You can claim a range of tax deductions in Australia, some without receipts.
When you’re completing your tax return, you may be able to claim a number of expenses that are directly related to earning your income. Deductions are purchases that you can deduct from your total taxable income, meaning you could pay less tax. Your taxable income is the income that your tax is calculated on.
This guide will look at the general rules surrounding tax deductions, as well as some specific examples and legislation. If you want information on a specific deduction, you can skip ahead to the examples and questions section of the guide.
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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 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:
- 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 info on what you can claim as a tax deduction and some tax deductions you may have forgotten.
What are some things I can claim on tax?
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.
- 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
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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 2017/2018 financial year.
|Taxable income||Tax on this income|
|$0 - $18,200||Nil|
|$18,201 - $37,000||19c for each $1 over $18,200|
|$37,001 - $87,000||$3,572 plus 32.5c for each $1 over $37,000|
|$87,001 - $180,000||$19,822 plus 37c for each $1 over $87,000|
|$180,001 and over||$54,232 plus 45c for each $1 over $180,000|
Need help with your tax return? Use a tax agent.
It is not easy to navigate through all of the applicable deductions, yet you don’t want to miss any as this will affect the amount of taxes you owe or your refund. If you want to ensure that you have included all of the items you have purchased that are tax deductible, you may want to speak to a tax agent or an accountant. Remember, the cost of your accountant is tax deductible!
They can provide you with a comprehensive list of all of the expenses you may have incurred through your job over the year and whether or not you may include it as a deduction.
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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.