What deductions can I claim at tax time?

Apr 1, 2022
minute read

Deductions you can claim to reduce your tax at tax time.

In this article we'll explain how to reduce tax through what you can claim, we'll run you through:

  • Deductions you can claim
  • The importance of a good tax accountant
  • More about specific deductions

How to reduce tax - deductions you can claim

According to the Australian Taxation Office (ATO) website, when you complete your tax return you are able to claim deductions for some expenses, there are 3 things you need to claim a work-related deduction:

  1. You must have spent the money yourself and were not reimbursed;
  2. The expenses you are claiming must be directly related to earning your income; and
  3. You must have a record to prove it, this is usually in the form of a receipt.

The Australian Tax Office allows you to claim up to $300 for work-related expenses without having kept any receipts – but you must have spent the money and it must be related to your employment.

If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.

How to reduce tax - learn more about specific deductions

It’s our job as your chartered accountant to make the lodgement of your tax return as easy and simple as possible. We do this every day, so we know all the ins and outs of what to claim to make it easy for you.

Want to know more about Australian tax standards?

To learn more about specific deductions and your financial reporting requirement you can claim we you can visit the ATO's website. Here is a list of some of the work related expenses that are deductible through your work activities:

Clothing, laundry and dry-cleaning expenses

You can claim a deduction clothing, laundry and dry-cleaning expenses where you incurred to buy, hire or repair clothing and footwear related to your work activities if it falls within these four categories:

  • occupational-specific clothing
  • protective clothing
  • compulsory uniform
  • non-compulsory uniform (that your employer has registered with AusIndustry)

You will need to show evidence that you bought the clothing, the amount you spent and the cleaning costs. This means you need the receipts, if your employer reimburses you and pays these costs, you cannot claim them. 

Self-education expenses

Self education and study expenses are able to be claimed if the expenses incurred relate to your current employment activities and have a significant connection to your current employment including promotion and increased renumeration. For 2021/22 the first $250 is not tax deductible, however this may change going forward.

Not that self-education expenses prior to employment is not tax deductible nor is repayments on HECS and repayment of study support loans.

Tools, equipment and other assets

You can claim a deduction for tools, equipment and other assets if you use them for tasks related to your work duties. The claim is limited by the cost of the asset and you must use it for work purposes. If the cost is greater than $300, it must be depreciated over its useful life rather than claimed outright. A claim cannot be made for tools that are supplied by the employer, it is only the employees cost of work tools that is deductible. There is a great free tool on the ATO website on deductions which can help you record and upload your receipts and photos.

Work from Home expenses

Work from home expenses is a big one in the last year with Covid measures forcing more people to work remotely and is worth discussing with your accountant. The most important thing is to make sure you have kept your evidence.  The home office expenses calculator can help with estimating your deductions, this includes an hourly rate method at 80 cents per hour to cover telephone, internet, office equipment and utilities.

Motor Vehicle and travel expenses

You may be able to claim a deduction for car expenses if you use the vehicle for work related duties.  There are various methods and rules and we suggest its best getting in touch with us so we can explain these. Once simple way to claim is the rate per kilometre method (72 cents per km) up to 5000km, a reasonable estimate of work related use is required.

Your travel expenses are claimable when you stay away from home overnight because of work however you need to check the conditions of these deductions with your accountant to ensure you are claiming correctly. You will need to keep track of your expenses and receipts throughout the year. If you receive a travel allowance, this is generally tax deductible without the need to keep receipts.

Other work related expenses

Other work related expenses that you may also claim as an expense relate to your work or income producing activities. These can include:

  • books, periodicals and digital information
  • phone, data and internet expenses
  • protective eyewear (limitations can apply)
  • income protection insurance
  • overtime meals (where a travel allowance is received)
  • protective items, equipment and products
  • seminars, conferences and training courses
  • union fees
  • professional associations
  • working with children checks

Other tax deductions

Other deductions that you may also claim as an expense relate to 

– ATO interest - the cost of calculating and reporting
– the cost of managing tax affairs (e.g. accounting fees)
– donations to tax deductible bodies
– Interest, dividend and other investment income deductions
– Personal super contributions
– Income protection insurance

 Occupational and industry specific guidelines

Occupational and industry specific guides are available to provide information on your occupational area in relation to the income, expenses and record keeping related expenses that you need to be aware of.

Covid Testing

The expense associated with Covid Testing to establish whether you can return to work is tax deductible from 1/7/2021, both PCR and RAT tests qualify.

Record Keeping

Just remember that in order to claim a deduction you must have spent the money and weren't reimbursed for it, you have to have a record to prove you incurred the cost. This is known as substantiation. A receipt or credit card statement is generally sufficient, a diary record for amounts totalling under $200 is also allowed.

Just remember that in order to claim a deduction you must have spent the money and weren't reimbursed for it, the expense must be related to your work and earning an income and you have to have a record to prove you incurred the cost.

To find out more about your tax planning and how you can minimise your tax at tax time, chat to us or phone us on (08) 9217 2400


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