Are you unsure of what or how much you can claim as deductions in your tax return? We're here to help.
Deduction entitlements can be confusing, it's true. Trying to figure out depreciation values or calculating use percentages can be hard enough, but sometimes the trickiest part can simply be understanding what you can and can't claim in the first place.
And when it comes to tax, it really can pay to know what you're eligible for. That's where our Tax Deduction Guide can help!
Below is a quick breakdown of the various expense criteria that you may be able to claim as a deduction at tax time, as well as some useful tools and links to make things easier.
Work-Related Expenses
These are the most common tax deduction type people know about. Despite that, sometimes the line can seem blurry when it comes to what is and isn't included.
You can claim a deduction for work-related expenses when:
- You have spent the money yourself and weren't reimbursed
- It directly relates to you earning your income
- You have a record to prove the cost
If you work from home, you can claim a deduction for additional expenses incurred enabling you to do your job remotely and have records of the expenses.
You can claim:
• Additional running expenses for costs, such as electricity or gas, and internet
• Mobile and home phone usage
• Stationery and office supplies
• Office furniture, such as desks and office chairs*
• Equipment, such as computers and software*
You can't claim:
• General household items, such as coffee, tea, milk and toilet paper
• Items provided by your employer, such as a laptop or phone
You can calculate your claim using one of the below methods:
*You can deduct the decline in value of these depreciating assets
You can claim certain car and transport expenses incurred during the course of your work that you weren't reimbursed for.
You can claim:
• Trips while working, such as conferences or an off-site client meeting (including non-reimbursed parking fees and tolls)
• Travelling between workplaces such as going from one job to another
• Trips between home and your workplace when you have shifting locations of work
You can't claim:
• Trips between home and your workplace
• Parking fees for parking near or at your workplace
You can calculate your claim using one of the below methods:
If you claim your work-related car expenses using either of the above methods, you can't claim any further deductions for the same car (petrol, insurance, servicing, etc) within that tax return.
You can claim expenses for work-related travel that require you to stay away from your home overnight that you were not reimbursed for.
You can claim:
• Accommodation
• Meals
• Transport expenses such as flights
• Incidental expenses, such as taxi fares or parking
You can't claim:
• If you haven't stayed away from home overnight
• Your employer paid for the travel
Ensure you keep records of your incurred travel expenses.
The expense for the purchase, cleaning and repair of certain work-related clothing (including footwear) is deductible when not reimbursed by your employer.
You can claim:
• Protective clothing such as steel-capped boots
• Occupation-specific clothing such as chef pants
• Compulsory distinctive uniforms such as a branded polo
• Personal Protective Equipment (PPE) such as earplugs
You can't claim:
• Conventional work attire even when compulsory such as black trousers
• Normal clothes you only wear at work
• Regular glasses and contact lenses
You can claim the expense incurred for tools and equipment you use for work.
You can claim:
• The cost of the item purchase
• Repairs costs
• Insurance fees
• Full deduction of items that cost $300 or less (if used for work more than 50% of the time)
You can't claim:
• The percentage of any private use of an item
• Expenses for tools supplied for you
Ensure you keep records of the expense and item usage. You'll need to work out if you are able to claim the full cost of the item in the financial year that you bought it or if your deduction amount equals the decline in value over its effective life.
There are very few instances in which you can claim work-related deductions for personal grooming, health and fitness expenses.
You can claim:
• Compulsory medical examinations required by your employer
• Cost of Covid-19 test required to attend your workplace
You can't claim:
• Vaccinations
• Cosmetics
• Haircuts (even when required by an employer)
• Gym fees*
*Except in very limited circumstances
You can claim self-education and study expenses when it relates directly to your employment, such as university courses or work seminars.
You can claim:
• Seminars and training for continued professional development (CPD)
• TAFE courses
• Online skills courses
• Full fee paying university or higher-education tuition, student or amenities fees
• Student union fees
• Textbooks
• Internet and data usage
• Equipment and furniture, such as desks and bookshelves*
You can't claim:
• Children's school fees or childcare
• Self-education not related or only generally related to your employment
• University or higher-education tuition when the expense is covered by a HECS-HELP loan
• Tuition paid for by someone else or that you are reimbursed for
• Repayments of study and training loans such as HELP and VET loans
Your self-education must have a significant relation to earning your employment income or increasing it by either maintaining or improving skills or knowledge in your employment activities.
You can use the ATO's self-education expense calculator to help you figure out your deduction.
*The deduction amount will be based on the decline in value of these depreciating assets
You can claim the work-related portion of other expenses incurred in relation to your employment where eligible.
You can claim:
• Books, periodicals and journals, such as academic journals and reference books
• Union fees and associated subscriptions
• Up to $42 per year for each non-work related association subscription
• Fees to obtain or renew certificates, memberships, accreditations and licenses needed to work in your field
• Commissions for work you've gained and paid directly to an agency for
• Professional Indemnity insurance
You can't claim:
• Costs reimbursed to you by your employer
• Expenses paid for by your employer
• Newspapers and magazines
• Fines
• Entertainment or social expenses such as those incurred during a business lunch or gala
• Club memberships (even if needed to meet with clients)
• Gifts for clients
If you work from home, you can claim a deduction for additional expenses incurred enabling you to do your job remotely and have records of the expenses.
You can claim:
• Additional running expenses for costs, such as electricity or gas, and internet
• Mobile and home phone usage
• Stationery and office supplies
• Office furniture, such as desks and office chairs*
• Equipment, such as computers and software*
You can't claim:
• General household items, such as coffee, tea, milk and toilet paper
• Items provided by your employer, such as a laptop or phone
You can calculate your claim using one of the below methods:
*You can deduct the decline in value of these depreciating assets
You can claim certain car and transport expenses incurred during the course of your work that you weren't reimbursed for.
You can claim:
• Trips while working, such as conferences or an off-site client meeting (including non-reimbursed parking fees and tolls)
• Travelling between workplaces such as going from one job to another
• Trips between home and your workplace when you have shifting locations of work
You can't claim:
• Trips between home and your workplace
• Parking fees for parking near or at your workplace
You can calculate your claim using one of the below methods:
If you claim your work-related car expenses using either of the above methods, you can't claim any further deductions for the same car (petrol, insurance, servicing, etc) within that tax return.
You can claim expenses for work-related travel that require you to stay away from your home overnight that you were not reimbursed for.
You can claim:
• Accommodation
• Meals
• Transport expenses such as flights
• Incidental expenses, such as taxi fares or parking
You can't claim:
• If you haven't stayed away from home overnight
• Your employer paid for the travel
Ensure you keep records of your incurred travel expenses.
The expense for the purchase, cleaning and repair of certain work-related clothing (including footwear) is deductible when not reimbursed by your employer.
You can claim:
• Protective clothing such as steel-capped boots
• Occupation-specific clothing such as chef pants
• Compulsory distinctive uniforms such as a branded polo
• Personal Protective Equipment (PPE) such as earplugs
You can't claim:
• Conventional work attire even when compulsory such as black trousers
• Normal clothes you only wear at work
• Regular glasses and contact lenses
You can claim the expense incurred for tools and equipment you use for work.
You can claim:
• The cost of the item purchase
• Repairs costs
• Insurance fees
• Full deduction of items that cost $300 or less (if used for work more than 50% of the time)
You can't claim:
• The percentage of any private use of an item
• Expenses for tools supplied for you
Ensure you keep records of the expense and item usage. You'll need to work out if you are able to claim the full cost of the item in the financial year that you bought it or if your deduction amount equals the decline in value over its effective life.
There are very few instances in which you can claim work-related deductions for personal grooming, health and fitness expenses.
You can claim:
• Compulsory medical examinations required by your employer
• Cost of Covid-19 test required to attend your workplace
You can't claim:
• Vaccinations
• Cosmetics
• Haircuts (even when required by an employer)
• Gym fees*
*Except in very limited circumstances
You can claim self-education and study expenses when it relates directly to your employment, such as university courses or work seminars.
You can claim:
• Seminars and training for continued professional development (CPD)
• TAFE courses
• Online skills courses
• Full fee paying university or higher-education tuition, student or amenities fees
• Student union fees
• Textbooks
• Internet and data usage
• Equipment and furniture, such as desks and bookshelves*
You can't claim:
• Children's school fees or childcare
• Self-education not related or only generally related to your employment
• University or higher-education tuition when the expense is covered by a HECS-HELP loan
• Tuition paid for by someone else or that you are reimbursed for
• Repayments of study and training loans such as HELP and VET loans
Your self-education must have a significant relation to earning your employment income or increasing it by either maintaining or improving skills or knowledge in your employment activities.
You can use the ATO's self-education expense calculator to help you figure out your deduction.
*The deduction amount will be based on the decline in value of these depreciating assets
You can claim the work-related portion of other expenses incurred in relation to your employment where eligible.
You can claim:
• Books, periodicals and journals, such as academic journals and reference books
• Union fees and associated subscriptions
• Up to $42 per year for each non-work related association subscription
• Fees to obtain or renew certificates, memberships, accreditations and licenses needed to work in your field
• Commissions for work you've gained and paid directly to an agency for
• Professional Indemnity insurance
You can't claim:
• Costs reimbursed to you by your employer
• Expenses paid for by your employer
• Newspapers and magazines
• Fines
• Entertainment or social expenses such as those incurred during a business lunch or gala
• Club memberships (even if needed to meet with clients)
• Gifts for clients
Non-Work Related Expenses
Non-work related expenses are often forgotten about by a lot of people, but they can help to substantially reduce your taxable income depending on your circumstances.
You can claim a deduction for them when:
- You personally incurred the cost
- You have a record to prove the expense
You can claim a tax deduction for gifts or donations you make to eligible organisations.
You can claim:
• Gifts and donations of money, property or shares
• Political party and independent candidate donations (including membership fees for registered political parties)*
• Bucket or small cash donations of $2 or more (total $10 claim limit without a receipt)
You can't claim:
• A gift or donation you received a material benefit or advantage from in return
• A gift or donation to an organisation without a deductible gift recipient (DGR) status
• Raffle tickets
• Cost of attending fundraising events
• Club membership fees
• Gifts to family and friends
• Donations included in a salary sacrifice arrangement
• Social media or crowdfunding donations (unless they are a registered DGR)
The gift or donation must be either money or property, including financial assets such as shares. Be sure to keep receipts and records for tax time.
*You must have made the non-testamentary donation as an individual. There is a $1,500 cap for these deduction claims.
You can claim deductions for investment expenses, insurance, personal super contributions and foreign pensions.
You can claim:
• Account-keeping fees for investment accounts (or your share of the fees on joint accounts)
• Costs incurred to invest in shares, such as management or advice fees
• A portion of the costs of managing investments such as travel expenses to attend an annual company meeting
• 50% of the Listed Investment company (LIC) capital gain amount of a dividend paid to you
• Interest paid on money borrowed to buy shares or related investments that earn you dividends or assessable income*
• Income protection insurance (unless the policy is through your superannuation fund)
• Additional personal post-tax super contributions
• Taxable income received from a foreign pension or annuity with an un-deducted purchase price
You can't claim:
• Interest on a personal tax debt such as interest on a loan
• Costs of creating an investment plan
• Brokerage fees and transactional costs
• Non-income related personal insurance, such as life or trauma insurance
• Personal super contributions made as part of a salary sacrifice arrangement
*You may only claim the interest expenses incurred on money borrowed for income-producing purposes (or the percentage of interest when the borrowed money is also used for private purposes)
You can claim deductions for certain expenses related to your rental properties and holiday homes, as well as the decline in value of some assets and items.
You can claim:
• Costs related to rental advertisement and property agents
• Borrowing expenses, such as loan establishment and mortgage broker fees
• Some strata fees
• Cleaning costs, repairs and maintenance
• Local council rates and land tax
• Premiums for insurance policies, such as building, contents, public liability and loss of rent
• Interest incurred on a mortgage or property purchase loan
• Interest incurred on loans taken out for depreciating assets, repairs or renovations for the rental property
• Some lease documents and legal expenses
• Depreciating assets*
• Capital works expenses for extensions or structural improvements and alterations, such as adding a room or removing an internal wall
• Capital works deductions for residential properties built after 17 July 1985 (deductions are generally spread over a period of 25 to 40 years)
You can't claim:
• Rental property tenant expenses, such as water or electricity costs
• Acquisition and disposal costs of rental properties
• Expenses you incur when using your own holiday home, even when rented out for part of the year
• Expenses related to vacant land**
• The decline in value of certain second-hand depreciating assets such as carpet installed in the property prior to its purchase
• Expenses for relocating assets prior to renting such as removal costs
• Property improvements such as landscaping
If your rental property is located outside of Australia, different deductibility rules will apply.
*Deductions for the decline in value of depreciating assets can be worked out using either the Diminishing Value or Prime Cost method
**Deductions are claimable in limited circumstances
You can claim deductions for expenses related to managing your tax affairs.
You can claim:
• Costs related to using an accountant or registered tax advisor for advice or to lodge your tax return
• Tax return preparation courses
• Bookkeeping fees
• Travel expenses incurred to get tax advice such as costs to attend a meeting with your advisor
• Valuation costs of deductible gifts or donations of property
• General interest and shortfall interest charged by the ATO within the financial year that you incur the charge
• Costs to fulfil legal obligations for another person's or entity's tax affairs
• Fees relating to an appeal to the Administrative Appeals Tribunal, including legal costs
• Software costs and subscriptions used to lodge and prepare your tax, such as Xero
You can't claim:
• Costs or time associated with personally preparing and lodging your tax return
• Costs associated with preparing someone else's tax return such as a spouse, even when receiving a single invoice
You can claim a tax deduction for gifts or donations you make to eligible organisations.
You can claim:
• Gifts and donations of money, property or shares
• Political party and independent candidate donations (including membership fees for registered political parties)*
• Bucket or small cash donations of $2 or more (total $10 claim limit without a receipt)
You can't claim:
• A gift or donation you received a material benefit or advantage from in return
• A gift or donation to an organisation without a deductible gift recipient (DGR) status
• Raffle tickets
• Cost of attending fundraising events
• Club membership fees
• Gifts to family and friends
• Donations included in a salary sacrifice arrangement
• Social media or crowdfunding donations (unless they are a registered DGR)
The gift or donation must be either money or property, including financial assets such as shares. Be sure to keep receipts and records for tax time.
*You must have made the non-testamentary donation as an individual. There is a $1,500 cap for these deduction claims.
You can claim deductions for investment expenses, insurance, personal super contributions and foreign pensions.
You can claim:
• Account-keeping fees for investment accounts (or your share of the fees on joint accounts)
• Costs incurred to invest in shares, such as management or advice fees
• A portion of the costs of managing investments such as travel expenses to attend an annual company meeting
• 50% of the Listed Investment company (LIC) capital gain amount of a dividend paid to you
• Interest paid on money borrowed to buy shares or related investments that earn you dividends or assessable income*
• Income protection insurance (unless the policy is through your superannuation fund)
• Additional personal post-tax super contributions
• Taxable income received from a foreign pension or annuity with an un-deducted purchase price
You can't claim:
• Interest on a personal tax debt such as interest on a loan
• Costs of creating an investment plan
• Brokerage fees and transactional costs
• Non-income related personal insurance, such as life or trauma insurance
• Personal super contributions made as part of a salary sacrifice arrangement
*You may only claim the interest expenses incurred on money borrowed for income-producing purposes (or the percentage of interest when the borrowed money is also used for private purposes)
You can claim deductions for certain expenses related to your rental properties and holiday homes, as well as the decline in value of some assets and items.
You can claim:
• Costs related to rental advertisement and property agents
• Borrowing expenses, such as loan establishment and mortgage broker fees
• Some strata fees
• Cleaning costs, repairs and maintenance
• Local council rates and land tax
• Premiums for insurance policies, such as building, contents, public liability and loss of rent
• Interest incurred on a mortgage or property purchase loan
• Interest incurred on loans taken out for depreciating assets, repairs or renovations for the rental property
• Some lease documents and legal expenses
• Depreciating assets*
• Capital works expenses for extensions or structural improvements and alterations, such as adding a room or removing an internal wall
• Capital works deductions for residential properties built after 17 July 1985 (deductions are generally spread over a period of 25 to 40 years)
You can't claim:
• Rental property tenant expenses, such as water or electricity costs
• Acquisition and disposal costs of rental properties
• Expenses you incur when using your own holiday home, even when rented out for part of the year
• Expenses related to vacant land**
• The decline in value of certain second-hand depreciating assets such as carpet installed in the property prior to its purchase
• Expenses for relocating assets prior to renting such as removal costs
• Property improvements such as landscaping
If your rental property is located outside of Australia, different deductibility rules will apply.
*Deductions for the decline in value of depreciating assets can be worked out using either the Diminishing Value or Prime Cost method
**Deductions are claimable in limited circumstances
You can claim deductions for expenses related to managing your tax affairs.
You can claim:
• Costs related to using an accountant or registered tax advisor for advice or to lodge your tax return
• Tax return preparation courses
• Bookkeeping fees
• Travel expenses incurred to get tax advice such as costs to attend a meeting with your advisor
• Valuation costs of deductible gifts or donations of property
• General interest and shortfall interest charged by the ATO within the financial year that you incur the charge
• Costs to fulfil legal obligations for another person's or entity's tax affairs
• Fees relating to an appeal to the Administrative Appeals Tribunal, including legal costs
• Software costs and subscriptions used to lodge and prepare your tax, such as Xero
You can't claim:
• Costs or time associated with personally preparing and lodging your tax return
• Costs associated with preparing someone else's tax return such as a spouse, even when receiving a single invoice
Keeping Records
It's recommended that you keep any records related to your tax for five years (good-quality digital copies are an easy way to do this). Any receipts should include:
- Name of supplier
- Amount of expense
- Nature of the goods or service
- Date of expense
- Date of receipt
Deduction Tools
You can use the ATO's convenient myDeductions app to keep track of your deductible expenses and store your receipts as they come up throughout the year.
However, if you don't have the app and need to work out the deductible amount of a depreciating asset, you can use their online Depreciation and Capital Allowances Tool to do the math for you.
Preparing your tax return each year and compiling your deductions can seem daunting but with a bit of knowledge and preparation, you can substantially reduce the stress and confusion.
Interested in having a professional do the hard work for you? Get in touch with us today and don't forget, it's deductible!
