Employees guide for work expenses

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What this Guide is about

This Employees guide for work expenses will help you as an employee to decide whether your expenses are deductible and what records you need to keep to substantiate them.

Not all expenses associated with your employment are deductible. This Guide explains:

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how to determine if an expense is deductible against your employment income

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how to apportion your expenses if they are only partly deductible

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how to work out whether you can claim a deduction in the year you incurred the expense or whether you need to claim a deduction for a decline in value over a number of years

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what records you need to keep.

The examples used throughout this Guide assume that the people in them are employees and not in business.

What's new in the 2024–25 income year

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Practical Compliance Guideline PCG 2023/1 Claiming a deduction for additional running expenses incurred while working from home – ATO Compliance approach has been updated. From 1 July 2024, the fixed rate for each hour worked from home is 70c.

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Practical Compliance Guideline PCG 2024/2 Electric vehicle home charging rate – calculating electricity costs when a vehicle is charged at an employee's or individual's home has been updated. This Guideline now allows individuals who own a plug-in hybrid electric vehicle (PHEV) as well as individuals who own a zero emissions vehicle (electric vehicle) and use the logbook method to rely on the relevant method outlined in the Guideline to calculate their home charging electricity expenses. The Guideline applies to individuals who own an electric vehicle from 1 July 2022 and to individuals who own a PHEV from 1 July 2024.

More detail on changes we have made can be found at the end of each Part of this Guide.

For more information, see:

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Car expenses

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Working from home expenses

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Practical Compliance Guideline PCG 2024/2 Electric vehicle home charging rate – calculating electricity costs when a vehicle is charged at an employee's or individual's home

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Practical Compliance Guideline PCG 2023/1 Claiming a deduction for additional running expenses incurred while working from home – ATO Compliance approach .

Common myths about work expense deductions

There are many myths about deductions that may lead you to make an incorrect claim. Here are some of the most common.

Myth: Everyone can automatically claim $150 for clothing and laundry expenses , 5000 km under the cents per kilometre method for car expenses or $300 for work-related expenses, even if they didn't spend the money.

Fact: There is no such thing as an 'automatic' or 'standard deduction'. Substantiation exceptions provide relief from the need to keep receipts in certain circumstances. While you don't need receipts if your total claim for work-related expenses (including laundry expenses but excluding car expenses, meal allowance expenses and travel allowance expenses) is $300 or less, if your total claim for laundry expenses is $150 or less ( note: this is for laundry expenses only and doesn't include clothing expenses) or if you are claiming 5,000 km or less for car expenses using the cents per kilometre method:

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you must have spent the money and not be reimbursed

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it must be related to earning your income, and

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you must be able to explain how you calculated your claim.

For more information, see:

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Laundry expenses

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Car expenses

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Substantiation requirements

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Exceptions and relief from substantiation requirements .

Myth: I don't need a receipt, I can just use my bank or credit card statement.

Fact: To claim a tax deduction, you need to be able to show that you spent the money, what you spent it on, who the supplier was and when you paid. Bank or credit card statements alone don't have this information. The only time you don't need these details is if substantiation exceptions apply.

For more information, see:

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Substantiation requirements .

Myth: I can claim makeup that contains sunscreen if I work outside.

Fact: Cosmetics are usually a private expense and the addition of sun protection doesn't make it deductible. However, it may be deductible if the primary purpose of the product is sunscreen (that is, it has a Australian Register of Therapeutic Goods Identification (AUST ID) number displayed as an AUST L or AUST R number), the cosmetic component is incidental, and your duties require you to spend prolonged periods outdoors in the sun.

For more information, see:

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Sunscreen .

Myth: I can claim my gym membership because I need to be fit for work.

Fact: Very few people can claim gym membership fees. To be eligible, your job would have to depend on you maintaining a very high level of fitness, for which you are regularly tested, for example special operations personnel in the Australian Defence Force.

For more information, see:

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Gym fees and fitness-related expenses .

Myth: I can claim all my travel expenses if I add a conference or a few days' work to my holiday.

Fact: If you decide to add a conference or some work to your holiday, or a holiday to your work trip, you must apportion the travel expenses between the private and work-related components and only claim the work-related component.

For more information, see:

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Conferences, seminars and training courses

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Overnight travel expenses .

Myth: I can claim my work clothes because my boss told me to wear a certain colour.

Fact: Unless your clothing is a uniform that is unique and distinct to your employer, or protective or occupation-specific clothing you are required to wear to earn your income, you won't be able to claim it. Plain clothes, like black pants, aren't deductible even if your employer told you to wear them.

For more information, see:

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Clothing expenses .

Myth: I can claim my pay television, newspaper and magazine subscriptions because I need to keep up to date for work.

Fact: Subscriptions to pay television, newspapers and magazines are not ordinarily deductible. Keeping up to date on news, current affairs and other general matters usually won't have a sufficiently close connection with your employment activities to provide a basis for deducting these subscriptions. They are essentially private expenses. You can only claim deductions for subscriptions which provide knowledge and information directly relevant to your income-earning activities.

For more information, see:

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Pay television and streaming services

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Newspapers and other news services and subscriptions

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Books, periodicals and digital information services .

Myth: I can claim home to work travel because I need to get to work to earn my income.

Fact: For most of us, home to work travel is a private expense. You cannot claim a deduction for private expenditure.

For more information, see:

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Transport expenses .

Myth: I don't need to keep records if I use my ute for work.

Fact: If you own and use a ute with a carrying capacity of more than 1 tonne for work you can't use the cents per kilometre or logbook methods to calculate your expenses. You must keep original receipts for all of your ute expenses and provide evidence of how you calculated your work-related use of the ute. The easiest way to demonstrate how you apportioned your usage between work and private use is to use something like a logbook.

For more information, see:

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Car expenses

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Vehicles other than cars .

Myth: I've got a capped phone and internet plan, so I can claim both work and private phone calls and internet usage.

Fact: Unless you only use your phone and internet for work, you have to apportion the cost between work-related and private usage and only claim the work-related portion of your expenses.

For more information, see:

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Phones, other telecommunication devices and phone usage

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Internet expenses .

Myth: I can estimate the hours I worked from home when I use the fixed rate method for claiming my working from home expenses.

Fact: To use the fixed rate method, you must keep a contemporaneous record of all the hours you worked from home over the entire income year. You cannot estimate based on the average number of days per week and hours per day you worked from home.

For more information, see:

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Working from home expenses .

References

Related Rulings/Determinations:
IT 2477
IT 2543
TR 92/15
TR 93/30
TR 94/22
TR 95/25
TR 95/34
TR 96/18
TR 97/7
TR 97/12
TR 97/24
TR 98/5
TR 2000/2
TR 2003/16
TR 2004/6
TR 2020/1
TR 2021/1
TR 2021/4
TR 2024/3
TD 93/114
TD 97/19

Related Practice Statements:
PS LA 1999/2
PS LA 2001/6
PS LA 2005/7

Case References:
AT85/98 and Commissioner of Taxation
[1987] AATA 145

B636/1985 and Commissioner of Taxation
[1986] AATA 318

Case C47; Case 44
71 ATC 219
11 CTBR (NS) 207

Case K2; Case 21
78 ATC 13
22 CTBR (NS) 178

Case No 69/1978
79 ATC 488
23 CTBR (NS) 680

Case No M 99/1981
82 ATC 139
25 CTBR (NS) 696

Case No M 282/1979
81 ATC 383
25 CTBR (NS) 200

Case No M 208/1983
84 ATC 411
27 CTBR (NS) 867

Case Nos M 309/1980, M 216/1981
82 ATC 72
25 CTBR (NS) 608

Case N44; Case 114
81 ATC 216
24 CTBR (NS) 915

Case P31; Case Q17
82 ATC 141
83 ATC 62

Case P114; Case 47
82 ATC 586
26 CTBR (NS) 365

Case R49; Case 104
84 ATC 387
27 CTBR (NS) 836

Case R70; Case 124
84 ATC 493
27 CTBR (NS) 981

Case S82; Case 87
85 ATC 608
28 CTBR (NS) 678

Case T47; Case No 1409/1985
86 ATC 381
29 CTBR (NS) 345

Commissioner of Taxation v Faichney
[1972] HCA 67

Commissioner of Taxation (Cth) v Finn
[1961] HCA 61

Commissioner of Taxation (Cth) v Forsyth
[1981] HCA 15

Commissioner of Taxation (Cth) v Smith
[1981] HCA 10

Commissioner of Taxation (Cth) v Vogt
[1975] 1 NSWLR 194

Commissioner of Taxation (Cth) v Wiener
8 ATR 335

Federal Commissioner of Taxation v Maddalena
71 ATC 4161
2 ATR 541

Frankcom, Terrence James v Commissioner of Taxation
[1982] VicSC 469

Fullerton, L.W. v Commissioner of Taxation
[1991] FCA 702

Handley v Commissioner of Taxation (Cth)
[1981] HCA 16

Lodge v Commissioner of Taxation (Cth)
[1972] HCA 49

Lunney v Commissioner of Taxation
[1958] HCA 5

Morris v Commissioner of Taxation
[2002] FCA 616

NT85/4959 and Commissioner of Taxation
[1987] AATA 575
87 ATC 470

Re Taxation Appeals
[1991] AATA 197

Re Taxation Appeals
[1994] AATA 315

Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation
[1949] HCA 15

Sun Newspapers Limited v Federal Commissioner of Taxation
[1938] HCA 73

ST86/633 and Commissioner of Taxation
[1987] AATA 567
87 ATC 575

ST87/36 and Commissioner of Taxation
[1987] AATA 424

TT 87/8, TT 87/168 and Commissioner of Taxation
[1987] AATA 863

Thomas v Commissioner of Taxation (Cth)
[1972-73] ALR 368

Other References:
Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025
PCG 2023/1
PCG 2024/2