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.
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
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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.