Claiming Work-Related Expenses | Part 3 – Other Popular Deductions

1) WORK-RELATED EXPENSES – TRAVEL

If you travel regularly for work, then you may be able to claim some work-related travel in your tax return.

But to do so, you must:

Keep a travel diary or itinerary – especially if your travel was for 6 nights or more
Keep receipts for all meals, airfares, accommodation, car parking and tolls
Have a clear explanation of the travel required, the number of nights you slept away from home and the location.

There are some conditions that can vary depending on whether you have a travel allowance, travel domestically or travel overseas and how long you travel. Bur fundamentally, if you want to claim work-related travel expenses, you must keep good records, be able to explain your calculations and only claim amounts that you’ve actually spent.

If you are unsure as to your eligibility to claim work-related travel, please give our team a call on (03) 9762 7344.

Here are some examples that may help to put this into context:

Example #1 – When work-related travel is deductible

Jack works for a large company with two offices in Melbourne. He usually works from the city location but occasionally his boss directs him to attend the office in Glen Waverley. Jack can claim a deduction for the cost of driving to and from the Glen Waverley office.

But, if Jack was to work from the city location every Monday to Thursday and from the Box Hill office every Friday as a standard arrangement, then both places would be considered his regular workplaces so he cannot get a deduction for any of his travel.

Example #2 – When work-related travel is NOT deductible

Jenny is a singing teacher who offers lessons from her home after work and on the weekends. Her Monday – Friday job is as a receptionist at the local dentist.

Even though she occasionally earns an income as a singing teacher at home, Jenny cannot claim travel to and from the dentist to her home. This is considered home to work travel and is not deductible.

2) WORK-RELATED EXPENSES – CLOTHING

If you’re planning to claim “work” clothing in your next tax return, remember that it must not be conventional clothing. Conventional clothing is defined as ordinary everyday clothing worn by people regardless of their occupation.

Conventional clothing that you wear for your job is considered a private expense and cannot be claimed as a deduction.

The only instances where you can claim work-related clothing as a deduction, is if it has sufficient connection with your employment activities such as:

Protective clothing
Compulsory uniforms
Registered non-compulsory uniforms
Occupation-specific clothing

Each category has different criteria that must be met for the clothing to be deductible.

If you are unsure if you can claim clothing for work, please give our team a call on (03) 9762 7344.

Here are some examples that may help to put this into context:

Example #1 – Waitress with uniform (Deductible & Non-Deductible Clothing)

Laura works at a supermarket. She is required to buy and wear a shirt with the supermarket’s logo embroidered on it. The employee guidelines include a requirement to wear black pants and closed black shoes.

Laura can claim a deduction for the cost of the shirts as they are a compulsory uniform, but she cannot claim the cost of the pants or shoes. Even though her employer requires her to wear a specific colour, they are not distinctive enough to make them part of her uniform and are still conventional clothes.

Example #2 – A Tradie’s work clothes (Deductible & Non-Deductible Clothing)

Ryan starts work on a building site and wears cotton drill pants and a drill safety shirt to work every day. He wears them as they are comfortable to work in and, though they aren’t very durable, they provide some protection.

Ryan wears them at work but cannot claim the expense of buying them because the clothes only provide a minimal amount of protection from injury related to his work. They are mostly fulfilling the private need of having to be clothed.

After a couple of weeks on the site, Ryan notices that he is getting sunburnt through his shirt and that his pants are getting ripped and exposing his legs to potential harm. He buys himself some UPF 50 work shirts and heavy duty abrasion-resistant work trousers and starts wearing them to work. Ryan can claim a deduction for these clothing expenses as they are specifically protecting him from harm at work.

3) CLAIMING INTERNET & PHONE EXPENSES

If you use your personal phone, electronic devices or internet for work, you may be able to claim a deduction for relevant expenses incurred.

But first, you will need to work out the percentage of private use compared to work use before you can claim working from home expenses. Once the percentages have been calculated, you can then claim the apportioned amount of as a work-related expense in your tax return.

How to work out the percentage of private vs. work use:

If your bills are itemised, ensure to go through them and highlight all your work-related calls in a four-week period. This can then be applied to the full year.
If you have a bundled plan, you must keep a diary that covers a representative four-week period and shows how often you use each device for work. This pattern of work use can then be applied to the full financial year.

If you do not have a representative four week period, you will need to keep records for the full year.

What you cannot claim:

Installation and set up costs
If the device’s cost was more than $300, and you’re wanting to claim that, you can only claim its decline in value as a deduction.

If you are unsure whether you can claim any expenses regarding your electronic devices or internet, please give us a call.

4) WORKING FROM HOME EXPENSES

If you work from home, you may be able to claim some expenses associated with running your home office. This may include heating, cooling, electricity, lighting, cleaning and depreciation of home office furniture and equipment (eg. keyboards, chairs, desks, etc).

When working out your claim, there are two different methods you can use. To keep things simple, all you need to know is that the method chosen can impact which types of records you need to keep.

Some examples of records you may need to keep include:

Records of the actual hours spent working at home
A diary for a four-week period to show your usual work pattern
Receipts for items you plan to claim outright (Eg. Stationery or electricity statements).

What you cannot claim:

Home occupancy expenses such a rent, mortgage, interest, water and rates.

If you are unsure as to whether you can claim home office expenses, call us on (0762 7344).

Here are some examples that may help to put this into context:

Example #1 – Working from home expenses that are deductible

Calvin is employed as a software developer for 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 Melbourne CBD.

His employer gives him permission to work frequently from home. But, he needs to come into the office for team meetings and on other days as required.

Calvin sets up a spare room as his work office and he doesn’t use it for any other purpose. Calvin would be able to claim running expenses in respect of his home office but would not be able to claim any portion of his rent. This is because it is a cost of maintaining a place to live and is domestic in nature (that is, an occupancy expense).

5) WORK-RELATED EXPENSES – EDUCATION & STUDY

Are you wanting to claim some extra study or education taken for your work?

According to the ATO, self-education and study expenses include such things as :

Courses undertaken at an educational institution (whether it leads to a formal qualification or not)
Attendance to work-related conferences or seminars
Self-paced learning
Study tours
Stationery & text book expenses

The instances where you can claim a deduction for these kinds of expenses are when they:

Relate directly to your current employment
Maintain or improve specific skills or knowledge related to or require for your current employment
Result in, or is likely to result in, an increase in your income from your current employment

You cannot claim a deduction for study or self-education that doesn’t have a connection with your current employment, that relates only in a general way to your current employment or enables you to get a different job or change employment.

We hope that this article on other popular work-related expenses, has helped to demystify what you can and can’t claim in your tax return. Especially when it comes to travel, clothing, phone and internet, education and working from home expenses.

If there is anything in here that you are unsure about, please give us a call on (03) 9762 7344 so that we can help to explain it in a way you understand.

To read more about the different types of work-related expenses you can claim, check the ATO website here. The content there is quite dry and complex, so it would likely be better to call us first and then read more detail if it applies to you.

All the best!