Deductions you can claim as an employee
Ultimate Guide on how to claim during tax time - accounting advice
Tax deductions advice for accountants
Every year, come tax time, many of us scramble to find our tax receipts and figure out what can be claimed for the year and what can’t be claimed for the year. It always feels like it is a thousand-piece puzzle that is taking forever to piece together. Learn more about the finance industry by enrolling in Accounting Training Online, Bookkeeping or Financial Planning course. If you are ready to study a Accounting course at the Diploma level have a look at the Diploma of Accounting - Qualification details here.
The basic rule of thumb is that to be able to claim a work-related deduction, you must have spent the money yourself and you have not been reimbursed for it, it must relate directly to you earning an income, and you must have a record to prove it. This record usually comes in the form of a receipt or an invoice. Sometimes, this record could also be a payment summary from your employer, bank statements, summaries from managed investment funds, contracts or even tenant and rental records.
If an expense incurred was both for work and private purposes, such as usually is the case with one’s internet and mobile services, you can only claim a deduction for the work-related portion. Let’s have a look at the common claims us Australians make.
Vehicle and travel expenses
Vehicle and certain travel expenses incurred may be claimable if they were incurred in the course of performing your work duties. For example, you have to travel outside of the office to meet a client at their office and you took an Uber. The Uber fare is claimable. However, the trek from home to work and back cannot be claimed as this is considered private travel.
Clothing, laundry and dry-cleaning expenses
The cost of purchasing and cleaning your work-specific uniform or other occupation-specific clothing and protective clothing may be claimable. In order for you to be able to make a deduction, you may need to have written evidence that you purchased the clothing and diary records or written evidence of your cleaning costs such as receipts from the dry cleaning. If you received an allowance from your employer for clothing, uniforms, laundry or dry-cleaning; you must show the allowance provided on your tax return.
Home office expenses
If you are an employee of a business who regularly works from home, you may be able to claim a deduction for expenses relating to that work such as phone and internet expenses. The tax office has a handy table you can refer to as to whether the home office expenses you want to claim is indeed claimable.
Mobile phone, internet and home phone expenses
If you use your own mobile or home phone, or internet for work which brings you an income, you may be able to claim a deduction if you paid for these costs and have records to support your claims. Remember to work out the percentage that reasonably relates to your work use if your phone or internet is being used for both work and private purposes. It is important to note that if you are a casual employee or if your employer is the one who has provided you with the phone, you cannot claim a deduction for telephone rental expenses as per the rules outlined by the tax office.
Overtime meals
If you receive an overtime meal allowance under an award and buy food and drink on overtime, you can claim up to the reasonable allowance expense amount set without keeping any written evidence. Bearing in mind that you can still only claim the amount you have actually spent. If you claim more than the reasonable allowance expense amount, you need to keep written evidence of all of your expenses on your food and drink, not just the excess.
Self-education expenses
If you undertake any self-education activities relating to your current work activities as an employee, or if you receive a taxable bonded scholarship, you may be able to claim a deduction for this. Self-education expenses are deductible when the course you undertake leads to a formal qualification and meets the following conditions – the course must have a sufficient connection to your current work activities as an employee and maintain or improve the specific skills or knowledge you require in your current work activity. The only time you cannot claim a deduction is when the course is for you to get new employment or a promotion, or if it only generally relates to it.
Under this category, you can make claims for certain expenses such as accommodation and meals if you are away from home overnight for the course, computer consumables, course fees, decline in value for depreciating assets, fares, equipment repairs, home office running costs, internet, phone calls, stationery, student union fees, textbooks and student services and amenities fees.
Tools, equipment and other equipment deductions
If you are required to purchase tools, equipment or other assets to help you earn your income, you can claim a deduction for some or all of the cost of the purchase. For items that don’t form part of a set and cost $300 or less, or forms part of a set that in total costs $300 or less, you can make an immediate deduction for their entire cost. However, for items that cost more than $300, or that form part of a set that altogether costs more than $300, you can claim a deduction for their decline in value. Under this category, you can also claim the cost of repairing and insuring your tools and equipment and any interest on the money you borrowed to purchase these items.
Other work-related deductions
If you have purchased any items or spent any money to earn your income, you can usually claim a deduction for the expense. To claim this deduction, you need to be able to show that you need to incur the expense to earn the income, the expense is not private in nature and the expense is not an outgoing of capital or of a capital nature. Save these records and present them to your tax agent who can help guide you further as to whether they are indeed claimable.
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