Navigating the world of work expense deductions can feel overwhelming, especially with a mix of outdated advice and persistent myths. With the 2023–24 income year coming to a close, it’s more important than ever to separate fact from fiction. Whether you’re looking to cash in on the latest guidelines or avoid falling for persistent myths, this article will arm you with the knowledge you need to make the most of your deductions — without stepping on any tax-time traps.
The ATO has introduced two key updates for the 2023–24 income year that could impact your deductions:
If you own a zero-emissions vehicle and use the logbook method to calculate your work-related car expenses, the ATO has made it easier to determine the electricity costs when charging your vehicle at home. The new Practical Compliance Guideline PCG 2024/2, effective from 1 July 2022, provides a method to calculate these expenses.
The ATO has updated its guidance on self-education expenses with Taxation Ruling TR 2024/3, replacing older rulings (TR 98/9 and TR 92/8). The ruling clarifies the principles of deductibility for self-education expenses and eliminates the previously required $250 non-deductible threshold, making it easier to claim these expenses.
Let’s set the record straight on some of the most common misconceptions during tax time:
Many people believe they can automatically claim the $150 for clothing and laundry, 5,000 km under the cents per kilometre method, or $300 for work-related expenses, regardless of actual spending.
Fact: No deductions are automatic. While receipts might not be required under certain thresholds, you must have actually incurred the expense, and it must directly relate to earning your income. Be ready to justify how you calculated your claim.
Many people believe they can automatically claim the $150 for clothing and laundry, 5,000 km under the cents per kilometre method, or $300 for work-related expenses, regardless of actual spending.
Fact: Statements alone don’t show what was purchased, who the supplier was, or when the payment was made. Receipts or similar evidence are necessary, except in cases where substantiation exceptions apply.
For more information, see:
It’s commonly believed that makeup containing sunscreen is deductible if you work outdoors.
Fact: Cosmetics are generally non-deductible, even if they include sunscreen. To claim a deduction, your duties must require you to spend prolonged periods outdoors in the sun and the product’s primary purpose must be sun protection, with the cosmetic element being incidental.
For more information, see:
Some think they can claim gym memberships because their job requires physical fitness.
Fact: Only a select few occupations qualify for this deduction. To be eligible, your job would have to depend on you maintaining a very high level of fitness, for which you are regularly tested. For most people, gym fees are a private expense.
For more information, see:
There’s a misconception that attending a conference or adding a few workdays to a holiday makes all travel expenses deductible.
Fact: Travel expenses must be apportioned between private and work-related activities, with only the work-related portion being claimable.
For more information, see:
There’s a misconception that if your employer requires a specific clothing or colour, you can claim it.
Fact: Clothing is only deductible if it’s a uniform unique to your employer, protective gear, or occupation-specific clothing. Standard clothing like black pants, even if required by your employer, is not deductible.
For more information, see:
There’s a belief that subscriptions for newspapers, magazines, or pay television can be claimed if used for work purposes.
Fact: These subscriptions are generally considered private expenses unless they directly relate to earning your income.
Some think they can claim travel from home to work as a deduction because it’s necessary for earning their income.
Fact: For most, this travel is considered a private expense and isn’t deductible.
For more information, see:
If you use a ute for work, you might think you’re exempt from keeping detailed records.
Fact: If your ute has a carrying capacity of over 1 tonne, you must keep original receipts for all expenses and provide evidence of how you calculated the work-related use. The cents per kilometre and logbook methods don’t apply.
For more information, see:
Some believe that if your phone and internet plan is capped, you can claim the entire cost, regardless of work and personal use.
Fact: Unless your phone and internet are solely used for work, you must apportion the costs between work and personal use, only claiming the work-related portion.
For more information, see:
There’s a misconception that you can estimate your work-from-home hours when using the fixed rate method.
Fact: You need to keep an accurate, ongoing record of all hours worked from home throughout the year. Estimates, even if based on the average number of days per week and hours per day you worked from home, are not allowed.
For more information, see:
* Please note that Work From Home expense is an area of ATO’s focus this financial year.
Understanding the latest updates and dispelling common myths is crucial to accurately claiming work expense deductions. By staying informed and ensuring your claims are based on fact, not fiction, you can maximise your deductions and avoid unnecessary complications with the ATO.
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