You may be able to claim deductions for work-related expenses you incurred while performing your job as an employee.
See also
Things to know
You incurred an expense in 2019–20 if:
- you received a bill or invoice for an expense that you were liable for (even if you paid it after 30 June 2020), or
- you did not receive a bill or invoice but you were charged and you paid for the expense.
These expenses include:
- car expenses, including fuel costs and maintenance
- travel costs
- clothing expenses
- education expenses
- union fees
- home computer and phone expenses
- tools and equipment expenses
- journals and trade magazines.
You may also be able to claim some deductions which are not work related. They are:
- interest and dividend deductions for investments
- deductions for gifts and donations
- a deduction for the cost of managing your tax affairs.
For more information, see Taxation Ruling TR 97/7 Income tax: section 8-1 – meaning of 'incurred' – timing of deductions.
Goods and services tax
If your expense includes an amount of goods and services tax (GST), the GST is part of the total expense and is therefore part of any deduction. For example, if you incurred union fees of $440 which included $40 GST, you claim a deduction for $440.
Foreign employment
If you received a PAYG payment summary – foreign employment or have foreign employment payment information shown on an income statement, then you claim deductions that you are entitled to claim in respect of that income at work-related expenses and low value pool deductions in the Deductions section, as relevant.
All foreign deductions must be converted to Australian dollars before you complete this section. For more information on how to convert your foreign deductions see Foreign exchange gains and losses or you can phone 13 28 61 to get information about the exchange rates.
Basic rules
You must have incurred the expense in 2019–20.
To claim a deduction for a work-related expense:
- you must have spent the money yourself and weren't reimbursed
- it must be directly related to earning your income
- you must have a record to prove it (usually a receipt).
The expense must not be private, domestic or capital in nature. For example, the costs of normal travel to and from work, and buying lunch each day are private expenses.
- If you incurred an expense that was both work-related and private or domestic in nature, you can claim a deduction only for the work-related portion of the expense.
- If you incurred an expense that was capital in nature you may be able to claim a deduction for the decline in value of the depreciating assets you acquired. See Decline in value of a depreciating asset.
If you incurred an expense for services paid in advance, see Advance expenditure to decide what part of the expense is deductible in 2019–20.
You can't claim a deduction for an expense if:
- someone else paid the expense, or you were, or will be reimbursed for the expense, or
- the payment or reimbursement is a fringe benefit (including an exempt benefit).
If you were partially reimbursed for the expense, you can only claim the part that was not reimbursed.
Record keeping for work-related expenses
You must be able to substantiate your claims for deductions with written evidence if the total amount of deductions you are claiming is greater than $300. The records you keep must prove the total amount, not just the amount over $300. The $300 does not include car and meal allowance, award transport payments allowance and travel allowance expenses. There are special written evidence rules for these claims which are explained at the relevant sections.
If the total amount you are claiming is $300 or less, you need to be able to show how you worked out your claims, but you do not need written evidence.
See also:
Advance expenditure
If you have prepaid an amount for a service costing $1,000 or more, and the service extends for a period of more than 12 months or beyond 30 June 2021 (such as a subscription to a journal relating to your profession), then you can claim only the portion that relates to 2019–20. You can also claim the proportion of your pre-paid expenses from a previous year that relate to 2019–20.
For more information, see Deductions for prepaid expenses.
Allowances
If an allowance you received is shown on your tax return (in your income statement or payment summary details), you may be able to claim a deduction for your expenses covered by the allowance. You must have incurred the expenses in producing your employment income, and must meet the basic rules discussed above. For example, if you received a tools allowance of $500 and your tool expenses were $300, the whole amount of the allowance is included with your payment summary details on your tax return and you claim a deduction of $300 at Other work related expenses.
Decline in value of a depreciating asset
You may be able to claim a deduction for the decline in value of a depreciating asset which you held during 2019–20 if you used it to produce income that you show on your tax return.
A depreciating asset is an asset that has a limited effective life and can reasonably be expected to decline in value over the time it is used. Depreciating assets include items such as tools, reference books, computers and office furniture.
The decline in value of a depreciating asset is worked out on the basis of its effective life. You can either make your own estimate of its effective life or use the Commissioner's effective life determinations (see Taxation Ruling TR 2019/5 – Income tax: effective life of depreciating assets (applicable from 1 July 2019) for assistance with both).
You may be able to claim an immediate deduction for the full cost of depreciating assets costing $300 or less provided certain conditions are met.
For more information, see Guideto depreciating assets.