BLOG What can I claim?

Kathryn Harris, FCPA,CTA TrustOne Partners

If a salesperson tells you your purchase is tax deductible is it?

BLOG What can I claim?

We constantly get told that the salesperson said "I could claim it on my tax", or "but my mates accountant claims it".

So what can you claim?

For an expense to be deductible in your tax return it has to have a connection to the money you've learnt. Some are obvious. If you're a carpenter and you need a new hammer that will be deductible. Others - not so much.

A tricky area is clothing. We have clients that work for stores such as Factorie or Just Jeans where as part of their employment they must wear the brand. Unfortunately these costs are not deductible. The clothing is still everyday clothing that they could wear elsewhere. It offers no protection from the elements or dangerous substances or from other dangers. It is also not something that uniquely identifies them as an employee. Another example of clothing is the drill pants and stubbie shorts. These are not deductible.

Claiming your car can also be confusing. As of this year there are only two methods allowed for claiming car cost - the cents per kilometre basis and the log book method. If you do 5000km or less for work you can claim 66 cents per kilometre. The log book method requires you to keep a log book of every trip you make in the car, whether for work or not, and then a percentage can be worked out. You also have to write down the odometer reading at the 30 June each year. It is necessary to keep all your receipts related to car costs other than fuel which can be estimated. For car costs to be claimable it has to be used for work. This doesn't including travelling from home to your work place - this is considered private travel. Even if you get the mail on the way it still doesn't count. You can count travel between workplaces or to study and training. You can also include travel where you have to transport heavy and bulky tools. The rule of thumb is if you can't take it on public transport then it will be heavy and bulky.

Self education has always been a big audit area. It is important that you can prove that the study has a connection to your current job and:

  • will maintain or improve the specific skills or knowledge you require in your current employment, or

  • will result in, or is likely to result in, an increase in your income from your current employment.

You can't claim expenses for a course that might be generally related to your current job or that will enable you to get a new job, including a promotion.

It's also important that you consider private use of items. If you use your home computer for work purposes but also to download and watch GoT then you need to work out how much of your use is work related and only claim that proportion. 

The ATO does allow tax payers to claim up to $300 in deductions without having receipts as long as they can show they are reasonable. However, once your deductions total more than $300 you need to have a receipt for each claim.

What you get back in your pocket for these deductions depends on your marginal tax rate. For most tax payers it will only be about a third of what you claim that you get as a refund. The very most you can get back is 49% - and for that you would have to have a taxable income over $180,000.

Remember - it is actually on you as to whether your claims are correction and it is your responsibility to keep all your receipts and other tax records. Make sure you read your return before you sign it and are comfortable with what has been claimed. Big refunds that are incorrect lead to big fines and interest!

The best advice we can give is to bring in all your recipes that you think you may be able to claim and we will let you know which ones you can. A way of helping you keep track is by using the ATO My Deductions tool.

We are available for appointments Monday through Friday from 9am to 5pm, as well as some evening availability on Tuesdays and Thursdays.


Kathryn Harris, FCPA,CTA TrustOne Partners

Kathryn is a small business advisor and tax specialist. She is passionate about helping small business owners work smarter.