The tax office is focusing on work-related deductions this tax time. It is no surprise when Australian taxpayers claimed $22 billion in work expenses in 2014-15!
When it comes to claiming tax deductions in your personal tax return this year remember; there are three golden rules:
- Did you actually spend the money yourself and not have it reimbursed by your employer?
- Is it directly related to your ability to earn your current income? If only partially, have you apportioned between the work and private usage?
- Do you have a receipt or other proof of purchase?
Here are some of the deductions you need to think twice about before claiming:
Uniform / Laundry – specific clothing must be compulsory, or with a logo registered design or be protective clothing (such as steel cap boots, non slip shoes) to qualify as deductible. Everyday clothing such as black pants or a suit are not deductible, even if you only ever wear them to work. Only if the clothing qualifies as deductible can you also claim a deduction for laundry and dry cleaning.
Travel between home and work – this is generally private in nature, even if you have to travel a far distance or catch a plane. The exception to this is if your work requires you to transport bulky (at least 20kg in weight) items and there is no secure place to store these at the workplace.
Cosmetics – a tax deduction for skin care, hairdressing and cosmetics is generally very difficult to claim, notwithstanding that some employees are required to maintain a very high standard of personal grooming for the purpose of their occupation. Tax Ruling TR 93/19 provides examples of both flight attendant and a marriage celebrant, both of which were denied a deduction for any personal grooming expenses on the basis they were essentially private in nature.
Telephone expenses – you can claim the cost of using your mobile phone for work, such as calling clients or other staff members. However, just because you are required to be “on-call” doesn’t mean your entire bill is deductible. To work out how much you can claim keep a record for 4 weeks of the number of business calls made as a percentage of your total calls, then apply this percentage to your annual phone bill. There is no magic percentage and each taxpayer is required to keep a record to work out their own percentage if they want to claim any telephone expenses as a deduction.
Gym memberships – the general stance on this one is that NO deduction is allowed, as the tax office sees this as a private expense. Even if you are employed to undertake physical activity and maintain a high standard of general fitness such as a PE teacher, personal trainer, standard police officer, firefighter or a model, you are still NOT ALLOWED to claim a deduction for gym memberships (or similar fitness memberships /program fees or sport shoes or home gyms). The only two professions allowed to claim a deduction are Defence Force Members and Professional Sportsperson. For more guidance you can refer to Taxation Ruling 95/17.