Work Related Expenses

business meeting

Do you ever get to tax time and think to yourself “I really wish I had thought about what I could claim six months ago?” Well what better time to start considering your tax than April! Research from Officeworks in 2014 shows Australians miss out on $426 each of unclaimed tax each year — or $1.65 billion nationwide so chances are if you are doing it yourself you might be missing something. So what constitutes a work related expense? The ATO states you must be able to show that:
• The essential character of the expense is income-producing
• There is a nexus between the outgoing and the assessable income in that the nature of the outgoing is incidental and relevant to the gaining of assessable income, and
• There is a necessary connection between the particular outgoing and the operations or activities by which you directly gain or produce assessable income.
So basically if you can directly connect the expense to a requirement of your job you can claim that expense on your return. For example, someone who is required to work outdoors to complete their work duties may claim sunglasses and sunscreen as protective items however someone working in an office could not. The list of claimable work expenses is expansive however a few main items to watch out for when considering what expenses are claimable are:
• formal education courses provided by professional associations
• journals, magazines, books
• seminars, conferences or education workshops
• tools and equipment
• union fees
• overtime meals
• protective items such as sunscreen and sunglasses
• computers and software
• telephone and home office expenses, and
• premiums on income protection insurance.
There are some specific items which are not claimable regardless of their relationship to your employment being expenses relating to critical illness, trauma or life insurance, entertainment, fines and penalties, child care expenses and social club fees.
If you think you have an expense that relates to your employment it is important that you provide details to your accountant. Written evidence of substantiation is required for claiming deductions which exceed a total combined amount of $300. If they exceed this amount you have to show evidence for all expenses, not just those over the $300 combined amount. The documentation must show the supplier name, expense amount, nature of the goods or service and the date the expense was incurred. Acceptable forms of substantiation include credit card or bank statements, invoices, email receipts and BPAY reference numbers.
If you are unsure if an expense will be deductible on your return contact our office for more information or go to https://www.ato.gov.au/Tax-professionals/Compliance-for-tax-professionals/Work-related-expenses/Taxation-rulings-for-specific-occupations/ and, if your role is listed, you can view specifically what you can and cannot claim as a deduction for work related expenses.