need to travel between different work sites.
Example - work that is not itinerant
Chloe is a substitute teacher, who travels to different schools when teachers are away. She sometimes attends a school for just one day, and at other times for a few weeks. Chloe is not carrying out itinerant work. While she may not know where she is going to work each day, she will only ever work at one location for the day. She cannot claim a deduction for the cost of the transport between home and work.
Example - work that is itinerant
Mitchell works as an apprentice roof tiler and is dispatched to various sites each day. He travels to the first location from his home and returns home at the end of the day from the last site at which he has worked. Mitchell is carrying out itinerant work as he is travelling between sites all day and can claim a deduction for the transport expenses he incurs when he travels between home and work each day.
Mitchell can also claim the cost of his transport to travel between each site during the day. However, if Mitchell only attended one site and worked there for several days until the job was finished, he would not be carrying out itinerant work.
It is important to also note that the travel needs to be fundamentally tied to your employment income. If the travel is merely a matter of convenience for you or the employer it will still be considered a private expense and therefore not deductible.
- Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses
Your home may be a base of employment if:
- you commenced work at or before the time of leaving home to travel to work, and
- the responsibility for completing that work is not discharged until you attend the worksite.
If you do small tasks at home or work at home as a matter of convenience, then you cannot claim that your home is a base of employment.
Example - home is a base of employment
Tom is the IT Security Director of a data storage company. He is on call 24 hours a day to be notified of a security breach. His employer has installed a secure terminal so he can work from home if he receives a call out of hours. Normally, Tom would provide advice over the phone to the staff on site, and sometimes he would log into the secure terminal at his home to correct the issue.
At times, Tom needs to drive into head office out of hours so he can resolve the issue on site. On those occasions when he starts working from the home terminal then drives into work to resolve the issue, the journey is deductible, as his home becomes a base of employment. However, his regular daily drive into work is not deductible.
Example - home is not a base of employment
Una is employed as a copywriter at an advertising agency. She often works from home as it is more convenient for her. Occasionally, she starts the day working at home but drives into the office in the afternoon to meet with her colleagues or check in with her manager. As she chooses to work from home and it is not generally necessary for her to go to her office, her home is not a base of employment and the journey to work remains private. She cannot claim a deduction for her home to work travel.
You can claim a deduction for your transport expenses when they are incurred in the course of earning your employment income. This is when:
- you travel directly between two separate places of employment, as long as one of them is not where you live
- you attend work-related conferences or meetings away from your usual workplace
- you travel from your regular workplace to an alternative workplace (a workplace you don't regularly travel to) and back to your regular workplace
- you travel to and from your home to an alternative workplace.
Example - regular workplace
Brock works for a large company with two offices in Melbourne. He usually works from the city location but occasionally his boss directs him to attend the office in Box Hill. Brock can claim a deduction for the cost of driving to and from the Box Hill office. However, if Brock works from the city location every Monday to Thursday and from the Box Hill office every Friday as a standard arrangement, then both places are his regular workplaces and he cannot get a deduction for any of his travel.
Example - direct travel between two separate workplaces
Ahmit works primarily as a drafter but has another part-time job as a security guard. On Tuesdays and Thursdays he drives directly from his job as a drafter to his job as a security guard. As the travel is between two workplaces he can claim a deduction for that travel.
Example - non-deductible travel
Michelle is a piano teacher who offers lessons from her home after work and on weekends. Monday to Friday she works as a receptionist at the local doctor's surgery. Michelle cannot claim a deduction for travel to and from the doctor's surgery, as this is home to work travel, even though she earns income as a piano teacher at home.
- For car expenses when you undertake self-education see Self-education and study
Travel includes transport expenses (refer to Transport expenses ) and overnight travel expenses - being accommodation (refer to Accommodation ), meals (refer to Meals (food and drink) ) and incidental expenses (refer to Overnight travel expenses ).
You can claim a deduction for the cost of union fees for industry that you are employed in.
You can also claim up to $42 per income year for each subscription you make for membership of a trade, business or professional association that is not directly related to the earning of your assessable income.
Example - union fees
Justin is an employee film writer. He belongs to the Australian Writers' Guild. Each year Justin pays an amount to the Australian Writer's Guild to be a member. Justin can claim a deduction for the fees he pays.
Example - subscriptions
Michael is an accountant, and pays $700 a year for membership of his professional accounting body. He is also studying actuarial science and decides to join that professional body as a student member which costs $200 per year.
Michael can claim the full $700 of the accounting body membership as that relates to his employment. He can claim $42 of the actuarial professional membership, as it is not related to his employment activity.
This includes, for example: motorcycles, bikes, bicycles, scooters, trucks, heavy vehicles and buses.
If the vehicle you drive while travelling for work is not a car as defined, you can claim the actual expenses related to your work travel. Vehicles other than cars include motorcycles, a vehicle with greater than 1 tonne carrying capacity or a van with capacity for nine or more passengers.
These expenses can include fuel, oil, and repair and maintenance costs. You cannot claim the purchase of the vehicle, but you can claim the decline in value of the vehicle over its effective life.
You need to keep records of all your expenses to prove your claims, as well as records that show how you have calculated your work travel as a percentage of your overall travel. While it is not a requirement to keep a logbook, it is the easiest way to show how you have calculated your work-related use of the vehicle.
Example - claimable expenses
Samid buys a motorcycle that he uses for his work making local deliveries. His logbook shows he travels a total of 3,000 km for the year and during the 12-week logbook period he travels 800 km in total with 600 km being work-related travel. He calculates his work use percentage as 75%.
Total logbook work-related kilometres / Total logbook kilometres = Logbook work use percentage
600 / 800 = 75%
Samid keeps receipts for his expenses. These were for:
Fuel and oil
Decline in value
Samid multiplies his work use percentage by the total expense to get his deduction.
Total expenses × Work use percentage = Claimable deduction
$3,600 × 75% = $2,700
If you are an employee who earns commission-only income, you may be able to claim a deduction if you pay someone to provide you with services and assistance directly relating to your employment activities. You need to demonstrate that the arrangement is not a private arrangement and that hiring the person allows you to earn additional income from your employment activities.
Example - deductible expense
Claire is employed as a regional wine sales executive and works on a commission-only basis. She hires Jake as an administration support person who works four hours a day, five days a week. Jake fulfils Claire's sales orders with the warehouse and books her appointments with clients in future weeks. Hiring Jake allows Claire to earn more income from selling wine. Claire can claim a deduction for Jake's wages expense as there is a clear connection with her employment activity.
Example - non-deductible expense
Pawel is employed as a computer systems sales person and he only receives commission income. He pays his son $100 a week to answer the home phone when he is not around. Pawel does not expect his son to be at home at certain times and if he doesn't answer the phone, it will divert to his mobile. He rarely gives his home phone number out to clients. Pawel cannot deduct the expense of paying his son as there is no connection between the expense and his employment activities.
If you are paying wages to a relative, a deduction is only available to the extent it is no more than a reasonable payment for the service performed. A reasonable payment is the amount the employee would be expected to pay to an unrelated person who had similar skills and experience in the same role.
Example - overpayment
Verity is employed as a real estate agent on a commission-only basis. She pays her son $50 an hour to deliver advertising leaflets in the region in which she operates. The market rate for such a service is only $21 an hour. Therefore Emily can only claim a deduction of $21 an hour for the wage expenses.
A deduction is not allowable for the cost of purchasing or repairing an ordinary wristwatch as the expense is generally considered private or domestic. However, you may be able to deduct the cost of purchasing or repairing a speciality watch that has the necessary connection with your work.
If the watch cost more than $300, you can only claim its decline in value as a deduction.
You need to apportion expenses if you use the watch for work and private purposes
Similarly to ordinary watches, a smart watch (that connects to a phone or other device to provide notifications, apps and GPS, for example) is a private expense and not deductible under ordinary circumstances.
However, if you require some of the smart watch's functions as an essential part of your employment activities you may be able to apportion the expense between your private and work use. In order to show your work-related use of the watch, you will need to keep a diary or similar record of your use of the device for a representative period.
- Phones and other telecommunication devices
- Apportioning work-related expenses
- Decline in value under the capital allowance provisions
Example - specialty watch deductible
Alastair is employed as a nurse. When he started working in a hospital he bought a nurses' fob watch for $150, which he wears only during work hours. Alastair cannot wear a normal wrist watch for hygiene reasons. Alastair can claim a deduction for the expense.
Example - specialty watch apportioned for private use
Bianca works on the police Diving Squad. She buys a diving watch that she uses every day for work. She also uses the watch when she goes diving recreationally. As the watch cost more than $300, she is entitled to claim the decline in value of the watch as a deduction. However, Bianca would need to apportion the decline in value amount between her work and private use, and claim only the portion that relates to her work.
Example - ordinary watch not deductible
Carlos is a travelling salesman. He buys a watch so he can make sure he is on time for his appointments. Carlos cannot claim a deduction for his expense as it is not a speciality watch and the expense is private and domestic in nature.
Example - smart watch not deductible
Dianna is a police officer who primarily works on bicycle patrol. As part of her role, she needs to keep GPS records of where she travels. The department has provided her with a GPS for this purpose. Dianna purchases a smart watch so it is easier for her to keep personal GPS records and to check messages sent to her phone while she is on patrol. She receives both private and work-related messages via the smart watch. Dianna cannot claim a deduction for the smart watch, because her employer provides her with the necessary tools to fulfil her work functions. The ability to check messages on her phone with her watch is not a part of her employment duties and the cost of the watch is not a deductible expense for her work.
Generally the cost of acquiring and taking care of dogs or other pets is a private expense. However if your dog has a necessary connection to earning your employment income, you may be able to claim a deduction for the purchase and care of the dog. Working dogs are trained for their role from a young age and are not treated like pets.
Example - working dog connected to employment
Greg is a truck driver who exclusively transports cattle. He owns Hamish, an Australian cattle dog which is a breed developed for droving cattle. Hamish has also been raised and trained as a cattle dog. Greg takes Hamish on his cattle runs and Hamish herds the cattle in and out of the truck. Because of the connection with Greg's employment, he can claim a deduction for the costs incurred with Hamish to the extent of the work-related use of the dog.
Example - companion dog not connected to employment
Sammy works as a long haul truck driver who hauls a variety of goods around Australia. She owns Buster who is an Australian kelpie, a breed that was developed for herding livestock. Sammy takes Buster on her trips as a companion and guard dog, but he is never used for herding livestock. There is no connection between Buster and Sammy's employment and therefore Sammy cannot claim a deduction for expenses for Buster's upkeep.
Example - guard dog not connected to employment
Gabby is a police officer who owns a German shepherd as a guard dog for her protection at home. Gabby cannot claim a deduction for maintaining the dog as it is a private expense.