An industry-by-industry guide to the common tax claims that people get wrong
At the end of every financial year some Australians claim for expenses they're not entitled to – some by accident, others as an opportunity to see what deductions they can get.
But with the ATO fine-tuning its systems every day, it's becoming harder for incorrect claims to go unnoticed.
To keep your tax claims on the straight and narrow, we recommend using online accounting software (of course we do 😉). But it's useful to know what you can claim for before you try and claim it.
Skip to your industry:
1. Home offices
- You can claim expenses for the cost of setting up and running a home office.
- But you will need to portion your claim to the actual room you do your work in and only for the time period you do in it.
- You can't claim the cost of running your whole house as a home office.
- That means no claiming for the coffee machine in the kitchen or the new armchair in the living room – even if they do help you to get the job done!
- To help you figure out your home office claim the ATO has created a handy calculator.
2. Travel and car
- If you travel or drive as part of your job, (e.g. salespeople) you can claim expenses for these trips.
- But only if they haven't already been reimbursed by your employer.
- You can't claim expenses for traveling or driving between the office and your home.
- You can’t claim expenses for education aimed at getting another job. In the eyes of the ATO, that’s a personal expense rather than a work expense.
- You can’t claim expenses for work-based education if your employer has either paid for the course or reimbursed you for it.
1. Travel and car
- You can't claim expenses for traveling or driving between your home and your workplace.
- You can't claim for traveling or driving to work outside normal business hours (such as night shifts or public holidays).
- Sadly, you can't claim travel expenses if you live far away from your workplace either.
2. Clothing and grooming
- You can’t claim expenses for the cost of cleaning your street clothes, even if your employer tells you to wear them.
- So if you’re required to wear black pants and a shirt for work – despite not wearing this outside work – you can’t claim for it.
- You also can’t claim expenses for personal grooming. That well-groomed beard is maintained at your personal expense.
- You can't claim for study expenses in order to get another job – even if it’s in the same business.
- For example, if you’re a waiter and you dream of being a chef, you can’t claim for your cookery school classes.
4. Tools and equipment
- You can’t claim expenses for equipment that has been paid for by your employer.
- You can't claim expenses for equipment repairs if you’ve been reimbursed for them by your employer.
- And you can't claim expenses for equipment that you use outside of work in your personal life.
1. Cars, trucks and utes
- You can’t claim expenses for driving between your home and the worksite.
- That includes side trips like dropping the kids off at school or picking up a fellow tradie.
- There’s also a clear difference between what the ATO defines as a ‘car’ and what it defines as a larger vehicle.
- It’s important to get this right because what type of vehicle you have relates to what you can claim.
- You can claim expenses on specialised clothing for your job such as hi-vis gear and worker boots.
- You can’t claim for street clothing worn at work – even if your boss or site manager told you to wear street clothing.
- You also can't claim for cleaning any street clothing you wear as part of your job.
3. Tools and other equipment
- You can’t claim expenses for tools and equipment that you use privately.
- You can’t claim for tools provided to you by your employer or another person.
- If a tool costs more than $300 (and you paid for it) you can claim the cost of the tool over a number of years – taking into account that the tool will depreciate in value over the years.
- But if the tool costs less than $300, you can claim a deduction for the whole cost upfront.
4. Mobile phones
- You can claim for a mobile phone if you use it to run and manage your business.
- But you can only claim for the work-related part of using the phone.
- So if you only use your phone to make work calls 20 percent of the time, you can only claim 20 percent of the phone-related costs.
Top tip: For your mobile phone claim to be successful you'll need to be able to prove how you use it for your work and for how much of the time.
1. Clothing and personal grooming
- You can't claim expenses for clothing you wear at work even if it’s not clothing you’d normally wear.
- So if you’re told to wear clothing sold at the store you work at, that doesn’t mean it’s a work expense.
- You can’t claim expenses on personal grooming or cosmetics, even if the store you work at sells these items and you were told to use them.
- You can’t claim expenses for a meal eaten during a normal work day, sadly the ATO sees that as a personal expense.
- You can’t claim for education expenses no matter if you're studying for a career in retail or to secure a job with another employer.
4. Travel and car
- You can’t claim expenses for traveling or driving between your home and your workplace, even if you live a long way from your workplace or if you're working outside normal business hours.
The bottom line is, if you can’t prove it, you can’t claim it
We understand that claiming expenses for your job can be complicated and sometimes daunting.
You want to claim for the things you're entitled to, but you don't want to make a mistake and end up in the ATO's bad books.
The best way to keep your expense claims correct and the ATO happy is to keep a record of what you think is an expense. That means keeping things like:
- receipts and invoices
- how long you use a work-related item
- and what it's used for in your job
If you're unsure about putting in a claim ask for help. Whether it's your employer, the ATO or a tax professional.
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