Tools and equipment
You can claim a deduction for tools and equipment you use to perform your duties as an engineer. For example, a calliper or scientific calculator.
You can only claim a deduction for the work-related use of the item.
If the tool or equipment cost you $300 or less, you can claim a deduction for it in the year you buy it, if:
- you use it mainly for work purposes
- it's not part of a set that together cost more than $300.
You can claim a deduction for the cost over the life of the item (that is, decline in value), if the tool or equipment:
- cost more than $300
- is part of a set that together cost more than $300.
If you bought the tool or item of equipment part way through the year, you can only claim a deduction for the decline in value for the period of the income year that you own it. To work out your deduction use the Depreciation and capital allowances tool.
You can also claim a deduction for the cost of insurance and repairs to tools and equipment that you use for work purposes.
You can't claim a deduction for tools and equipment that your employer or a third party supplies for use.
Example: decline in value (no immediate deduction)
Amelia is employed as a mechanical engineer and needed a new set of 16 spanners for work. She couldn't afford the $330 cost for the complete set, so she bought them all individually over the 2023–24 income year.
Although they only cost $22 each, Amelia can't claim an immediate deduction for the spanners. This is because they are part of a set, she bought in the 2023–24 income year that cost more than $300. Amelia can claim a deduction for the decline in value of the set, which in the end cost her $352.
If in a following year, Amelia breaks one of the spanners and has to buy a replacement, she'll be able to claim an immediate deduction for the replacement because it won’t be part of a set she bought in that year that cost more than $300.
End of example
Example: effective life of tools
Tony buys an electric tool set on 5 September for $1,500 and only uses it for work-related purposes.
He visits the ATO website and looks up the ruling on the effective life of depreciating assets. The ruling says the effective life of loose electric hand tools is 5 years.
Tony decides to use the prime cost method to work out his decline in value of the electric tool set. Tony works out that he held the tool set for 300 days during the income year and calculates his deduction for the decline in value of his tool set in this way:
Asset cost × (days held ÷ 365) × (100% ÷ 5)
$1,500 × (300÷ 365) × (100% ÷ 5) = $246
Tony can claim $246 for the decline in value of his tool set in the first year. Using the same method, he will also be able to claim $300 per year in the following 4 years and $54 in the final (sixth) year.
If Tony used the electric tool set for private purposes as well, he would have to apportion his decline in value to account for this private use.
End of exampleTravel expenses
You can claim a deduction for travel expenses you incur when your work requires you to both:
- travel for work
- sleep away from your home overnight in the course of performing your employment duties.
Expenses you can claim include your accommodation, meals and expenses which are incidental to the travel (incidentals). For example, travelling interstate to oversee on-site projects as part of your role as an electrical engineer.
You can't claim a deduction for travel expenses where you haven't incurred any expenses, because:
- you slept in accommodation your employer provides
- you eat meals your employer provides
- your employer or a third-party reimburses you for any costs you incur.
You also can't claim a deduction if you aren't required to sleep away from your home overnight in the course of performing your employment duties. For example, if you fly interstate for work and return home the same day, or you choose to sleep near your workplace rather than returning home.
Receiving an allowance from your employer doesn’t automatically mean you can claim a deduction. In all cases, you must be able to show:
- you were away overnight
- you have spent the money
- the travel directly relates to earning your employment income
- how you work out your claim.
If you receive a travel allowance you must include it as assessable income in your tax return unless all of the following apply:
- the travel allowance is not on your income statement or payment summary
- the travel allowance doesn't exceed the Commissioner's reasonable amount
- you spent the whole allowance on deductible accommodation, meal and incidental expenses, if applicable.
The Commissioner's reasonable amount is set each year. The amount is used to determine whether an exception from keeping written evidence applies for the following expenses which are covered by a travel allowance:
- accommodation
- meals
- incidentals.
You don’t have to keep written evidence such as receipts if both of the following apply:
- you receive a travel allowance from your employer for the expenses
- your deduction is less than the Commissioner’s reasonable amount.
If you claim a deduction for more than the Commissioner’s reasonable amount you need to keep receipts for all expenses, not just for the amount over the Commissioner’s reasonable amount.
However, you must keep written records for all your overseas accommodation expenses.
Even if you are not required to keep written evidence such as receipts, you must be able to explain your claim and show you spent the amounts. For example, show your work diary, that you received and correctly declared your travel allowance and bank statements.
Example: living away from home allowance
Joe is a civil engineer. He lives in the city with his family and applied for a job to work on a large construction project near a country town for 12 months. He is paid a living-away-from-home allowance by the construction company to meet his accommodation and meal costs whilst working in the country town.
The allowance isn't income and shouldn't be shown on Joe's income statement. He can't claim a deduction for his accommodation and meal costs while living away for work.
End of example
Example: reasonable allowance amount
Alexis travels from Brisbane to Toowoomba for a job, she is away from home for 3 nights. Her employer pays her a travel allowance of $110 per night to cover her accommodation, meals and incidentals. The allowance isn't shown on his income statement.
The travel allowance amount paid to Alexis is less than the reasonable allowance amount and she spends all of the travel allowance on her travel expenses.
Alexis doesn't include her allowance on her tax return because:
- it's not shown on her income statement
- it's less than the reasonable allowance amount
- she spends it all to cover her travel expenses.
This means Alexis can't claim a deduction for her expenses on her tax return.
End of exampleFor more information, see TD 2023/3 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2023–24 income year?
Union and professional association fees
You can claim a deduction for union and professional association fees you pay. You can use your income statement or payment summary as evidence of the amount you pay if it's shown on there.
Working from home expenses
You may be able to claim a deduction for working from home expenses you incur as an employee. These can be additional running expenses such as electricity, the decline in value of equipment or furniture, phone and internet expenses. You must:
- use one of the methods set out by us to calculate your deduction
- keep the records required for the method you choose.
There are some expenses you can't claim a deduction for as an employee. Employees who work at home can't claim costs:
- for coffee, tea, milk and other general household items your employer may provide you at work
- for your children and their education including
- setting them up for online learning
- teaching them at home
- buying equipment such as iPads and desks
- your employer pays for or reimburses you for the expense
- for the decline in value of items provided by your employer – for example, a laptop or a phone.
Generally, as an employee you can’t claim occupancy expenses (rent, rates, mortgage interest and house insurance premiums), unless your home office is:
- your only place of work because no other work location is provided by your employer
- used exclusively or almost exclusively for work purposes.
You can’t claim a deduction if your employer pays for your home office to be set up or they reimburse you for the expenses.
The Home office expenses calculator helps you work out the amount you can claim as a deduction for home office expenses.
Example: working from home
Calvin is an employee civil engineer for ABC Pty Ltd, a company based in the Melbourne CBD. Calvin lives in a rented property in Geelong and wants to limit his need to commute to the office in the Melbourne CBD. His employer gives him permission to work mostly from home, but he needs to come into the office for team meetings and on other days as required.
Calvin sets up his spare room as his work office and he doesn't use it for any other purpose. Calvin can claim additional running expenses in respect of his home office.
Calvin can't claim any portion of his rent (occupancy expense) as it is a cost of maintaining a place to live and is domestic in nature. Calvin's employer provides him with an office to work from so is home office it is not his only place of work.
End of exampleFor more information, see:
- PS LA 2001/6 Verification approaches for electronic device usage expenses
- TR 93/30 Income tax: deductions for home office expenses
- PCG 2023/1 Claiming a deduction for additional running expenses incurred while working from home
For more engineer expenses, see: