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Tax deductions: What you can claim on tax in Australia
You can claim a range of tax deductions when lodging your 2019/2020 tax return, some without receipts.
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If you're looking to reduce your taxable income and increase the amount you get back in tax, claiming tax deductions is the way to do this. But what can you claim on tax? This guide outlines what you can and can't claim on tax.
It's important you claim only what you're eligible for and you claim the correct amount you're entitled to, which can be tricky to work out. Tax agents know the ins-and-outs of the tax system, so they can help you claim more deductions, including things you may not know you're eligible to claim. Plus, the cost of using a tax agent is completely tax deductable.
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What are work related tax deductions?
Work related deductions are expenses that you incur as a direct result of your occupation. The Australian Tax Office (ATO) is very specific in its definition of work related deductions and will check to ensure that they are legitimate.
How much can I claim on tax?
There's no limit to how many tax deductions you can claim. You can typically claim up to $300 worth of tax deductions without any receipts, but it's a good idea to keep receipts and show your working out if you can. Over this amount, you can claim as many tax deductions as you're eligible for.
How do I know if I can claim something as a tax deduction?
If your purchase meets any of the following requirements, you may be able to claim it as a tax deduction with The ATO. Here are some items you can claim on your tax return:
- The purchase or expense was made in the tax year for which you are claiming the deduction.
- The expense was directly related to your employment.
- If the expense was related to your employment and also for personal use, you can prove what portion is used for your employment.
- You paid for the expense yourself and it has not been reimbursed by your employer
- You have proof of the purchase, such as receipts or a logbook, to support your claim for all deductions over $300
Read this guide for more information on tax deductable expenses, including some and some tax deductions you may have forgotten.
What are some things I can claim on my tax return?
Depending on your circumstances, you may be able to claim the following as a deduction on your Australian tax return. Remember to ensure these meet the criteria in the checklist above.
- The cost of using a tax agent, including the cost of travelling to and from their office.
- Formal education courses related to your field and provided by a professional association
- The attendance of a work related seminar
- The purchase of journals, magazines and/or books relevant to your field
- The attendance of work related conferences or education workshops
- Tools and equipment necessary to perform your job with success
- Union fees
- Meals purchased while working overtime
- The purchase of protective products needed for the course of your work, such as sunglasses
- Computers and software used in the course of your employment
- Home office expenses
- The premiums for income protection insurance
What’s not claimable as a tax deduction?
There are some expenses that you incur during the year that may seem work related, but are not an allowable deduction. These include, but are not limited to the following:
- The cost of obtaining a driver’s licence, even if it’s a necessary condition for employment. If the job requires a special driver’s licence, the difference in cost between that and a standard licence may be allowed.
- Vaccinations against diseases that may be contracted through the course of employment.
- Child care expenses are not deductible, although you might be eligible for a child care rebate or child care benefit.
- The cost of commuting to and from work.
- Grooming expenses such as hairdressing and makeup.
- Relocation expenses.
- The cost of a police clearance certificate or police record check.
- Even if provided an allowance by your employer, you are not automatically entitled to a deduction.
How do income tax deductions work in Australia?
Your taxable income is the total amount of money that you’re required to pay tax on. By claiming a work related expense as a tax deduction, you are reducing your taxable income and therefore reducing the amount of tax you’re legally required to pay.
For example, if your total taxable income is $50,000 and you claim $2,000 worth of work related expenses as tax reductions, your total taxable income will be reduced to $48,000. This means you will only pay tax on that $48,000.
Taxable income table
In some cases, claiming work related deductions may even push you down into a lower tax bracket. For example if your taxable income is $38,000 and you claim $2,000 worth of deductions, your taxable income will fall into the lower tax bracket. Of course, this is subject to the ATO’s approval of your claimed deductions. In some cases, claiming work related deductions may even push you down into a lower tax bracket. It's important, therefore, to keep a proper account of any work-related expenses you incur over the year, and then assess whether these can be used to reduce your taxable income come tax time.
Take a look at the table below to see which tax bracket you fall into for the 2019–20 financial year.
Resident tax rates 2019–20
| Taxable income | Tax on this income |
|---|---|
| 0 – $18,200 | Nil |
| $18,201 – $37,000 | 19c for each $1 over $18,200 |
| $37,001 – $90,000 | $3,572 plus 32.5c for each $1 over $37,000 |
| $90,001 – $180,000 | $20,797 plus 37c for each $1 over $90,000 |
| $180,001 and over | $54,097 plus 45c for each $1 over $180,000 |
Foreign resident tax rates 2020–21
| Taxable income | Tax on this income |
|---|---|
| 0 – $90,000 | 32.5c for each $1 |
| $90,001 – $180,000 | $29,250 plus 37c for each $1 over $90,000 |
| $180,001 and over | $62,550 plus 45c for each $1 over $180,000 |
All your tax deduction questions answered!
Other deductions
There may be other expenses that you can claim as well, such as books or periodicals that relate to your occupation. Consider if the expense was necessary to earn your income and not private. If so, and it does not fall under the ‘what’s not claimable’ category mentioned above, there is a chance that you can claim it.
If you are unsure if you will be able to deduct an expense, it is best that you keep the receipt and either contact the Australian Tax Office or consult with a qualified tax expert when it comes time to complete your tax forms. Attempting to reduce your income with non-eligible expenses could result in a rejection of your claim and further scrutiny by the Australian Tax Office.
DISCLAIMER: Many of the comments in this article are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information applicability to their own particular circumstances.
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Ask an Expert
On personal income of AUD 90,000 per year only from dividend payment from Australian listed companies with 100% franked dividend payment, how much personal tax should be paid for a resident in Australia?
Hi David,
Thank you for getting in touch with Finder.
It is best to seek help from a certified tax agent on this matter. If you consider doing some math on tax deductions, you may use ATO’s simple tax calculator.
I hope this helps.
Please feel free to reach out to us if you have any other enquiries.
Thank you and have a wonderful day!
Cheers,
Jeni
Self-funded retiree aged 76. My wife is 75 and has no income other than $240 per fortnight. Can I claim her as a dependent?
Hi Robert,
Thank you for getting in touch with Finder.
A dependant must be an Australian resident for tax purposes. A dependant can be:
You maintained a dependant or maintained another person if any of the following applied:
If you had a spouse for the whole of 2016–17 and your spouse worked at any time during the year, we still consider you to have maintained your spouse as a dependant for the whole income year.
For your reference, please check ATO’s T7 Dependent (invalid or carer) 2014.
I hope this helps.
Have a great day!
Cheers,
Jeni
My accreditation I can claim yet not my driver’s licence, though I must have a valid licence to obtain accreditation, isn’t my licence a tool of my trade. Can’t earn income with out it. why can’t I claim my driver’s licence?
Hi Wayne,
Thanks for your question.
While the holding of a driver’s licence may be a condition of employment, it does not follow that the licence fees are deductible. They are private in nature and accordingly not deductible under ATO’s guidelines. However, if the job requires a special driver’s licence, the difference in cost between that and a standard licence may be allowed. Please feel free to read our guide about ATO’s list of deductions.
If all else fail, you may want to discuss your concern with a qualified tax specialist.
I hope this helps.
Kind regards,
Liezl
Hi I’m currently employed as a bartender and cook and completed a cert 2 in security operations this year to improve my qualifications, it had units covering first aid, oh&s, a higher level rsa and other relatable skills to my current job can you tell me if i am able to claim the course fees as a deduction on my tax return?
Kind regards,
Shawry
Hi Shawry,
Thanks for your question.
As per ATO’s guidelines, you may be able to claim a deduction for self-education expenses if your study has sufficient connection to your current employment and not just generally related. Moreover, it should have honed your work-related skill and have caused or will likely cause an increase in your income. I’m not sure though if your security operation courses can be considered significantly related to your current job. It’s a good idea to contact ATO or check their website for more information on self-education expenses.
Alternatively, you may check our guide here on ATO’s 2017 job deductions for some helpful information.
Cheers,
Liezl