Individual Salary & Wage Earners
Deductions you can claim
When completing your tax return, you’re entitled to claim deductions for selected expenses, most of which are directly related to earning your income.
To claim a work-related deduction:
- You must have spent the money yourself and not have been reimbursed;
- It must be directly related to earning your income; and,
- You must have a record to prove it.
*N.B. If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.
Below is a summary of deductions allowed by the Australian Tax Office (ATO). Please keep in mind that there are specific obligations to be met for many of these deductions.
Please seek our further advice before claiming these items. The ATO targets unsubstantiated deductions claimed by individuals. If you are ineligible, or cannot substantiate your claims, potential penalties can apply. Contact us today so we can help identify the opportunities that are available to you.
Clothing, Laundry, and Dry-Cleaning Expenses
- Occupation-Specific clothing
- Must be specific and identifiable (e.g. Chef’s checked pants)
- Compulsory work uniforms
- There are no deductions for non-compulsory uniforms, unless your employer has registered the design with AusIndustry.
- Cleaning of work clothing
- You must have written evidence such as diary entries and receipts for your laundry expenses if both:
- the amount of your claim is greater than $150; and,
- your total claim for work-related expenses exceeds $300.
- You must have written evidence such as diary entries and receipts for your laundry expenses if both:
- Protective clothing, e.g.
- fire-resistant and sun-protection clothing
- safety-coloured vests
- non-slip nurse’s shoes
- rubber boots for concreters
- steel-capped boots, gloves and heavy-duty shirts and trousers
- overalls, smocks and aprons you wear to avoid damage or soiling to your ordinary clothes during your income-earning activities.
- Dry cleaning expense
- You can claim the cost of dry-cleaning work-related clothing, however if your total work-related claim exceeds $300, you must have written evidence to substantiate the claim.
Tools & Equipment
If you buy tools, equipment or other assets to help earn your income, you can claim a deduction for some or all of the cost.
Examples of tools, equipment or assets:
- Computers and software
- Desks, chairs and lamps
- Safety equipment
- Technical instruments
- Filing cabinets and bookshelves
- Hand tools or power tools
- Protective items, such as hard hats, safety glasses, sunscreens and sunglasses
- Professional personal libraries
Gifts and Donations
- For you to claim a gift (or donation) as a tax deduction, it must meet four conditions:
- The gift must be made to an eligible entity. We call these entities ‘deductible gift recipients’ (DGRs).
- The gift must truly be a gift. A gift is a voluntary transfer of money or property where you receive no material benefit or advantage.
- The gift must be money or property, which includes financial assets such as shares.
- The gift must comply with any relevant gift conditions. For some DGRs, the income tax law adds extra conditions affecting the types of deductible gifts they can receive.
- For gifts of money, all gifts of $2 or more are deductable. For gifts of property, there are different rules, depending on the type of property and its value.
- Bushfire and flood donations
- Donations of $2-$10 to bucket collections conducted by an approved organisation for bushfire and flood victims, you can claim a tax deduction equal to your contribution without a receipt
- If the contribution exceeds $10, a receipt is required.
- What you can’t claim – Gifts that provide you with a personal benefit, e.g.
- Raffle or art union tickets
- Items such as chocolates and pens
- The cost of attending fundraising dinners, even if the cost exceeds the value of the dinner
- Membership fees
- Payments to school building funds made, for example, as an alternative to an increase in school fees or placement on a waiting list
- Payments where you have an understanding with the recipient that the payments will be used to provide a benefit for you.
Self – Education
The course must have a sufficient connection to your current employment and:
- Maintain or improve the specific skills or knowledge you require in your current employment, or
- Result in, or is likely to result in, an increase in your income from your current employment.
You can claim the following expenses in relation to your self-education:
- Accommodation and meals (if away from home overnight)
- Computer consumables
- Course fees
- Decline in value for depreciating assets (where the cost exceeds $300)
- Purchase of equipment or technical instruments costing $300 or less
- Equipment repairs
- Home office running costs
- Internet usage (excluding connection fees)
- Parking fees (only for work-related claims)
- Phone calls
- Student union fees
- Student services and amenities fees
- Trade, professional, or academic journals
- Travel to-and-from place of education from/to either home, or work
You cannot claim a deduction for self-education expenses for a course that does not have a sufficient connection to your current employment even though it:
- Might be generally related to it, or
- Enables you to get new employment.
You cannot claim the following expenses in relation to your self-education:
- Repayments of Higher Education Loan Program (HELP) loans (although the fees paid by some HELP loans are)
- Student Financial Supplement Scheme (SFSS) repayments
- Repayments for Student Start-up Loan (SSL)
- Home office occupancy expenses
- Accommodation and Meals – unless sleeping away from home for study.
Vehicle and Travel Expenses
Certain travel expenses may be wholly or partially deductible depending upon the purpose, timing and vehicle used. Generally, classifications of deductibility can include:
- Travel between home and different workplaces.
- Car expenses.
- Meals, accommodation and other expenses incurred while traveling for work.
- There is an obligation to keep records of all travel expenses.
If you receive an allowance from your employer for transport expenses or car expenses and it is paid to you under an award. You may also be able to claim a deduction for work-related transport expenses covered by these payments
Other Potential Deductions
Some general and sundry items of expenditure incurred may also be deductible. These are as follows:
- Books, periodicals and digital information (online subscriptions, electronic published materials).
- Cost of managing tax affairs (i.e. our costs to prepare your taxation advice and tax return form).
- Election expenses.
- Income protection insurance premiums (if held outside of superannuation).
- Interest charged by the ATO.
- Overtime meals.
- Seminars, conferences and education workshops.
- Union fees and subscriptions to associations.
- Working with children check.
- Personal super contributions.
Mobile phone, internet and home phone expense (if related to work)
First Home Superannuation Saver Scheme
The First Home Super Saver Scheme allows potential buyers to contribute money to super to save for their purchase. This means the saver’s “interest” earned may be taxed at a lower rate. Monies can then be withdrawn from super without penalty to buy a house. Super earnings are taxed at the rate of 15% which may be lower than your tax bracket. Up to a total of $50,000 can be withdrawn under FHSS.
Interest, Dividend and other investment income
- You can claim a deduction for expenses incurred in earning interest, dividend or other investment income.
- You cannot claim a deduction for receiving an exempt dividend or other exempt income.
Contribution caps for 2023 FY are $27,500 concessional, and non-concessional cap is $110,000 annually.
Concessional contributions are contributions from income that has not yet been taxed, these are taxed at a rate of 15% once in your superfund. You can contribute up to the contribution cap before you are taxed at a higher rate.
Non-concessional contributions are contributions from income that has already been taxed.
You must complete a ‘Notice of intent to claim or vary a deduction for personal super contributions’ ATO form and submit it with your super fund after June 30 of the relevant financial year, and before your Individual Tax Returns are completed for that relevant financial year.
Spouse Superannuation Contribution Offset
If you make a non-concessional contribution on behalf of an eligible spouse, you may be able to access the spouse contribution tax offset of up to $540.
- The spouse to whom the contribution is being made has a total superannuation balance as at 30 June 2022 of less than $1.6 million.
- The spouse to whom the contribution is being made has an assessable income of less than $40,000.
- The receiving spouse is under 75 years of age and the contribution is within their non-concessional contribution cap.
The receiving spouse is an Australian resident for tax purposes.
Government Super Co-contributions
If a low or middle income earner makes a personal, non-concessional contribution to your superannuation, you can gain access to a government co-contribution of up to $500. The co-contribution available is dependant both on the amount contributed and your assessable income.
To be eligible for the co-contribution you must:
- Receive at least 10% of assessable income from employment or self-employment.
- Lodge a tax return.
- Be under the age of 71 at 30 June 2023.
- Have a total super balance as at 30 June 2022 of less than $1.7 million.
Make a non-concessional contribution within the NCC cap.
Home Office Expenses
To claim working from home expenses, you must:
- be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls
- incur additional running expenses as a result of working from home
- have records that show you incur these expenses.
To calculate your deduction for working from home expenses, you must use one of the methods set out below.
Revised fixed rate method
- an amount per work hour for additional running expenses (0.67c)
- separate amount for expenses not covered by the revised fixed rate, such as the decline in value of depreciating assets
you no longer need a dedicated home office.
Actual cost method
the actual expenses you incur as a result of working from home.
Where you incur running expenses for both private and work purposes, you need to apportion your deduction. You can only claim the work-related portion as a deduction.
Advice Warning: All content referencing taxation matters is current as 01 June 2023 and accurate to the best of our understanding. References to superannuation and the ability to make contributions is general information and not personal advice. Your financial needs, goals and circumstances have not been taken into consideration. Accordingly, you should consider if the advice is right for you. We recommend that you seek tailored, personal advice. Holzworth Partners is able to facilitate this advice via a specific arrangement should you wish.