CLAIMING MOBILE PHONE, INTERNET & HOME PHONE EXPENSES

If you use your own phone or internet for work purposes, you may be able to claim a deduction if all of the following conditions apply:

  • you spent the money yourself
  • the expense is directly related to earning your income
  • you must have a record to prove it.

You can’t claim a deduction where you haven’t incurred any expenses, or you’re reimbursed for any costs by your employer.

If you use your phone or internet for both work and private use, you will need to work out the percentage that reasonably relates to your work use.

Substantiating your claims

To claim a deduction of more than $50, you need to keep records for a four-week representative period in each income year. These records may include diary entries, including electronic records, and bills. Evidence that your employer expects you to work at home or make some work-related calls from home will also help you show that you are entitled to a deduction.

When you can’t claim a deduction for your phone

Employer provided phone

If your employer provides you with a phone for work use and they are billed for the usage (phone calls, text messages, data) then you can’t claim a deduction. Similarly, if you pay for your usage and are then reimbursed by your employer, you can’t claim a deduction.

Costs you incur before work commences

If you use your phone to seek employment you can’t claim a deduction as you are not yet generating income from the use of the phone.

Similarly, if you are a casual employee and an employer calls you to ask you to work, or you call them to check on work availability, you can’t claim a deduction. The cost is not considered to be one that directly relates to your income producing activities. Instead, it’s an activity that is putting you in a position to earn that income.

You can only claim a deduction for the portion of your phone use when you’re earning assessable income and your employer requires you to use your phone directly in earning that income.

Purchasing a smartphone, tablet or other electronic device

If you bought a smartphone, tablet or other electronic device and you use it for work you can claim a deduction for a percentage of its cost.

How to apportion work use of your phone

  1. Incidental use
  2. Usage is itemised on your bills
  3. Usage is not itemised on your bills
  4. Bundled phone and internet plans

As there are many different types of plans available, you will need to determine your work use using a reasonable basis.

  1. Incidental use

If your work use is incidental and you are not claiming a deduction of more than $50 in total, you may make a claim based on the following, without having to analyse your bills:

  • $0.25 for work calls made from your landline
  • $0.75 for work calls made from your mobile
  • $0.10 for text messages sent from your mobile.

 

  1. Usage is itemised on your bills

If you have a phone plan with an itemised bill, you need to work out your percentage of work use over a four-week representative period, which you can then apply to the full year.

You need to work out the percentage using a reasonable basis. This could include the:

  • number of work calls made as a percentage of total calls
  • amount of time spent on work calls as a percentage of your total calls
  • amount of data downloaded for work purposes as a percentage of your total downloads.

Example: Phone calls are itemised on your bill

Julie has an $80 per month mobile phone plan, which includes $500 worth of calls and 1.5GB of data. She receives a bill that itemises her phone calls and provides her with her monthly data use.

Over a four-week representative period, Julie identifies that 20% of her calls are work-related. She worked for 11 months during the income year, having had one month of leave. Julie can claim a deduction of $176 in her tax return (20% × $80 × 11 months).

  1. Usage is not itemised on your bills

If you have a phone plan where you don’t receive an itemised bill, you determine your work use by keeping a record of all your calls over a four-week representative period and then calculate your claim using a reasonable basis.

Example: Non-itemised account

Ahmed has a prepaid mobile phone plan that costs him $50 per month. Ahmed does not receive a monthly bill so he keeps a record of his calls for a four-week representative period. During this four-week period, Ahmed makes 25 work calls and 75 private calls. Ahmed worked for 11 months during the income year, having had one month of leave.

Ahmed calculates his work use as 25% (25 work calls ÷ 100 total calls). He claims a deduction of $138 in his tax return (25% × $50 × 11 months).

  1. Bundled phone and internet plans

Phone and internet services are often bundled. If you are claiming deductions for work-related use of one or more services, you need to apportion your costs based on your work use for each service.

If other members in your household also use the services, you need to take into account their use in your calculation.

If you have a bundled plan, you need to identify your work use for each service over a four-week representative period during the income year. This will allow you to determine your pattern of work use, which you can then apply to the full year.

A reasonable basis to work out your work-related use could include:

  • Internet
    • the amount of data downloaded for work as a percentage of the total data downloaded by all members of your household
    • any additional costs incurred as a result of your work-related use, for example, if your work-related use results in you exceeding your monthly cap.

 

  • Phone
    • the number of work calls made as a percentage of total calls
    • the amount of time spent on work calls as a percentage of your total calls
    • any additional costs incurred as a result of your work-related calls, for example, if your work-related use results in you exceeding your monthly cap.

 

Example: Apportioning bundled services

Sujita has a $100 per month home phone and internet bundle. The bill identifies that the monthly cost of Sujita’s phone service in her bundle is $40, and her internet service is $60. Sujita brings in her mobile phone plan of $90 per month and receives a $10 per month discount. Her total costs for all services are $180 per month.

Sujita worked for 11 months during the income year, having had one month of leave.

Based on her itemised accounts, Sujita determines that the work-related use of her mobile phone is 20%. Sujita also uses her home internet for work purposes and based on her use she determines that 10% of her use is for work. Sujita does not use her home phone for work calls.

As the components are part of a bundle Sujita can calculate her work-related use as follows:

Step 1 – work out the value of each bundled component

  • Mobile phone: $90 per month minus the $10 per month discount = $80 per month
  • Internet: $60 per month
  • Home phone: Sujita does not need to determine the home phone costs as she does not use this service for work purposes.

Step 2 – apportion work-related use

  • Mobile phone use: 20% work-related use × $80 per month × 11 months = $176
  • Home internet use: 10% work-related use × $60 per month × 11 months = $66
  • In her tax return, Sujita claims a deduction of $242 for the financial year ($176 mobile phone use + $66 home internet use).

Example: Apportioning bundled services

Des has a $90 per month home phone and internet bundle, and unlimited internet use as part of his plan. There is no clear breakdown for the cost of each service. By keeping a record of the calls he makes over a four-week representative period, Des determines that 25% of his calls are for work purposes. Des also keeps a record for four weeks of the data downloaded and determines that 30% of the total amount used was for work.

Des worked for 11 months during the income year, having had one month of leave.

As there is no clear breakdown of the cost of each service (calls and downloads), it is reasonable for Des to allocate 50% of the total monthly cost to each service.

Step 1 – work out the value of each bundled component

  • Internet: $45 per month ($90 ÷ two services)
  • Home phone: $45 per month ($90 ÷ two services)

Step 2 – apportion work-related use

  • Internet: 30% work-related use × $45 per month × 11 months = $149
  • Home phone: 25% work related use × $45 per month × 11 months = $124
  • In his tax return, Des claims a deduction of $273 ($149 + $124) for the year.

 

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

COVID-19 Early Release Of Super

If you have been financially affected by COVID-19, you may be able to access some of your superannuation early. Eligible citizens and permanent residents of Australia or New Zealand can both:

  • apply for up to $10,000 in 2019–20
  • apply again for up to a further $10,000 in 2020–21.

Eligible temporary residents can apply once to access up to $10,000 of super in 2019–20. Temporary residents cannot apply after 30 June 2020.

Applications can be submitted online through myGov:

  • until 30 June 2020 for the 2019–20 year
  • between 1 July 2020 and 24 September 2020, for the 2020–21 year.

You will not need to pay tax on amounts released under COVID-19 early release of super and will not need to include these amounts in your tax return – amounts released under other compassionate grounds must be included

Eligibility

  1. Citizens and permanent residents of Australia and New Zealand

To be eligible, a citizen or permanent resident of Australia and New Zealand

A confirmed coronavirus patient is wheeled to a hospital at Chuncheon, South Korea, February 22, 2020. Yonhap via REUTERS

must require the COVID-19 early release of super to assist them to deal with the adverse economic effects of COVID-19.

In addition, one of the following circumstances must apply:

  • you are unemployed
  • you are eligible to receive one of the following:
    • jobseeker payment
    • youth allowance for jobseekers (unless you are undertaking full-time study or are a new apprentice)
    • parenting payment (which includes the single and partnered payments)
    • special benefit
    • farm household allowance

 

  • on or after 1 January 2020 either:
    • you were made redundant
    • your working hours were reduced by 20% or more (including to zero)
    • you were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more (partners in a partnership are not eligible unless the partner satisfies any other of the eligibility).

 

  1. Temporary residents

Temporary residents can only apply for a COVID-19 early release of super in 2019-20. Applications close on 30 June 2020. To be eligible, temporary residents must require the COVID-19 early release of super to assist them to deal with the adverse economic effects of COVID-19.

In addition, they must be in one of the following circumstances:

  • You hold a student visa that you have held for 12 months or more and you are unable to meet immediate living expenses.
  • You are a temporary skilled work visa holder and still employed but unable to meet immediate living expenses.
  • You are a temporary resident visa holder (excluding student or skilled worker visas) and you cannot meet immediate living expenses.

Temporary residents cannot be eligible for COVID-19 early release of super and the Departing Australia Super Payment (DASP) at the same time. COVID-19 early release of super eligibility requires temporary residents to be on a current valid visa; DASP is only available once their visa has expired and they have left Australia.

Assessing your eligibility

You do not need to attach evidence to support your application. However, you should keep records and documents to confirm your eligibility as we may ask you for this information. You can only submit one application for COVID-19 early release of super per financial year (temporary residents can only apply until 30 June 2020).

If you’re eligible and you want to access COVID-19 early release of super in the 2020-21 financial year, you need to apply in that financial year -between 1 July and 24 September- even if you have applied in 2019-20. Applications cannot be submitted after 24 September 2020.

You can apply for COVID-19 early release of super even if you have previously accessed your super early in other circumstances.

You can’t access your super early for a dependant. If your dependant is financially affected by COVD-19, they must apply themselves.

Eligibility examples

Example

Edward’s employer temporarily closes her shop in late March 2020 following a downturn in trade due to COVID-19. Edward is stood down and applies for and receives $8,000 of his superannuation under COVID-19 early release of super in May 2020. By mid-June shops have reopened and Edward recommences work. When we contact Edward, he uses his payslips to show his work hours decreased by at least 20% from March to May. Edward’s eligibility is confirmed, and no further action is taken.

Example

Audrey runs her own business as a sole trader in the fitness industry. Due to COVID-19, Audrey has a lot less work and she decides to temporarily shut down her business. Due to the financial impact, Audrey decides to apply for $7,000 from her super to help with immediate living expenses. When we contact Audrey to confirm her eligibility, she provides a link to her website and business bank records to show that her business had temporarily been suspended. Audrey is eligible for COVID-19 early release of super because her business temporarily ceased operating and she suffered a financial impact due to COVID-19.

Implications of accessing your super early

Accessing your super early will affect your super balance and may affect your future retirement income.

Withdrawing superannuation may also affect your:

  • income protection insurance
  • life and total permanent disability insurance cover

Insurance may not be available on accounts that have a low balance.

You should consider whether you need to seek financial advice before submitting your application for early release of super.

Before you apply

Before you start the application process, you should:

  • set up your myGov account and link it to the ATO
  • have your Australian bank account information available; you will need this to complete your application. Only Australian bank accounts are accepted
  • check your super balance; your actual account balance may be higher or lower than that shown in ATO online or in the early release application form.

There are several ways you can check your super balance:

Check your total superannuation balance in ATO online services. There will be an ‘as at’ or ‘effective’ date for the balance. In most cases, it will be 30 June 2019 as funds are only required to report to us once a year. This means your account balance may have changed since it was last reported to us; it may be higher or lower than shown on ATO online or in the early release application form.

If you have access to your super fund’s online member portal, you can log on and check your current account balance there. It might be a good time to establish a login to your fund portal if you haven’t already.

Check the last statement that your fund issued to you. This might be by paper or email.

Call your fund but understand that they have had a large increase in members calling and there could be delays in having your call answered.

If your fund is a state-administered fund, or you’re a member of an exempt public sector super scheme (EPSSS), you will need to confirm whether they are allowed to release super due to COVID-19, before you submit an application.

Submit an application

Applications for early release of superannuation are accepted through ATO online services via myGov.

You can only submit one application for COVID-19 early release of super in each financial year:

  • 2019–20, between 20 April and 30 June 2020
  • 2020–21, between 1 July and 24 September 2020 (Australian and New Zealand citizens and permanent residents only).

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

INSTANT ASSET WRITE-OFF FOR ELIGIBLE BUSINESSES

Under the instant asset write-off, eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used, or installed ready for use.

Instant asset write-off can be used for:

  • multiple assets as long as the cost of each individual asset is less than the relevant threshold
  • new and second-hand assets.

It cannot be used for assets that are excluded from the simplified depreciation rules.

The instant asset write-off eligibility criteria and threshold have changed over time. You need to check your business’s eligibility and apply the correct threshold amount. This depends on when the asset was purchased, first used or installed ready for use.

Recent changes

From 12 March 2020 until 31 December 2020 the instant asset write-off:

  • threshold amount for each asset is $150,000 (up from $30,000)
  • eligibility has been expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).

Eligibility

Eligibility to use instant asset write-off on an asset depends on:

  • your aggregated turnover (the total ordinary income of your business and that of any associated businesses)
  • the date you purchased the asset
  • when it was first used or installed ready for use
  • the cost of the asset being less than the threshold.

If you run a small business and choose to use the simplified depreciation rules, you must use instant asset write-off on all eligible assets.

Businesses with an aggregated turnover of $500 million or more are not eligible to use instant asset write-off.

From 1 January 2021 the instant asset write-off will only be available for small businesses with an aggregated turnover of less than $10 million and the threshold will be $1,000.

Instant asset write-off thresholds

 

Eligible businesses Date range for when asset first used or installed ready for use Threshold
Less than $500 million aggregated turnover 12 March 2020 to 31 December 2020 (see note) $150,000
Less than $50 million aggregated turnover 7.30pm (AEDT) on 2 April 2019 to 11 March 2020 $30,000

Note: For eligible businesses with an aggregated turnover from $10 million to less than $500 million, the $150,000 threshold applies for assets purchased from 7.30pm (AEDT) on 2 April 2019 but not first used or installed ready for use until 12 March 2020 to 31 December 2020.

Excluded assets

You must use the general depreciation rules for the following depreciating assets – as they are specifically excluded from the simplified depreciation rules:

Car limit

A car limit applies to the cost of passenger vehicles (except a motorcycle or similar vehicle) designed to carry a load less than one tonne and fewer than nine passengers. The one tonne capacity relates to the maximum load your vehicle can carry, also known as the payload capacity.

The payload capacity is the gross vehicle mass (GVM) as specified on the compliance plate by the manufacturer, reduced by the basic kerb weight of the vehicle.

The basic kerb weight is the weight of the vehicle with a full tank of fuel, oil and coolant together with spare wheel, tools (including jack) and factory-installed options. It does not include the weight of passengers, goods or accessories.

  • Payload capacity = GVM – basic kerb weight

The car limit is:

  • $57,581 for the 2019–20 income tax year
  • $59,136 for the 2020–21 income year.

The instant asset write-off is limited to the business portion of the car limit for the relevant income tax year. For example, the car limit is $57,581 for the 2019–20 income tax year. If you use your vehicle for 75% business use, the total you can claim under the instant asset write-off is 75% of $57,581, which equals $43,186.

You cannot claim the excess cost over the car limit under any other depreciation rules.

If your vehicle is not considered a passenger vehicle, the car limit does not apply. You can claim the cost of the vehicle if it is less than the relevant threshold amount.

Cost of asset exceeds threshold

If you are a small business using the simplified depreciation rules, and the cost of the asset is the same as or more than the relevant instant asset write-off threshold, the asset must be placed into the small business pool.

If you are not using the simplified depreciation rules, you may be able to use the general depreciation rules or use the backing business investment – accelerated depreciation for certain qualifying assets.

Work out your deduction

The entire cost of the asset must be less than the relevant threshold, not including any trade-in amount. Whether the threshold is GST exclusive or inclusive depends on if you’re registered for GST.

To work out the amount you can claim, you must subtract any private use portion. The balance (that is the portion you use to earn assessable income) is generally the taxable purpose portion (business purpose portion). While you can only claim the taxable purpose portion as a deduction, the entire cost of the asset must be less than the relevant threshold.

This also applies to research & development (R&D) use. When you work out the amount you can include in the calculation of your R&D tax offset for your R&D use, you must subtract any non-R&D use including the taxable purpose portion and private use portion.

Later sale or disposal of asset

If you use the instant asset write-off for an asset and then sell or dispose of that asset, you need to include the taxable purpose portion of the amount you received for the asset in your assessable income for that year.

If you use the instant asset write-off for an asset that is later destroyed (for example, in a bushfire or flood) then the amount you receive (such as from an insurance payout) for the destruction of the asset is included in your assessable income.

 Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

LOW AND MIDDLE INCOME EARNER TAX OFFSETS

If you are an Australian resident for income tax purposes and you pay tax on your taxable income, you may be eligible for both the:

  • low income tax offset
  • low and middle income tax offset.

You don’t need to complete a section in your tax return to get these tax offsets. We work out your tax offset for you once you lodge your tax return. If you are entitled to any offset, it is added to your tax return and you can see the amount on your notice of assessment (you won’t receive the offset as a separate payment).

What is a tax offset?

A tax offset means you pay less tax (also known as your tax payable) on your taxable income (that is, your total income minus any deductions).

This tax offset can only reduce the tax you pay to zero, but any unused offset amount can’t be refunded to you.

How tax offsets affect the tax you pay

The tax offset amount you receive depends on your taxable income and the

amount of tax you need to pay on this income (your tax payable).

Non-refundable tax offsets such as the low and low and middle income tax offsets can only lower your tax payable to zero.

Offsets also can’t reduce your Medicare levy and Medicare Levy Surcharge (if any). The Medicare levy is 2% of your taxable income, in addition to the tax you pay on your taxable income.

So, if your taxable income is $18,200 or less and you:

  • have not paid any tax, an offset can’t reduce the tax you pay– your tax payable amount is already zero
  • have paid any tax on this income, you will generally receive all of this tax back as a refund – your tax payable amount is zero so no offset can be applied.

If your taxable income is $18,201 or more, we use your taxable income to work out how much tax you’re required to pay. We then reduce the tax you need to pay with the offset amount you’re entitled to.

If you are under 18 as at 30 June of the income year and you have unearned income, these offsets can’t reduce the tax payable on this income.

Claiming the low and low and middle income tax offsets

You don’t need to complete anything in your tax return in order for us to work out your low or low and middle income tax offset. We work out the amount of this tax offset for you once you lodge your tax return.

Any offset you are entitled to is included when we work out the result of your tax return.

If you want to find out how much of an offset you were entitled to, you can see this amount on your notice of assessment. Look for the Less non-refundable tax offsets section.

If you lodge online, your notice of assessment will be sent to your myGov Inbox once you return has been finalised.

If you receive a tax refund it will be deposited into your nominated bank account. Any refund may also be reduced by any debt you have with us or any Australian government agency, the law requires us to use refunds or credits to pay debt.

Low income tax offset

The maximum low income tax offset is $445.

If your taxable income is:

  • less than $66,667, you will get some or all of the low income tax offset
  • $37,000 or less you will get the full offset of $445.

The low income offset amount is reduced by 1.5 cents for each dollar over $37,000.

Low and middle income tax offset

The low and middle income tax offset amount is between $255 and $1,080.

The full offset is $1,080 per annum but you might not be entitled to the full $1,080. The base amount is $255 per annum.

This offset is available for the 2018–19, 2019–20, 2020–21 and 2021–22 income years.

If your taxable income is between $37,001 and $126,000, you will get some or all of the low and middle income tax offset. This is in addition to the low income tax offset.

The amount of offset you receive depends on your circumstances, such as your taxable income and how much tax you have paid.

The table and graph below shows the amount of the offset you are entitled to depending on your taxable income.

Low and middle income tax offset

Taxable income Offset
$37,000 or less $255
Between $37,001 and $48,000 $255 plus 7.5 cents for every dollar above $37,000, up to a maximum of $1,080
Between $48,001 and $90,000 $1,080
Between $90,001 and $126,000 $1,080 minus 3 cents for every dollar of the amount above $90,000

Example – income up to $37,000

Jacqueline’s taxable income is $18,000. She paid no tax because her income is under the tax-free threshold. As Jacqueline’s income was less than $37,000, she is eligible to a low and middle income tax offset amount of $255. She is also eligible to a low income tax offset amount of $445.

Jacqueline is eligible for the two offsets but as she did not pay any tax. Her tax payable can’t be reduced any lower than $0. The low and middle income tax offset and low income tax offset are non-refundable tax offsets so the unused offset can’t be refunded. Jacqueline’s tax payable remains at $0 and she does not receive a tax refund.

Example – income exceeds $37,000 but is not more than $48,000

Jeff’s taxable income is $45,000. He is eligible for both the low income tax offset and the middle and low income tax offset. As Jeff’s income is less $66,667 but above $37,000, he is eligible to a low income tax offset amount of $445 minus 1.5 cents for every dollar his income is above $37,000. That is:

  • $45,000 − $37,000 = $8,000
  • $8,000 × $0.015 = $120
  • $445 − $120 = $325

As Jeff’s income is between $30,000 and $48,000, he is eligible to a low and middle income tax offset amount of $255 plus 7.5 cents for every dollar his income is above $37,000.That is:

  • $45,000 − $37,000 = $8,000
  • $0.075 × $8,000 = $600
  • $255 + $600 = $855

Both of the offset amounts reduce Jeff’s tax payable.

$325 + $855 = $1,180

Jeff’s tax payable can be reduced by up to $1,180 using the low income tax offset and low and middle income tax offset.

Example – income exceeds $48,000 but is not more than $90,000

Anita’s taxable income is $70,000. As Anita’s income is more than $48,000 but less than $90,000, she is eligible to a low and middle income tax offset of $1,080. Anita is not eligible for the low income tax offset as her income is above $66,667.

Anita’s tax payable can be reduced by up to $1,080 using the low and middle income tax offset.

Example – income exceeds $90,000 but is not more than $126,000

Andre’s taxable income is $92,000. Andre’s income is more than $90,000 but less than $126,000. He is eligible to a low and middle income tax offset amount of $1,080 minus 3 cents for every dollar his income is above $90,000. That is:

  • $92,000 − $90,000 = $2,000
  • $0.03 × $2,000 = $60
  • $1,080 − $60 = $1,020

Andre’s tax payable can be reduced by up to $1,020 using the low and middle income tax offset.

Andre was not eligible for the low income tax offset.

 

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

OTHER WORK-RELATED DEDUCTIONS

 Generally, if you need to spend money as part of your income producing activities, you can claim a deduction for the expense. Depending on the deduction this can be an immediate deduction or over time.

To claim a deduction for a work-related expense:

  • you must have spent the money yourself and weren’t reimbursed
  • it must be directly related to earning your income
  • you must have a record to prove it (usually a receipt).

 

 

Expenses that relate to you earning an income can include:

  • Books, periodicals and digital information
  • Claiming mobile phone, internet and home phone expenses
  • Glasses, contact lenses and protective glasses
  • Income protection insurance
  • Overtime meals
  • Seminars, conferences and education workshops
  • Union fees, subscriptions to associations and bargaining agents’ fees
  • Working with children checks

Books, periodicals and digital information

‘Digital information’ includes:

  • online subscriptions
  • electronic published material, such as e-books or e-journals
  • other purchased digital materials.

 

 

If the item costs $300 or less you can claim an immediate deduction where it satisfies all of the following requirements:

  • It is predominantly used for earning assessable income that is not income from carrying on a business.
  • It is not part of a set of assets acquired in the same income year that costs more than $300.
  • It is not one of a number of identical or substantially identical items acquired in the same income year that together cost more than $300.

Glasses, contact lenses and protective glasses

You can’t claim a deduction for the cost of buying or repairing prescription glasses or contact lenses even if you wear them while working. It’s a private expense relating to a personal medical condition.

You may be able to claim a deduction for equipment that is used to protect your eyes from the risk of illness or injury at work. To claim such a deduction, you must be able to show that there is sufficient connection with your income earning activities.

You may be able to claim a deduction for the work-related portion of the cost of:

  • safety goggles – if you’re required to work in an environment that could be harmful if adequate safety precautions aren’t taken.
  • protective sunglasses – if you are required to work outdoors and are exposed to the risk of eye damage from sunlight. This includes prescription sunglasses and anti-glare glasses.

Income protection insurance

You can claim the cost of premiums you pay for insurance against the loss of your income. You must include any payment you receive under such a policy on your tax return.

If the policy provides benefits of an income and capital nature, only that part of the premium that relates to the income benefit is deductible.

You can’t claim a deduction for a premium or any part of a premium:

  • for a policy that compensates you for such things as physical injury
  • if the policy taken out is through your superannuation and insurance premiums are deducted from your super contributions.

For example, you can’t claim a deduction for:

  • life insurance premiums
  • trauma insurance premiums
  • critical care insurance premiums.

Overtime meals

You can claim a deduction for overtime meals without getting written evidence, if all the following apply, you:

 

 

 

  • get paid an overtime meal allowance under an industrial instrument (such as an award)
  • buy food and drink and consume it on overtime
  • only claim up to the reasonable allowance expenses amount.

However, you can still only claim the amount you have actually spent.

If you claim more than the reasonable allowance expense amount, you need to keep written evidence of all of your expenses on your food and drink. Not just written evidence for the excess amount.

Overtime meal allowances

Generally, you must include amounts received as overtime meal allowances as income on your tax return. If your award overtime meal allowance was not shown on your income statement or payment summary and was not more than the reasonable allowance amount for each meal, you don’t have to include the amount on your tax return providing that you:

  • have fully spent the allowance
  • don’t claim a deduction for overtime meal expenses.

See also: TD 2019/11 – Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2019-20 income year?

Seminars, conferences and training courses

You can claim the cost of attending seminars, conferences or training courses to maintain or increase the knowledge, capabilities or skills you need to earn your income in your current employment. This can include formal education courses provided by professional associations.

If there is a non-work related component to attending the seminar, conference or training course, then you may not be able to claim all of your expenses:

  • If the non-work related component of attending the seminar, conference or training course is incidental (such as catered lunches or a reception for delegates), then you can still claim all of the expenses to attend.
  • If the main purpose is non-work related and the conference, seminar or training course is incidental (not the main purpose), you can only claim the direct costs for the conference, seminar or training course.

If attendance involves travel, you may have to show that you have reduced your claim to exclude the private portion of any trip.

Union fees, subscriptions to associations and bargaining agents’ fees

You can claim a deduction for:

  • union fees
  • subscriptions to trade, business or professional associations
  • the payment of a bargaining agent’s fee to a union for negotiations in relation to a new enterprise agreement award with your existing employer.

You can only claim payments of levies to a strike fund where the fund is used solely to maintain or improve the contributors’ pay.

Most unions and associations send members statements of the fees or subscriptions paid.

Working with children check

Many people working with children need to get a working with children check.

Claiming a deduction for a working with children check

You can claim a deduction for the cost of a working with children check application you paid for as an employee, if you are:

  • an existing employee and need to have a suitability notice to continue to earn assessable income in your position
  • a new employee and recently earned assessable income from being continuously employed in the child-related employment field.

Example 1: new teacher previously employed in child-related employment

Freda receives most of her income in the child-related employment field. For years she has worked at a range of schools as a teacher, employed under a series of temporary contracts. Her last contract ended in March 2020 and she accepted another contract at a different school in May 2020. In order for Freda to start this new contract, the principal of the school is now required to apply for a suitability notice for Freda. Freda pays the application fee for the suitability notice to work with children.

Freda can claim the cost of the application as a deduction. Although she is a new employee at this particular school, she has been continuously employed in the child-related employment field and the expense is necessary to her employment.

End of example

Example 2: renewal of notice

Adam is working as a head of middle school when his suitability notice to work with children expires. The principal applies for a renewal of the notice and Adam pays the application fee. Adam can claim a deduction for the cost of the renewal. The expense is necessary to maintain his existing income stream.

End of example

When you can’t claim a deduction

You can’t claim a deduction for the cost of getting an initial working with children check if you are both:

  • a new employee
  • haven’t recently been employed in the child-related employment field.

Example 3: cleaner not previously in child-related employment

Catriona was once employed as a cleaner in a school. However, for an extended period of time, she has not worked in child-related employment and her suitability notice to work with children has expired. In June 2019, she accepted another position as a cleaner with a new school. The principal of the school applies for a suitability notice for her. Catriona pays the application fee.

Catriona is not entitled to a deduction, although her previous employment was child-related. The time elapsed and the fact that she has since had jobs in other fields of employment removes the connection between the expense and her income.

She needs the notice to allow her to re-enter the field of child-related employment as a new employee, rather than to preserve the continuity of an existing income stream. The expense precedes the earning of assessable income from that field.

End of example

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

TOOLS, EQUIPMENT 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.

If you use the tools for both work and private purposes you will need to apportion the amount you claim. If you have a computer that you use for private purposes for half of the time you can only deduct 50% of the cost.

The type of deduction you claim depends on the cost of the asset:

  • for items that aren’t part of a set and cost $300 or less, or form part of a set that together cost $300 or less, you can claim an immediate deduction for their cost
  • for items that cost more than $300, or that form part of a set that together cost more than $300, you can claim a deduction for their decline in value.

Examples of tools, equipment or assets

  • Calculators
  • Computers and software
  • Desks, chairs and lamps
  • Filing cabinets and bookshelves
  • Hand tools, such as spanners, hammers and screwdrivers or power tools, such as grinders, sanders and hammer drills.
  • Protective items, such as hard hats, safety glasses, sunglasses, sunscreens and cosmetics containing sun protection
  • Professional libraries
  • Safety equipment
  • Technical instruments

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

If you use items for both personal and work-related purposes you need to keep records, such as a diary to show the purpose of use of the item. So that, if requested, you can show how you apportioned the amount of personal and work-related use.

Handbags, briefcases and satchels

You may be able to claim a deduction for a handbag, briefcase or satchel you buy to carry items you are required to use and carry for your work, such as laptops, tablets, work papers or diaries. The amount of the deduction will depend on the how much you use the bag for work purposes.

You can’t claim a deduction if you mainly use the bag for personal purposes, such as carrying your lunch and beauty and hygiene products. This is private use.

When you use the bag for both private and income producing purposes, you may need to apportion the deduction you claim based on the amount of time you use the bag for work and for private purposes.

Where you use the bag for work purposes and it costs less than $300, you can claim the deduction immediately. Where the bag costs more than $300, you will generally work out any deduction using its effective life.

Example – allowable deduction for a handbag

Elizabeth buys a handbag for $150 to carry her tablet and work diary between appointments with clients The handbag is only used to carry the work items and she carries another bag for her personal items. She does not use the handbag that carries her tablet outside of work hours. As she is required to use the tablet and diary for her work the bag is being used for the production of assessable income, Elizabeth can claim a deduction.

Example – no deduction is allowable for a satchel

Arki buys a messenger satchel for $220 to carry his lunch and snacks, personal medical kit and private grooming items. He also uses it to carry a mini tablet, which he uses in his income producing occupation.

Arki also carries the satchel outside of work hours. This means the satchel is not mainly used for the purposes of producing assessable income. Arki is not able to claim a deduction for the satchel.

Example – apportioned deduction for a handbag

Theresa buys a large handbag for $280 to replace her current handbag, as she is now regularly required to take a small laptop type item and client paperwork to and from work. She continues to use her handbag to carry personal items and takes it with her outside of work hours. The large handbag is being used for both income producing and private purposes so the deduction would need to be apportioned between both uses.

End of example

 

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

CLOTHING, LAUNDRY AND DRY-CLEANING EXPENSES

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

To claim a deduction, you may need to have written evidence that you purchased the clothing and diary records or written evidence of your cleaning costs. Written evidence must be kept for a representative period of at least one month if both of the following apply:

  • the amount you claim is greater than $150
  • your total claim for work-related expenses exceeds $300.

You may receive an allowance from your employer for clothing, uniforms, laundry or dry-cleaning. If you do, make sure you show the amount of the allowance on your tax return as it is assessable income. You can only claim a deduction for the amount you actually spent.

  • Occupation-specific clothing
  • Protective clothing
  • Work uniforms
  • Cleaning of work clothing

Occupation-specific clothing

You can claim for clothing that is specific to your occupation, isn’t everyday

in nature and allows the public to easily recognise your occupation. For example, the checked pants a chef wears.

You can’t claim the cost of purchasing or cleaning clothes you bought to wear for work that are not specific to your occupation. Examples include a bartender’s black trousers and white shirt, a business person’s suit or a swimming instructor’s swimwear.

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 your work environment. To be considered protective, the items must provide a sufficient degree of protection against that risk.

Protective clothing includes:

  • fire-resistant and sun-protection clothing
  • safety-coloured vests
  • non-slip nurse’s shoes
  • rubber boots for concreters
  • steel-capped boots, gloves, and heavy-duty shirts and trousers
  • overalls, smocks or aprons you wear to avoid damage or soiling your ordinary clothes during your income-earning activities.

Ordinary clothes you wear at work (such as jeans, drill shirts, shorts, trousers, socks, closed shoes) are not regarded as protective clothing if they lack protective qualities designed for the risks of your work.

Clothing that provides a degree of protection against the risk of illness or injury includes, but is not limited to, clothing that:

  • is made to cope with more rigorous conditions, where conventional clothing would be inadequate
  • is designed to protect you – for example heavy duty shirts and trousers, distinct from ordinary cotton drill trousers, shorts and short sleeve shirts that may be considered as work wear but do not adequately protect the wearer from the risk of injury or illness
  • has a density of weave which gives a UV rating sufficient to protect you from the sun where your job requires you to work outdoors.

Example: can’t claim a deduction for conventional clothing

Bob works on a building site. He wears jeans with T-shirts or long sleeve shirts at work. Bob wears these clothes to work as they are comfortable and, although not very durable, they afford Bob some protection from skin abrasions when handling tools and building materials at the building site.

The jeans and shirts resemble clothes commonly worn as regular clothing and Bob also wears them when travelling to and from work. The cost of Bob’s jeans and shirts is not an allowable deduction.

Even if Bob wore the items only at work, a deduction would still not be allowable. The clothing provides only limited protection from injury. This means the expense is mainly for his personal needs of modesty, decency and warmth.

Example: claiming a deduction for protective clothing

At other times Bob, from the previous example, wears heavy denim trousers, steel capped boots and a hard hat when working at the building site. The inherently protective nature of these items means their main use is for Bob’s protection at work, rather than his requirements of modesty, decency and warmth.

The expense is not private or domestic in nature and there is the necessary connection between the expense and Bob’s income earning activities. This means he can claim a deduction for the cost of these items.

End of example

You can’t claim the cost of purchasing or cleaning ordinary clothes you wear for work that may also protect you. For example, you can’t claim for normal, closed shoes, even though you wear them to protect your feet.

Work uniforms

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

Clothing is unique if it has been designed and made only for the employer. Clothing is distinctive if it has the employer’s logo permanently attached and the clothing is not available to the public.

You can’t claim the cost of purchasing or cleaning a plain uniform.

Compulsory work uniform

This is a set of clothing that identifies you as an employee of an organisation. The organisation has a strictly enforced policy that makes it compulsory for you to wear the uniform while you’re at work.

You may be able to claim a deduction for shoes, socks and stockings if:

  • they are an essential part of a distinctive compulsory uniform
  • their characteristics (colour, style and type) are specified in your employer’s uniform policy.

You may be able to claim for a single item of distinctive clothing, such as a jumper, if it’s compulsory for you to wear it at work.

Non-compulsory work uniform

You can’t claim expenses incurred for non-compulsory work uniforms unless your employer has registered the design with AusIndustry.

Shoes, socks and stockings can never form part of a non-compulsory work uniform, and neither can a single item such as a jumper.

Cleaning of work clothing

You can claim the costs of washing, drying and ironing eligible work clothes, or having them dry-cleaned, even if the clothing is supplied by your employer.

If your employer launders your clothing or reimburses you, you can’t claim a deduction.

You must have written evidence, such as diary entries and receipts, for your laundry expenses if both:

  • the amount of your claim is greater than $150
  • the amount your total claim for work-related expenses exceeds $300 – not including car, meal allowance, award transport payments allowance and travel allowance expenses.

If your laundry expenses are $150 or less, you can claim the amount you incur on laundry without providing written evidence of your laundry expenses. This is even if your total claim for work-related expenses is more than $300 which includes your laundry expenses. However, if the total claim of your work-related expenses is more than $300, you must have written evidence for your other work-related expenses.

You need to be able to show how you came up with the total of your laundry expense claim. This isn’t an automatic deduction. You may use a reasonable basis to work out your claim.

We consider a reasonable basis for working out your laundry claim for washing, drying and ironing you do yourself is:

  • $1 per load – this includes washing, drying and ironing – if the load is made up only of work-related clothing
  • 50 cents per load if other laundry items are included.

If you choose a different basis to work out your claim, we may ask you to explain that basis.

Dry-cleaning expenses

You can claim your actual cost of dry-cleaning work-related clothing. You must have written evidence to substantiate your claim if your total claim for work-related expenses exceeds $300 – not including car, meal allowance, award transport payments allowance and travel allowance expenses.

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

TRAVEL AND ACCOMMODATION EXPENSES

Other travel expenses you have incurred as an employee that you may be able to claim as a deduction include:

  • expenses you incurred for meals, accommodation and incidentals when travelling away overnight for work, such as going to an interstate work conference (generally, you can’t claim for meals if your travel did not involve an overnight stay)
  • the costs you incur for driving your car (such as fuel, oil, repairs and maintenance costs) when using someone else’s car or other vehicle that is not defined as a car for work purposes
  • air, bus, train, tram and taxi fares
  • bridge and road tolls
  • car parking and car-hire fees.

Vehicles other than cars are motorcycles, scooters, vehicles with greater than one tonne carrying capacity such as trucks or heavy vehicles or a van with capacity for nine or more passengers.

You can’t claim:

  • the purchase of other vehicles, but you can claim the decline in value of the vehicle over its effective life
  • a deduction for
    • any fines you receive, such as speeding or parking infringements
    • normal daily trips between home and work – this is private travel.

 

You have to reduce your claim to exclude any private portion of your trip.

If you receive a travel allowance

Receiving a travel allowance from your employer does not automatically entitle you to a deduction. Travel allowances may or may not be shown on your income statement or payment summary.

If it’s on your income statement or payment summary, you will need to:

  • include the allowance in your tax return
  • claim a deduction for the amount you spent on deductible expenses.

If it’s not on your income statement or payment summary and you spent the full amount on deductible expenses, you can either:

  • not include the allowance in your tax return and not claim a deduction for your expenses
  • include the allowance in your tax return and claim a deduction for the amount you spent on deductible expenses.

If it’s not on your income statement or payment summary and you didn’t spend the full amount on deductible expenses, you will need to:

  • include the allowance in your tax return
  • claim a deduction for the amount you spent on deductible expenses.

If you claim more than the reasonable allowance amount we set, you need to keep records of your expenditure.

Accommodation allowances and expenses when travelling away from home for work

As a general rule, you must declare any travel allowance you receive as income in your tax return.

You do not have to declare the allowance as income in your tax return if all of the following apply:

  • the travel allowance is not shown on your income statement or payment summary
  • the travel allowance doesn’t exceed the Commissioner of Taxation’s reasonable allowance amount
  • you spent the whole allowance on deductible accommodation costs (and meal and incidental expenses, if applicable).

If you don’t declare your allowance as income, you can’t deduct your accommodation costs (and meal and incidental expenses, if applicable) – even if they are more than your allowance.

You can claim a deduction if the allowance you received has been folded into your salary and wages. You must keep written evidence of your expenditure.

Accommodation expense claims

You can deduct your accommodation costs (as well as meal and incidental expenses), if all of the following apply. You:

  • declare any travel allowance you receive as income on your tax return
  • are required as part of performing your work duties to travel away from home
  • are only working away from home for relatively short periods of time (you aren’t living away from home)
  • did not incur the expenses because of a choice you made to maintain your residence in a different location to your place of employment
  • have a permanent home at a location away from the work location that you are travelling to
  • pay for the accommodation yourself and aren’t reimbursed for the costs you incur.

Keeping records for accommodation

To claim a deduction, you generally need to keep written evidence to substantiate your costs.

Substantiation isn’t required if:

  • you have received a travel allowance for travel within Australia
  • the deduction you claim for accommodation (and meals and incidental expenses, if applicable) is equal to or less than the amount we consider reasonable.

The amounts we consider reasonable are published each year.

Even where you don’t need to substantiate your costs, we may still ask you to show all of the following:

  • you paid the expense yourself
  • the cost is deductible – you met the conditions required to deduct the expense
  • you received a travel allowance
  • you stayed in short-term commercial accommodation.

See also: TD 2019/11 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2019–20 income year?

Claiming expenses for accommodation you purchase or rent

Most people required to travel away from home temporarily to perform their work duties stay in short-term commercial accommodation. For example a hotel, motel or serviced apartment. However, a person may decide to stay in rented accommodation or in accommodation they have purchased.

The costs of financing, holding and maintaining accommodation you

purchase or rent to stay in when you travel to perform your work duties may be deductible as work-related travel expenses.

You must declare any travel allowance you receive as income in your tax return if you want to claim a deduction for your accommodation costs (as well as meal and incidental expenses).

Types of costs

Costs you can claim:

  • rent
  • interest on loans used to purchase the accommodation
  • rates
  • taxes
  • insurance
  • general maintenance of the accommodation
  • the decline in value of certain assets, such as furniture and household equipment.

 

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

SELF-EDUCATION EXPENSES

You may be able to claim a deduction for self-education expenses if your self-education relates to your current work activities as an employee or if you receive a taxable bonded scholarship. In some circumstances, you have to reduce the amount of your claim by $250.

Course eligibility

Self-education expenses are deductible when the course you undertake leads to a formal qualification and meets the following conditions.

The course must have a sufficient connection to your current work activities as an employee and:

  • maintain or improve the specific skills or knowledge you require in your current work activities
  • result in, or is likely to result in, an increase in your income from your current work activities.

You can’t claim a deduction for self-education expenses for a course that doesn’t have a sufficient connection to your current work activities even though it:

  • might be generally related to it – such as undertaking a full-time fashion photography course and working as a casual sales assistant on the weekends
  • enables you to get new employment – such as moving employment as a nurse to employment as a doctor.

Taxable bonded scholarship recipients

You can claim a deduction for self-education expenses if, in doing the course, you are satisfying study requirements to maintain your right to ataxable bonded scholarship.

If you are employed by the scholarship provider, normal work-related self-education rules apply.

Expenses you can claim

You can claim a deduction for following expenses related to your eligible self-education:

  • General course expenses
  • Depreciating assets
  • Car expenses.

General course expenses

You can claim a deduction for the following general course expenses:

  • accommodation and meals (if away from home overnight)
  • car expenses
  • computer consumables – for example, printer cartridges
  • course and tuition fees, if paid directly by you
  • decline in value for depreciating assets (cost exceeds $300)
  • purchase of equipment or technical instruments (costing $300 or less)
  • equipment repairs
  • fares
  • fees payable on some Higher Education Loan Program (HELP) loans, but not the loan itself
  • 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 costs, including car expenses
    • between home and your place of education
    • between your workplace and the place of education.

Some travel for journeys can’t be claimed, but you may be able to offset the cost of these journeys against the $250 reduction.

If an expense is partly for your self-education and partly for other purposes, you can only claim a deduction for the amount that relates to your self-education.

Depreciating assets

You may be able to claim a deduction for assets that lose their value over time such as computer and printers.

Depreciating assets that cost more than $300 are usually claimed over the life of the asset (decline in value). However, if you have a depreciating asset that cost $300 or less you can claim a deduction for the full cost of the asset to the extent that you used it for study in the financial year you bought it. If you also use the asset for private purposes you must apportion your costs.

Car expenses

If your self-education has sufficient connection to your current employment, you can claim daily travel expenses from your:

  • home to your place of education and back
  • work to your place of education and back.

However, you can’t claim the cost of the last stage of your travel for example, from home to your place of education and then to work.

Expenses you can’t claim

You can’t claim the following expenses in relation to your self-education:

  • tuition fees paid by someone else or that you have been reimbursed for
  • student contribution amounts
  • repayments of Higher Education Loan Program (HELP) loans (although the fees paid by some HELP loans are)
  • Student Financial Supplement Scheme (SFSS) repayments
  • VET Student Loan (VSL) repayments
  • Student Start-up Loan (SSL) repayments
  • Trade Support Loan Program (TSL) repayments
  • home office occupancy expenses – for example, rent, mortgage interest or rates
  • accommodation and meals (unless sleeping away from home for study, such as to attend a residential school).

From the 2011-12 income year, you can’t claim a deduction for self-education expenses you incur if you only receive a qualifying Australian Government allowance or payment, as that allowance or payment is a rebatable benefit and eligible for the beneficiary tax offset.

Example: receiving Austudy payments

Alison starts a full time Bachelor of Pharmacy. As she has two young children, she applies for and receives Austudy payments from Centrelink rather than finding employment to support herself while studying. Austudy is a taxable government assistance payment and is eligible for the beneficiary tax offset.

Alison isn’t eligible to claim a deduction for her self-education expenses because she received Austudy payments and Austudy is a rebatable benefit.

$250 reduction in expenses

Self-education expenses are broken into five categories. If all of your self-education expenses are ‘category A’ items then you have to reduce your deduction by $250. However ‘category E’ expenses’ can be used to offset the $250.

Expenses offset against the $250 reduction

While you can’t claim a deduction for the following expenses, you can use them to offset the $250 reduction. These expenses include:

  • childcare while attending self-education activities
  • capital expenses related to your self-education such as, the purchase of a desk
  • fares, travel or car expenses for these journeys
    • for work-related self-education, the second leg of a trip if you went from home to your place of education and then to work, or the other way around
    • if you receive a taxable bonded scholarship and are not employed by the scholarship provider, travel from home to your normal place of education and back.

See also: Self-education expenses calculator

Apportioning expenses

You need to apportion some expenses between private purposes and use for self-education, such as travel costs and depreciating assets.

If you use equipment such as computers and printers privately and for study, you must apportion the expenses based on the percentage you use the equipment for your self-education. For example, if you use a computer 50% of the time for self-education and 50% for private purposes, you can only claim half the cost of the computer as a deduction.

Use our self-education expense calculator to get an estimate of your self-education deductions. It also provides information on your claim eligibility.

Recording self-education expenses

You may need to keep receipts or other documents showing your self-education expenses such as:

  • course feesexpenses bills
  • textbooks
  • stationery
  • decline in value of and repairs to depreciating assets.

 

 

You must also keep receipts, documents or diary entries for travel expenses. You can use our myDeductions tool in the ATO app to record your self-education expenses.

 

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

 

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

HOME OFFICE EXPENSES

If you’re an employee who works from home, you may be able to claim a deduction for expenses you incur relating to that work. These can be additional running expenses such as electricity, the decline in value of equipment or furniture and phone and internet expenses.

If your home is your principal place of business, you should refer to running your business from home.

In most cases, if you are working from home as an employee, there will be no capital gains tax (CGT) implications for your home.

Calculation methods

There are three ways of calculating home office expenses depending on your circumstances. The methods are the:

  • Shortcut method (80 cents) – only available 1 March to 30 June 2020
  • Fixed rate method (52 cents)
  • Actual cost method

You must meet the record keeping requirements and working criteria to use each method.

Shortcut method

We have introduced a shortcut method to simplify how you calculate your deduction for working from home. This method is temporary and only available for the period 1 March to 30 June 2020. All employees working from home in this period can use this method.

Using this method, you can claim 80 cents per hour for each hour you work from home during the period 1 March to 30 June 2020.

You can choose to use this rate if you:

  • are working from home to fulfil your employment duties, not just carrying out minimal tasks such as occasionally checking emails or taking calls
  • have incurred additional running expenses as a result of working from home.

The shortcut method covers all of your work from home expenses, such as:

  • phone expenses
  • internet expenses
  • the decline in value of equipment and furniture
  • electricity and gas for heating, cooling and lighting.

If you use this method, you can’t claim any other expenses for working from home.

You don’t need to have a dedicated work area to use this method. However, you must keep a record of the number of hours you have worked from home. This could be a timesheet, roster, a diary or documents that set out the hours you worked from home.

You don’t have to use the shortcut method, you can choose to use one of the existing methods to calculate your deduction. You can use the method or methods that will give you the best outcome as long as you meet the working criteria and record keeping requirements for each method.

If you had a work from home arrangement before 1 March 2020, you will need to use one of the existing methods to calculate your deduction for the period 1 July 2019 to 29 February 2020.

The shortcut method includes decline in value of all items. If you choose to use this method there is no requirement to separately calculate the decline in value of equipment or depreciating assets. However, as you may combine methods or use a different method in later years it’s important to keep the:

  • purchase receipts for depreciating assets or equipment you use when working from home
  • records of how you calculated your work-related use of the asset
  • your decline in value calculations.

Fixed rate method

You can claim a deduction of 52 cents for each hour you work from home for the work-related expenses you incur for additional running expenses. The fixed rate covers all expenses you incur for:

  • the decline in value of home office furniture and furnishings – for example, a desk
  • electricity and gas for heating, cooling and lighting
  • the cost of repairs to your home office equipment, furniture and furnishings.

To claim using this method, you must keep records of either:

  • your actual hours spent working at home for the year
  • a diary for a representative four-week period to show your usual pattern of working at home.

You can apply the four-week representative period across the remainder of the year to determine your full deduction amount. However, if your work pattern changes you will need to create a new record.

To use this method, you need to have a dedicated work area, such as a home office when you work from home.

This method doesn’t include the following, so you will need to separately calculate your work-related use for:

  • phone expenses
  • internet expenses
  • computer consumables and stationery – such as ink
  • decline in value of equipment – such as phones, computers and laptops.

To claim the work-related portion of these expenses you must have records such as:

  • receipts or other written evidence that shows the amount spent on expenses and depreciating assets you purchased
  • phone accounts identifying your work-related calls and private calls to work out your percentage of work-related use for a representative period
  • a diary that shows
    • a representative four-week period of your usual pattern of working at home
    • any small expenses ($10 or less) that you can’t get a receipt for totalling no more than $200
    • your work-related internet use
    • the percentage of the year you used depreciating assets exclusively for work.

Watch: Claiming for a computer, phone or other electronic device as a work-related expense

Actual cost method

Under the actual expenses method, you can claim the additional running costs you directly incur as a result of working from home. This may include the following expenses:

  • electricity and gas for cooling, heating and lighting
  • the decline in value of home office furniture (desk, chair) and furnishings,
  • the decline in value of phones, computers, laptops or similar devices
  • phone expenses
  • internet expenses
  • cleaning (if you use a dedicated area for working)
  • computer consumables and stationery – such as ink

If you don’t have a dedicated work area, such as a home office, you will generally only incur minimal additional running expenses. For example, if the area you use for work is a common area of the home such as a lounge room and that area is being used by other members of your household for another purpose (such as, family members watching television) at the same time you’re working, you won’t be incurring any additional costs for lighting, heating or cooling as a result of working in that room.

To calculate the work-related portion of your actual expenses you must have records. You can:

  • keep a record of the number of actual hours you work from home during the income year
  • keep a diary for a representative four-week period to show your usual pattern of working at home
  • work out the decline in value of depreciating assets and
    • keep receipts showing the amount you spent on the assets
    • show the percentage of the year you used those depreciating assets exclusively for work – you can claim for the portion of the decline in value that reflects your work-related use of the depreciating assets
  • work out the cost of your cleaning expenses (if you have a dedicated work area) – for example, a room set up as a home office, by adding together your receipts and multiplying it by the floor area of your dedicated work area (floor area of the dedicated work area divided by the whole area of the house as a percentage) – your claim should be apportioned for any
    • private use of your home office
    • use of the home office by other family members
  • work out the cost of your heating, cooling and lighting by working out the following
    • the cost per unit of power used – refer to your utility bill for this information
    • the average units used per hour – this is the power consumption per kilowatt hour for each appliance, equipment or light used
    • the total annual hours used for work-related purposes – refer to your record of hours worked or your diary for this information.
  • work out the cost of your phone or internet plan expenses – where you receive an itemised bill, you need to determine your percentage of work use over a four-week representative period.
  • work out the cost of computer consumables and stationery by keeping receipts for the items purchased.

You must take into account other members of your household when you work out your expenses. If a member of your household is using the same area of the house or the same service when you’re working, you must apportion your expenses accordingly.

To claim a deduction for an asset that cost $300 or more, you need to calculate the decline in value for both the period you:

  • owned the assets during the income year
  • used the assets for work-related purposes.

You can use the depreciation and capital allowances tool to calculate your deduction for the decline in value of equipment, furniture and furnishings that cost more than $300, use the depreciation and capital allowances tool to work this out.

You can use the myDeductions tool in the ATO app to keep track of your expenses and receipts throughout the year. It’s a fast, easy way to capture information on the go by taking and uploading photos of receipts.

Expenses you can’t claim

There are some expenses you can’t claim a deduction for as an employee. Employees who work at home can’t claim costs:

  • for coffee, tea, milk and other general household items your employer may otherwise have provided you with at work
  • related to children and their education including setting them up for online learning, teaching them at home or buying equipment such as iPads and desks
  • that you’re reimbursed for, paid directly by your employer or the decline in value of items provided by your employer – for example, a laptop or a phone.

Employees generally can’t claim occupancy expenses such as rent, mortgage interest, water and rates.

Records for change in circumstances

Regardless of the method you choose to use to calculate your expenses for working from home, you will need to have records.

If your circumstances change part way through the income year – for example, your usual pattern of work from home changes – you will need to keep separate records to show this change.

If you use the four-week representative period to calculate your usage over the income year, you will need to either:

  • complete a new four-week representative period to show your usage in your new circumstances
  • keep separate records for the period your circumstances changed.

For example, if you usually work from home one day a week and due to an emergency situation such as COVID-19 or bush fires you’re required to work from home for a period, you will need to keep separate records for both situations. This includes:

  • the actual hours you’ve worked from home due to the emergency situation
  • your usual working from home arrangements.

Your four-week representative period will no longer be valid in these circumstances.

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.