Work-Related Deductions: What You Can (and Can't) Claim

Claiming every deduction you're entitled to is one of the simplest ways to reduce your tax bill. Claiming things you're not entitled to is one of the quickest ways to attract the ATO's attention. Here's how to tell the difference.

The three golden rules

For a work-related expense to be deductible, the ATO's three rules all have to be met:

1. You must have spent the money yourself and not been reimbursed.
2. The expense must be directly related to earning your income.
3. You must have a record to prove it.

If the expense was partly private, you can only claim the work-related portion.

Working from home: the 70-cent fixed rate

The fixed rate method lets you claim 70 cents for every hour you work from home. You need a record of the actual hours you worked from home.

The 70-cent rate covers these running expenses, so you can't claim them separately:

• Energy: electricity and gas for heating, cooling and lighting
• Internet and data: home and mobile internet
• Phone usage: mobile and home phone usage
• Stationery and computer consumables: such as paper and printer ink

Equipment such as a desk, chair or computer isn't covered by the rate and can be claimed separately.

Other deductions people miss

• Tools and equipment: items costing $300 or less used mainly for work can usually be claimed in full that year. More expensive items are depreciated over time.
• Self-education: courses that maintain or improve the skills you use in your current job.
• Tax agent fees: what you paid to have last year's return prepared.
• Donations: gifts of $2 or more to registered deductible gift recipients.

What you generally can't claim

• Travel between home and your usual workplace
• Everyday clothing, even if you only wear it to work (uniforms and protective clothing are different)
• Grooming, gym memberships and childcare
• Fines and penalties

Keep your records

Keep receipts, invoices and logbooks for five years from when you lodge. A photo on your phone is fine, as long as it's clear.

Not sure what you can claim? SydneyTaxAccountant is a Sydney-based tax practice serving clients Australia-wide online. Australian returns are lodged under OM Tax Services (Tax Agent No. 26072249). Call 1300 661 380 or book a free consultation.

This article is general information only and doesn't take your personal circumstances into account.