Tax time arrives with all the subtlety of a car alarm at 3 am. One day you’re casually tossing receipts in a drawer, the next you’re on your hands and knees searching for that crucial invoice from nine months ago. Most Australians know the annual ritual of hunting through bank statements and decoding faded receipts. But there’s a better way of keeping tax records.
That better way starts with a simple set of “golden rules.” If you want to include something in your tax return, each of these rules must apply:
- You must have spent the money
- The expense must be work-related
- You need proof
That last point matters more than you might think. No proof means no claim, and that can cost you serious money. We’re talking hundreds, sometimes thousands of dollars in missed deductions.
At ITP, our tax agents have seen it all. We’ve watched countless people miss out on deductions they’re 100% entitled to, simply because they couldn’t find the right records. On a less depressing note, this situation is completely preventable. With some basic organisation skills and a few smart habits, you can capture every deduction you deserve.
Here’s how to make sure you never leave money on the ATO’s table again.
What Proof Do You Need for Tax Deductions?
Keeping tax records can feel like a pain in the you-know-what. But once you turn it into a habit, it’s really not that bad. It’s not like you need the prime minister to sign a copy of the Australian constitution. The proof you need is far easier to access.
First up, you’ll need records of the income you’ve received throughout the year. This is not limited to salary and wages. You might earn money through bank interest, foreign income, a side business, crypto investments, or a trust account. Whatever the case may be, you’ll need to gather evidence of everything to work out your total.
The following income streams are your most common:
- Wages and salary
- Investments
- Dividends
- Managed funds
- Allowances
- Rent from rental properties
- Income from letting a room
- Bank interest
- Income from a trust account
Pro Tax Tip: Your ITP Tax Agent can access your income data for you using your tax file number. They’ll be able to see your Pay As You Go (PAYG tax) paid, allowances paid to you through your employers, and your superannuation.
How to Claim Everything You’re Entitled To
Once you have your total incomings summed up, you can start hunting for deductions. Although your ITP Tax Accountant will guide you through the whole process, it’s good to know generally where you can cut your tax and what proof you need to back yourself up.
Pro Tax Tip: Your ITP Tax Accountant is available all year round to help! If you’re not sure what expenses you can claim, just give them a call and they’ll guide you through what you’ll need to do. Any fees you might pay to a tax agent are tax deductible, and our year-round advice is free, making it a brilliant deal all-round.
To help you out, we’ve broken down all the most common tax deductions below. However, the specifics can vary significantly by industry. So if you want to get stuck into the details, we recommend downloading one of our industry-speficif guides, which you can find on our individual tax return page.
General Expenses
There are the general expenses you incur to keep your tax affairs organised. You may be surprised to learn that most people completely forget to claim these costs! Expenses such as your tax agent’s fees, income protection costs, charity donations, and private heath cover can all be valid claims.
Did you remember all of those on your last tax return? A tax accountant always will.
Work-Related Expenses
Here, we’re talking about professional membership fees, subscriptions, licenses, union fees, and work-related gifts. These costs are easy to forget but they all add up. So make sure you’re keeping your receipts throughout the year.
Surprised to see that gifts are claimable? You’ll be even more shocked to learn that Christmas cards can make it onto your tax return! Take a look at our guide to Christmas expenses and tax deductions to ensure you’re getting the most out of these claims.
Self-Education Expenses
Do you stay on top of your game and keep your skills up to date? You might be entitled to claim:
- Course fees
- Books and stationery
- Travel to and from your learning institution
- Accommodation
- Meals
- Library fees
Note that your course must directly relate to your existing source of income for any claims to be valid. You can also claim first aid courses and other short courses you need to perform your job.
Working From Home
Remote work has evolved from a pandemic necessity to a standard business practice. The tax implications have matured right along with it, which means keeping track of your home office expenses remains as critical as ever.
The basic claims still apply – your desk chair, computer equipment, stationery, and those charging cables that mysteriously vanish when you need them can all count toward your deductions. That dual-monitor setup and lush office chair can all work as deductions, as long as you genuinely use them for work.
Your home office running costs deserve particular attention. That includes:
- Internet and phone expenses (just please calculate the work percentage based on actual usage rather than wishful thinking)
- Heating and cooling for your workspace (no, gaming sessions don’t count)
- A portion of your rent or mortgage interest if you have a dedicated work area
- Electricity costs for your office equipment
- Cleaning costs for your workspace
Some often-overlooked items that might earn you a deduction:
- Ergonomic equipment and standing desk accessories
- Video conferencing equipment and lighting
- Home office furniture repairs and maintenance
- Surge protectors and UPS systems
- Air purifiers and ventilation improvements
It’s a good idea to document your working arrangements. A floor plan showing your dedicated workspace can support claims for occupancy expenses. Keep a diary of your work-from-home hours – those 3 am productivity spurts might raise eyebrows at the ATO if you don’t have proper documentation.
Clothing And Equipment
Protective gear and work-specific equipment form a substantial part of many tax claims. The ATO recognises two main categories: protective items required for your job, and tools or equipment essential to your work.
Protective items that typically qualify include:
- Steel-capped boots and safety shoes
- High-visibility clothing and protective vests
- Hard hats and protective helmets
- Safety glasses and goggles
- Sun-protective gear for outdoor workers, including sunglasses and hats
- Protective gloves and masks
Your tools of trade deserve special attention. Whether it’s a spanner set or specialised software, these items can be:
- Immediately deducted if they cost less than $1,000
- Depreciated over several years for more expensive items
- Partially claimed based on work-related usage percentage
Laundry claims also matter. You can claim costs for washing, drying, and ironing:
- Protective clothing
- Occupation-specific clothing
- Distinctive uniforms
- Clothing with your employer’s logo
Work-Related Travel
If you’ve incurred costs such as accommodation, meals, road tolls, parking fees, vehicle costs, flights, taxis, and the like for your work – keep those receipts.
Pro Tax Tip: You might need to keep a travel diary or log book. A quick call to your tax agent can clear up precisely what tax records you’ll need to keep for your travel expenses.
Claims Less Than $300
It your total claims add up to less than $300, you’ll need to show how you calculated your expenses, but you won’t need written evidence. This isn’t an ‘automatic’ deduction. You will need proof, such as a work diary or similar, not just a “yep, I reckon my expenses magically worked out to the maximum allowable amount without receipts.”
Common methods to support these claims include:
- Keeping a detailed work diary for a representative four-week period
- Recording specific dates and purposes of work-related activities
- Maintaining digital calendars that show regular usage patterns
- Documenting the business purpose for each expense
While the $300 threshold might seem like an easy target, the ATO analyses these claims carefully. Your tax agent will help ensure your calculations are based on solid evidence rather than approximations. This protects you from potential audits and helps maintain accurate records for future reference.
Pro Tax Tip: Consider tracking all expenses regardless of amount. Many taxpayers find they qualify for larger deductions when they keep comprehensive records rather than relying on the $300 threshold.
Claims Over $300
Claims exceeding $300 require meticulous record-keeping. The good news? Digital tools have made this process less painful. You’ll need complete documentation for every expense, with the ATO particularly interested in the what, when, and why of each claim.
Notable exceptions to the $300 rule exist for:
- Vehicle expenses
- Meal allowances during overnight stays
- Transport payments under workplace awards
- Travel allowances for work-related journeys
Each of these categories demands its own specific documentation. Vehicle expenses need a logbook that tracks every business kilometer. Meal claims require receipts and proof of overnight stays. Transport and travel allowances need supporting evidence of actual costs.
Pro Tax Tip: Your phone probably has better record-keeping apps than most accounting firms had a decade ago. The ATO even has a free tax record-keeping app. A few seconds spent photographing receipts beats trying to decipher that faded slip from last August that spent three months in your wallet.
Written Evidence
The ATO requires written evidence of a certain nature when accepting your claims. Written evidence can be:
- A document (invoice or receipt) from a supplier of goods or services that show: their name, the amount, a description of the good or service, the date of the expense and the date of the document.
- If your expense was $10 or less and you couldn’t get evidence (such as a tool or parking fee), you can record your expense, but you must keep the same details as you would on a receipt or invoice and the total of these sorts of expenses must not exceed $200.
Pro Tax Tip: You don’t need to fill up a filing cabinet with all your paper copies! You can keep electronic copies as long as they are a clear and true representation of the original.
Digital Record Management in 2025: A Practical Guide
Speaking of digital receipts, the ATO now accepts more digital documentation formats than ever before. That’s brilliant news in our books. What’s less brilliant is how many people still lose their records despite having unlimited storage in their pockets.
Here’s how to stay organised without becoming obsessed with spreadsheets or turning into your own personal librarian.
Cloud Storage: The Easy Answer to Keeping Tax Records
This works well for most taxpayers, but it needs structure. The ATO suggests creating clear folders by tax year, and they’re right – future-you will be grateful when searching for that one specific receipt from eighteen months ago.
Set up two-factor authentication on your cloud service, not just because the ATO requires it, but because identity theft is going to be a huge issue in 2025. To ensure you’re safe, take a look at our article on spotting the signs that your TFN has been compromised.
Pro Tax Tip: Name your files with a consistent pattern like “2025_Category_Date_Amount” (e.g., “2025_WorkClothing_0419_89.50”). Your tax agent will appreciate your organisational skills, and you’ll spend less time hunting through files named “Receipt1” through “Receipt743.”
Easy Fixes for Common Tax Record-Keeping Issues
Here are some common mistakes we see even the most organised clients make:
- Storing everything in email (until that account gets hacked or deleted)
- Keeping receipt photos scattered among pics of the kids and your holidays to Bali
- Using multiple devices without syncing them
- Saving screenshots of e-receipts instead of the originals
Mixed-use purchases can also be tricky. That new laptop that splits its time between Netflix marathons and work projects needs proper documentation. Keep a simple usage log – nothing fancy, just enough to show the ATO that yes, you really do use that computer 70% for work.
Subscription services often slip through the record-keeping cracks. Most offer annual statements, but they won’t remind you to download them. So, set those reminders yourself – your tax refund will be fatter as a result!
Pro Tax Tip: Thermal paper receipts can fade fast, especially if you leave them in your car or wallet. Avoid issues here by scaninf them immediately. The ATO accepts scanned copies, and you won’t be left squinting at blank paper in July.
A simple system to keep records in check:
- Ten minutes weekly: Process new receipts before they multiply
- Monthly: Check your digital storage is actually storing things
- Quarterly: Verify subscription payment records
- Yearly: Review everything while you still remember what it’s for
Tax Record Keeping in 2025: New Tools, Same Rules
The Australian tax system keeps getting smarter. Banks and financial institutions now share data directly with the ATO. But that doesn’t mean you can throw away your record-keeping habits along with those old receipts you found squished in the glovebox of your car.
Some recent changes worth noting:
E-invoicing Requirements Are Expanding
This isn’t just for big businesses anymore. More transactions will need to be processed electronically, which, frankly, makes sense. It streamlines things and reduces the chances of those pesky data entry errors. Plus, fewer paper cuts.
Digital Receipts Now Have Standardised Formats
No more squinting at crumpled thermal paper wondering if that’s a 3 or an 8. Standardised digital receipts are easier to store, organise, and, crucially, retrieve when the ATO comes knocking (metaphorically, of course). This is good news for our filing cabinets, which, let’s be fair, were starting to look a bit like a hoarder’s fever dream.
Data Security Is More Important Than Ever
With more data being shared digitally, the ATO is cracking down on data security. This means we need to be extra vigilant about protecting our financial information. Think strong passwords, secure cloud storage, and being wary of dodgy emails.
We reckon these changes will make record-keeping smoother. But remember, the core principles stay the same. Keep accurate records, store them securely, and understand what you can claim. Because while the tools may change, the tax office’s interest in proper documentation never will.
How Long Do You Need To Keep Tax Records?
Did you know that ATO can ask to see your receipts up to five years from the date of your lodgement? That’s a long time. It’s also a long time to remember what expense you did incur, which is why it pays to be organised.
For depreciating assets, you must keep records for as long as you depreciate the asset and claim deductions. You then have to keep your receipt for a further five years from the date of your last claim.
The Fundamentals of Good Tax Record-Keeping
That’s basically it – in a nutshell or course. There’s much more to it than that, but that’s why we always recommend outsourcing the hard parts to a tax accountant. Everyone’s situation is unique, but one thing is true for all Australians: a tax accountant can zap all the stress out of record-keeping and filing your taxes.
ITP’s tax agents are here year-round for our clients. So if any stressful questions do pop up, they can be resolved in one quick phone call.
Ready to make tax season smoother? Call 1800 367 487 or book an appointment online to connect with a local tax agent who’ll help you claim everything you’re entitled to.