Deductions
I was unemployed during the year. Can I claim money I spent looking for a job?
The tax office has ruled that deductions for expenses incurred job seeking are not deductible as there is no income to offset them against. However, after the recent Anstis case a deduction was allowed for job seeking expenses for the 2007, 2008, 2009 and 2010 years for taxpayers in receipt of a Newstart Allowance or Youth Allowance who are job seekers. In the 2011 year expenses will again be allowed for those in receipt of a government Newstart or Youth Allowance payment for expenses directly related to seeking paid work. All expenses will have to be fully substantiated and taxpayers must have written evidence to prove the expense has been incurred. This means receipts MUST be kept.
The types of expenses the tax office considers allowable against the Newstart or Youth Allowance income for people seeking paid work includes training courses (including self-employment training and assistance and text books), phone calls made seeking paid work and resume preparation. The ATO have said that they do not consider clothing and meals as direct expenses.
In the 2011 Budget, the Government announced its intention to change the law to prevent deductions being claimed against all government assistance payments from 1 July 2011. This includes claims for job seeking expenses by those who receive Newstart or Youth allowance. At this time, the legislation has not been introduced into Parliament.
I have to buy tools and equipment for my job. What can I claim and how much?
You are able to claim expenditure incurred in replacing, insuring and repairing tools of trade that you use for earning your income. If the cost of any item is more than $300 then it will have to be depreciated (i.e. claimed over its effective life). The amount you can claim will depend on what records you have kept and to what extent you use it for income producing purposes.
My job requires me to keep my knowledge up to date and I buy books and journals. Can I claim them all?
If technical books, trade books or journals are necessary to fulfil your job function efficiently then the cost of their purchase is tax deductible.
Can I claim a deduction for sun protection items?
A deduction is available for outdoor workers who buy sunscreen lotion, sunglasses and hats for use at work. The claim must be substantiated and apportioned for private use.
I have a job which requires me to be on the road a great deal and I have to use my own car. What do I need to do so that I can claim a tax deduction for my car?
There are four different methods for claiming work related motor vehicle expenses and each have different record keeping requirements. To use the method that ensures you the best claim it is advisable to keep a log book and all receipts for expenses (e.g. repairs, services, tyres, etc). You do not have to keep receipts for petrol. Your log book should be kept for a minimum of 12 consecutive weeks and generally it will be valid for five years unless there are significant changes in your circumstances. You also need to keep the opening and closing odometer reading for each year. It is not necessary that you use the same claim method each year. The choice of method should be made on the basis of which is more favourable to you and which you have the appropriate records for. If you don’t have a current logbook or have not retained all receipts you will be limited in which method you can choose. You cannot, however, claim any car expenses if your car is salary packaged.
I have incurred travel expenses this year. What can I claim?
Your travel must be relevant to your job function for you to be eligible to claim a deduction for those expenses. Where this is the case and you have the necessary documentation, you can claim the cost of transport and incidentals. If your travel involved an overnight stay you would be able to claim for meals. Travel overseas also has the requirement of keeping a travel diary.
I am paid an allowance for travel. Can I claim a deduction for that on my tax return?
A deduction will only be allowed if you have actually incurred a work related expense and have the necessary documentation. Travel to and from your job is generally not claimable unless, for example, you are carrying bulky equipment. Some awards allow for a payment of an allowance even though an expense is not necessarily incurred by the employee. If a deduction can be claimed it cannot be for more than the expense that you incurred even if the allowance that you have received was higher.
I had an overseas holiday during the year and while I was away attended a seminar that was relevant to my job. Can I claim the cost of the trip?
You cannot claim the cost of the trip because the main purpose was to have a holiday and attendance at the seminar was incidental to this. You will only be able to claim the additional expenses that you incurred to attend the seminar. These could include the registration fee, taxi fare to the seminar, etc.
I keep a room set aside in my house for a home office and would like to claim some expenses.
If a taxpayer carries on all or part of their employment activities from home and has an office set aside to do the work, then some portion of the running expenses can be deducted. A diary should be kept for a minimum of 4 weeks stating hours the office was used for work related purposes. Where a home is a place of business (and is easily identified as such – for example a separate entrance, signage etc), deductions can be claimed on the following items of expenditure - interest, rent, house insurance, council rates, heating and lighting, depreciation, insurance, repairs, cleaning, pest control, maintenance, decorating and telephone.
I need to have a telephone for making and receiving business calls and would like to know what I can claim.
Installation costs are not deductible. However, part of the rental costs are deductible where a taxpayer is required to make calls from home. Call costs would be deductible and a log of calls must be kept. Mobile phones are claimed in the same way.
This year I bought a laptop and new mobile phone which I need for my work. Can I claim the cost of these on my tax return?
Items like this that you buy for use in your job can be claimed on your return. However, since the cost of these items is most likely to be more than $300 each you will not be able to claim the full cost in one year. It will be necessary to spread your claim over the useful life of the items (depreciation) and only the work related proportion is claimable. You should keep a log of work related use for a period of at least four weeks for each item to determine the proportion that you can claim.
I recently bought an iPad and have been using it for work. Will I be able to claim a tax deduction for the cost?
The ATO have confirmed that the iPad will be treated as the equivalent of a laptop. If it is used to produce assessable income (i.e. for work related activities) a claim could be made. Any claim will have to be adjusted where there is private use and if the iPad cost more than $300 the work-related proportion would have to be depreciated over its effective life.
I have had to pay for child care during the year. Is this claimable on my tax return?
Child care expenses are not claimable as a tax deduction. Eligible taxpayers may be able to claim the Child Care Tax Rebate (CCTR) through the Family Assistance Office.
I am expected to maintain a well groomed appearance. Can I claim these expenses?
Expenditure on personal grooming and haircuts are generally not deductible. There are exceptions for some taxpayers involved in the performing arts field.
My employer expects me to wear specific clothing for work? What would I be able to claim?
Compulsory uniforms are generally deductible provided they identify you as an employee of that organisation or in a specific occupation. A requirement to simply wear particular colours is not enough to make the clothing deductible (for example a waiter being required to wear black and white clothing). Corporate wardrobes are also deductible if certain conditions are met. The uniform design must be registered with AusIndustry. Provided that the clothing is deductible then you may also claim maintenance costs (laundry, dry cleaning and repairs).
I work in a fashion clothing store and am required to wear the clothing that is sold in the shop. The garments have the manufacturer’s logo on as part of the design and I buy them at a discount. Can I claim the cost of this clothing?
Fashion clothing is not tax deductible even if your employer requires you to wear it. Because the logo is a part of the design of the clothing and does not in itself identify you as an employee it will still not be claimable.
Can I claim fees paid to my tax agent?
Fees paid to a registered tax agent for preparation of your return, amendments and generally handling your tax matters are all deductible. You can also claim travel to your registered tax agent (however the rules have changed in this area and you are limited per income tax return to 5,000km in total across the entire return if claiming the c/km method). Registered tax agents are the only people legally able to receive payment for the preparation of tax returns.
I buy tea towels from a charity each year when they ring me. Can I claim this as a deduction?
You cannot claim a deduction for this because you are receiving something for your money. Buying an item from a charity does not make your purchase tax deductible. The same applies to the purchase of raffle tickets. Only donations to registered charities are tax deductible.
Am I entitled to claim $300 for work related expenses as this does not have to be substantiated?
You cannot just claim $300. You must actually incur any expense before it is claimable. Whilst you may not need receipts for expenditure up to $300 you must have spent the money and it must be relevant to your employment.
Is there a limit on how much I can claim as a tax deduction each year?
There is no limit on the amount claimed each year, provided the expenses are necessarily incurred in earning your income . The expenditure must be work related and you may need receipts to substantiate the expenditure. Keeping incomplete, incorrect or no records at all may be limiting your ability to claim deductions. Advice can be obtained from a registered tax agent. H&R Block are happy to advise their clients on appropriate record keeping that will enable them to maximise their allowable deductions.
Is a credit card slip acceptable as a receipt?
Provided it gives full details of the supplier and date of purchase the tax office would accept a credit card slip as proof of purchase. Taxpayers can make a notation on the document indicating the type of goods that were purchased. Many taxpayers use the internet to purchase or pay for their work related expenses and so the ATO will also accept Bpay or email receipts provided they contain the necessary information; date, supplier, nature of the goods and the amount.
How long do I need to keep my receipts?
Documentary evidence should be kept for five years from the date of lodgement of the tax return in which the claims are made.
