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Deductions

Deductions you can claim

When completing your tax return, you are entitled to claim deductions for expenses that are directly related to earning your income. To claim a deduction, you must have made the purchase in the course of earning your income and it must not be a private, domestic or capitals expense. For more information, please visit the ATO’S website.

Vehicle and travel expenses

You can claim vehicle and other travel expenses directly connected with your work but you can’t claim for normal trips between home and work, which are considered private travel.

You can claim a deduction for work-related car expenses if you use your own car in the course of performing your job as an employee. You can choose one of the following four methods for claiming work-related car expenses. Some adjustments to your claim may need to be made if the car is jointly owned.

The four methods are:


1. Cents per kilometre method

  • Your claim is based on a set rate for each business kilometre.
  • You can claim a maximum of 5,000 business kilometres.
  • You don’t need written evidence but you need to be able to show how you worked out your business kilometres (for example, by producing diary records of work-related trips).


2. 12% of original value method

  • Your claim is based on 12% of the original cost of your car or 12% of its market value at the time you first leased it.
  • The cost or value is subject to luxury car limits.
  • Your car must have travelled more than 5,000 business kilometres in the income year (or, if you used the car for only part of the year, it would have travelled more than 5,000 business kilometres had you used it for the whole year).
  • You don’t need written evidence but you need to be able to show how you worked out your business kilometres.


3. One-third of actual expenses method

  • Your car must have travelled more than 5,000 business kilometres in the income year (or, if you used the car for only part of the year, it would have travelled more than 5,000 business kilometres had you used it for the whole year).
  • You claim one-third of all your car expenses, including private costs (but excluding capital costs, such as the purchase price, the principal on any money borrowed to buy your car and the cost of any improvements).
  • For fuel and oil costs, you can keep receipts to work out the amounts or you can estimate them based on odometer records that show readings from the start and the end of the period you had the car during the year.
  • You need written evidence for all the other expenses for the car, as well as records that show the car’s engine capacity, make, model and registration number.


4. Logbook method

  • Your claim is based on the business-use percentage of the expenses for the car.
  • Expenses include running costs and decline in value but not capital costs, such as the purchase price of your car, the principal on any money borrowed to buy it and any improvement costs.
  • To work out your business-use percentage, you need a logbook and the odometer readings for the logbook period.
  • You can claim fuel and oil costs based on either your actual receipts or you can estimate the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year.
  • You need written evidence for all other expenses for the car.

The ATO has a work-related car expenses calculator on their website for free use.

Clothing, laundry and dry-cleaning expense

You can claim a deduction for the cost of buying and cleaning occupation-specific clothing, protective clothing and unique, distinctive uniforms.

Occupation-specific clothing

You can claim for clothing that is specific to your occupation, is not everyday in nature and allows the public to easily recognise your occupation – such as the checked pants a chef wears.

Protective clothing

You can claim for clothing and footwear that you wear to protect yourself from the risk of illness or injury posed by your income-earning activities or the environment in which you are required to carry them out.

Work uniforms

You can claim for a uniform, either compulsory or non-compulsory, that is unique and distinctive to the organisation you work for.

Cleaning of work clothing

You can claim the costs of washing, drying and ironing eligible work clothes, or having them dry-cleaned.

Gifts & donations

You can only make tax deductive gifts or donations to organisations that have the status of deductive gift recipients (DGRs).

What you can’t claim

You cannot claim a deduction for:

  • 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
  • payments where you have an understanding with the recipient that the payments will be used to provide a benefit for you.

Home office expenses

You may be entitled to claim deductions from home office expenses. You must keep records. Running costs may be deductible. Occupancy costs are generally not deductible for an employee.

Running costs

If you perform some of your work from a home office, you may be entitled to a deduction for the costs you incur in running it, including:

  • for home office equipment such as computers, printers and telephones, the cost (for items costing up to $300) or decline in value.
  • work-related phone calls (including mobiles) and phone rental (a portion reflecting the share of work-related use of the line) if you can show you are on call, or have to phone your employer or clients regularly while you are away from your workplace
  • heating, cooling and lighting
  • the costs of repairs to your home office furniture and fittings
  • cleaning expenses.

Self-education expenses

You may be able to claim a deduction for self-education expenses if your study is work-related.

Expenses you can claim include:

You can claim the following expenses:

  • accommodation and meals (if away from home overnight)
  • computer consumables
  • course fees
  • decline in value for depreciating assets (cost exceeds $300)
  • purchase of equipment or technical instruments costing less than $300
  • equipment repairs
  • fares
  • home office running costs
  • interest
  • internet usage (excluding connection fees)
  • parking fees (only for work-related claims)
  • phone calls
  • postage
  • stationery
  • student union fees
  • student services and amenities fees
  • textbooks
  • trade, professional, or academic journals
  • travel to-and-from place of education

The ATO has a self-education expenses eligibility tool and a self-education expenses calculator to make things easier for taxpayers.

Tools, equipments and other assets

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 include:

  • calculators
  • computers and software
  • desks, chairs and lamps
  • filing cabinets and bookshelves
  • hand tools or power tools
  • protective items, such as hard hats, safety glasses, sunscreens and sunglasses
  • professional libraries
  • safety equipment
  • technical instruments.

You can also claim the work-related cost of repairing and insuring your tools and equipment and any interest on money you borrowed to purchase these items.

If you use items for both personal and work-related purposes, make sure you keep records, such as a diary, so that, if requested, you can show how you estimated the amount of private use and work-related use.

Other deductions

You may be able to claim other deductions not previously mentioned. As a rule of thumb, if you need to spend money to earn income, you can usually claim it – either as an immediate deduction or over time.

Other deductions may include:

  • books, periodicals and digital information
  • cost of managing tax affairs
  • income protection insurance
  • interest charged by ATO
  • personal superannuation contributions
  • seminars, conferences and education workshops
  • union fees and subscriptions to associations.