Tax Deductions Tips For Employees

You don’t have to be a big income earner or run your own business to claim tax deductions. There are always expenses to be found that you’ve incurred throughout the year that can be claimed – many of which are little known such as legal expenses.

Many employees are under the misconception that they can’t get a tax return because they don’t think they have any expenses. After all, their employer has taken care of their Pay-As-You-Go (PAYG) and superannuation. They don’t really have to worry about anything and as a result they slap together a quick and ‘free’ tax return which really doesn’t leverage their refund. After all, the Australian Taxation Office (ATO), isn’t set up to get you the maximum tax refund.

The truth is, there are many common tax deductions that are often overlooked. This difference could mean hundreds of dollars are given away to the ATO every year that don’t need to be. Have you overlooked any tax deductions this year?

Pro Tax Tip: The tax deductions you can make will depend on the specific duty you perform for your employment. A tax deductible claim for one person may not be the same for another even in similar jobs.

Annual Practising Certificates, Professional Memberships And Accreditations

The cost of renewing licenses, professional memberships and accreditations are tax deductible if you need to them to work in your field. Licenses include trade licenses for plumbers, electricians or carpenters, crane hoist and scaffolding licenses for construction workers, Responsible Service of Alcohol and gaming licenses for hospitality workers and registrations for teachers, doctors and nurses.

Pro Tax Tip: If you need accreditation before your employment (as a prerequisite to be employed), the expense is not tax deductible because you had to incur the expenses in order to seek employment. You were not employed at the time. If you need to renew licenses while employed to keep your job, that is a tax deductible expense.


Bags And Cases For Work Items

Most employees require a bag to take their personal belongings with them to their place of employment, such as briefcases, laptop bags, luggage and bags to carry client briefs. If you use a bag to carry items for work, the expense is a tax deduction, however if the bag is personal in nature, the expense is deemed to be private. Private bags include gym bags for personal clothing, food or used to carry a personal phone or tablet.

If your work-related bag cost you $300 or less and is used for work only, you’ll be able to claim a tax deduction for the entire cost in the year in which you purchased it. If the bag cost over $300, you’ll be able to depreciate the cost over a number of years.

Pro Tax Tip: If the work item you purchased is used for both work and personal purposes, you’ll need to apportion the cost and claim only the work-related portion. If you use the item for private use more than 50% of the time, you won’t be able to claim the expense at all.

Bank Fees

Every little expense does count. Did you know that although account keeping fees or overdraft fees you incur are considered to be a private expense, you can claim a deduction on any transfer fee you incur for purchasing a work-related item? This includes international transaction fees and bank fees incurred to make the purchase.

Books, Periodicals And Digital Information Services

Do you purchase online subscriptions, online resources, library subscriptions, academic journals and database subscriptions for your employment? Keep those receipts and keep track of your expenses.

Pro Tax Tip: You’ll need to apportion work versus personal use expenses.

Clothing And Laundry Expenses

Claiming clothing costs is sometimes shrouded in mystery. The ATO clearly defines clothing as either personal or work-related. Most clothing, even if your employer asks you to wear certain types of clothing, can’t be claimed. Ordinary clothing includes black pants, white shirts, jeans, drill shorts, socks, business attire, suits and normal everyday footwear.

The types of clothing that can be claimed must be worn for safety or to prevent personal injury, or be distinctly related to a particular job. These types of clothing include high-vis vests, steel-capped boots, non-slip shoes, compulsory uniforms, occupation-specific clothing and protective clothing.

Protective clothing must have features or special functions that will protect you. These items of clothing include heavy duty occupational wet weather gear, protective boots, boiler suits, fire-resistant clothing, heavy-duty gloves.

Pro Tax Tip: If you claim protective clothing, you’ll need to make sure there is a link to your current employment.

You can claim expenses for a compulsory uniform. Such uniforms should be distinctive to a particular job. For this type of expense, you must be expressly required to wear it by a workplace agreement or policy which is an enforced requirement and must be sufficiently different to ordinary clothing. This includes a polo top with a logo sewn onto it.

If you wear a non-compulsory uniform that is approved and entered on the Register of Approved Occupational Clothing and wear it for work, you can claim those clothing expenses.

Pro Tax Tip: Socks, shoes and stockings are considered private expenses even when worn under a uniform or protective clothing.

Occupation-specific clothing is also claimable. This includes a cleric’s ceremonial clothing, judges robes, or a chef’s chequered pants. The clothing must be clearly identified and connected to a particular professional vocation, occupation or calling.

You can claim the cost of laundering, cleaning and repairing your work-related clothing. This includes dry cleaning costs, as well as self-laundering. You can claim $1 per load if your load is only work clothing, or 50 cents per load if you wash a mix of work and private clothing.

The above tax deductions are not exhaustive. Some may not apply to you. There are other types of deductions not outlined in this report. A tax accountant will help you find all of your tax deductions. Already lodged your tax return? No problem, an ITP tax accountant can amend your tax return and alter your refund even if you have already lodged your 2020-21 tax return. The ATO won’t charge you for this. For the price of your tax agent’s normal time, you don’t have to miss out on receiving your hard earned money back. Phone 1800 367 487 and chat with a friendly ITP Professional or book online today.