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Income and Deductions

The SIMPLE guide of what you CAN and CAN’T claim.​
Renee Edge, C.A., Associate.

Income that must be declared:

  • Employment income
  • Super pensions, annuities and government payments
  • Investment income (including interest, dividends, rent and capital gains)
  • Business, partnership and trust income
  • Foreign income
  • Income from the sharing economy (for example Uber or Air BnB)
  • Other income – including compensation and insurance payments, discounted shares under employee share schemes, some prizes and awards

Allowable deductions:
To claim a deduction for work-related expenses:

  • you must have spent the money yourself and not have been reimbursed
  • it must be directly related to earning your income
  • you must have a record to prove you paid for it.

When your expenses meet these criteria, here’s a list of the things you may be able to claim.

  • Vehicle and travel expenses– This does not normally include the cost of travel between work and home but, if you use your car for work or work in different locations, then you may be able to claim a deduction.
  • Clothing, laundry and dry-cleaning expenses– To legitimately claim the cost of a uniform, it needs be unique and distinctive, for example it contains your employer’s logo, or is specific to your occupation, like chef’s pants or coloured safety vests.
  • Gifts and donations– to organisations that are endorsed by the ATO as deductible gift recipients.
  • Home office expenses– Costs could include your computer, phone or other electronic device and running costs such as an internet service. You can only claim the proportion of expenses that relate to work, not private use.
  • Interest, dividend and other investment income deductions– Examples include interest, account fees, investing magazines and subscriptions, internet access, depreciation on your computer.
  • Self-education expenses– If the study relates to your current job, you can claim expenses like course fees, student union fees, textbooks, stationery, internet, home office expenses, professional journals and some travel.
  • Tools, equipment and other equipment– If you buy tools or equipment to help earn your income, you can claim a deduction for some or all of the cost. Examples include protective gear, including sunscreen, sunglasses and hats if you work outside, office equipment, safety equipment and technical instruments.
  • Other deductions– Other items you can claim include: union fees, the cost of managing your tax affairs, income protection insurance (if it’s not through super), overtime meals, personal super contributions and other expenses incurred in the course of earning an income.

Deductions not allowed:
Here’s a list of deductions you usually can’t claim on your tax return:

  • Travel between home and work– which is generally considered private travel.
  • Car expenses– unless you are transporting bulky tools or equipment that your employer requires you to use, and you cannot leave it at work.
  • Car expenses– that have been salary sacrificed.
  • Meal expenses– unless you were required to work away from home overnight.
  • Private travel– including any personal travel portion of work-related travel.
  • Everyday clothes– you bought to wear to work (for example, a suit or black pants), even if your employer requires you to wear them.
  • The cost of laundering eligible work clothes– unless you can show how you calculated the cost.
  • Higher Education Loan Program– contributions charged through the HELP scheme.
  • Self-education expenses– where there is no direct connection to your current employment.
  • Phone or internet expenses– that relate to private use.
  • Tools and equipment that cost more than $300– however, you can depreciate the cost over a number of years.
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