As the term implies, work-related expenses are expenses that you incur whilst performing your work duties. To claim a deduction for work-related expenses, it must satisfy the following criteria:
- It must be directly related to earning your income
- You must have a record or proof to substantiate your claim, like a receipt
- You must have spent the money and not have been reimbursed by your employer.
If an expense is for both work and private purposes, you must deduct the personal percentage from the total spent.
Types of work-related expenses
Business travel expenses are some of the most frequent work-related deductions, but deductions can come from all kinds of avenues.
Vehicle and travel expenses
The ATO has some very specific conditions around what trips you can and can’t claim for between home, work and workplaces. In most instances, you can’t claim a deduction for travel between home and your workplace, as this is generally considered to be private in nature. There are some exceptions, however, such as needing to carry bulky products, tools or equipment that are required for work.
Work-related travel expenses incurred when performing work duties, such as road and bridge tolls, air, bus, train and taxi fares, meals, incidental and accommodation expenses can be claimed.
Clothing, laundry and dry-cleaning expenses
If your work duties require you to purchase a uniform or protective clothing e.g. sun protection clothing, steel-capped boots, high vis clothing or non-slip nurse’s shoes, you can claim these purchases as a work-related expense. You can also claim for cleaning and maintaining these items of clothing.
Tools, equipment and other assets
If you buy tools, equipment or other assets to help you earn an income, you can claim a deduction for some or all of the cost. For items that cost less than $300 you can claim an immediate deduction of the cost, whereas items that cost more than $300 can have their decline in value deducted.
Home office expenses
Tools and equipment such as computers, laptops, furniture and phones used for work purposes may be claimable. You can also claim for costs incurred from running a home office, including internet access, heating, lighting, repairs and cleaning. Be sure to only claim the work-related portion of such bills.
Self-education expenses
If you enrol in an eligible education course and your study is work-related, you may be able to claim.
Claiming work-related expenses
In order to claim any work-related expenses over $300, you must be able to provide evidence to substantiate deductions. Your records must prove the total amount, not just the amount over $300. The $300 limit doesn’t apply to claims for car expenses, meal allowance, award transport allowance or travel allowance expenses. There are special written evidence rules for substantiating these types of expenses.
Written evidence must be in English unless the expense was incurred outside Australia. Evidence can be in the form of:
A document from the supplier:
- Name of the supplier
- Amount of the expense
- Nature of the goods and services
- Date the expense was incurred
- Date of the document
A document containing the above information:
- Bank and other financial institution statements
- Credit card statements
- BPAY reference numbers
- Email receipts
- Income statement or PAYG payment summary
- Paper or electronic copies of documents
For expenses $10 or less you may record evidence yourself, providing they don’t total more than $200.
Written evidence should be kept for five years from the due date for lodgement of your tax return. If claiming a deduction for decline in value, written evidence must be kept for five years from the date of your last claim for decline in value.
Tips for managing work expenses
1. Prepay expenses
Prepaying your expenses, such as subscriptions, business travel expenses, training events, leases, rent, phone, internet, insurance and business asset repairs, can attract a tax deduction providing it doesn’t exceed a year. Every little tax deduction counts!
2. Review your stock and inventory
Take a good look at your stock and identify any damaged or obsolete stock you can make a note of or write off. This exercise will impact the value of the trading stock and your profit margins. If you need new assets, the EOFY could be a good time to purchase them.
3. Don’t forget income protection insurance
If you’ve taken out income protection insurance to protect you against loss of income, you’re entitled to a tax deduction for insurance premiums paid. Unfortunately, the same can’t be said for life insurance, trauma insurance or critical care insurance.
4. Know what you can claim
From sun protection to pest control, bookkeeping fees to union and membership fees, there are a lot of work-related expenses that commonly go unclaimed deductions. Do your research and get to know what you can and can’t claim as a work expense.
5. Manage your financial year
If you’ve just put in your tax and are looking to manage things better in this financial year, check out What You Need to Know About the End of Financial Year. Here, we’ve taken a look at what’s it’s all about and how you can use the end of the financial year period to your advantage when it comes to budgeting and saving.
Disclaimer: Please note this content is provided as general information only and does not take into account your objectives, financial situations or needs. For advice tailored to your financial situation, it is advised that you seek guidance from an accountant or financial advisor. The above post refers to application software (“App, Apps”) that is not affiliated or associated with Nimble. We do not have any control or responsibility over the content of the Apps. Use of the Apps may be subject to further terms and conditions imposed by the App provider, the owner of the mobile operating system and/or other related parties. The above links belong to a variety of websites and not Nimble, so clicking on, and using them, will take you away from Nimble’s website meaning we’ve got no control or responsibility over the content. Nimble does not endorse and is not affiliated or associated in any way whatsoever to the businesses named in this blog post. The information contained in this article is correct at the date of publication.
