FIFO (Fly-In-Fly-Out) is a popular choice of employment for people working in certain industries, such as those in the mining, construction, oil and gas industries. Under these arrangements, workers fly in for their shifts, which are generally concentrated working hours and day, and then fly back out to their normal residence after a set amount of days.
While on site, workers receive accommodation, meals, recreation and cleaning services by their employer, however the cost of flights to and from employment are generally paid for by the employee. Many would think that such expenses are for work and can be claimed as a tax deduction. After all, you’re travelling to get to your job, but in the eyes of the Australian Taxation Office (ATO) you might be surprised at what you can and can’t claim as a work expense. Let’s break it down.
The main part of travel for FIFO work is getting to the job site. This might entail flights, paid transport or using your own car. It might be a logical step to think that you’ve incurred these costs for your job and that these expenses are claimable as a tax deduction – but you’d be wrong.
The ATO regards getting to your job site as a private expense, no matter what the cost may be. Private travel to work includes travelling by car to an office, or taking a plane to another state, getting to the airport or any other means you’ve used to get to work.
You can claim travel as a tax deduction if you’ve incurred travel expenses while temporarily travelling from your work site to another location for work purposes, training, a conference or seminar. You can claim vehicle expenses if you’ve used your private transportation to get from one employer to your second employer job on the same say, or if you drive between two different work sites for the same employer on the same day.
If you transport bulky items as a part of your job and there’s no other way to transport your equipment other than use your private vehicle, you can claim your trip to and from your workplace.
Pro Tax Tip: You cannot claim any reimbursed expenses by your employer either before or after these costs were incurred on your tax return. You should check these arrangements with your employer prior to employment so you know what you might be out of pocket for.
Travelling over distances will probably take a few hours and in that time you’ll need to eat and drink. Again, there are rules for when you can and can’t claim meals. If you’re flying in or out to your workplace, just like travelling expenses, the meals are considered to be a private expense.
If you receive a meal allowance based on the Industrial Award you can claim the cost of meals when working overtime. You’ll need to keep claims under $31.90 per meal per day under the ATO’s allowable limit.
However, if you’re travelling overnight for your work away from your home and this is not a part of your FIFO arrangement, you can claim meal expenses.
Uniforms and Protective Clothing
You might need to kit yourself out for your job, or wear a distinct uniform for your work. Uniforms must have a company logo or be distinctive to the company you work for so you can be identified as a worker from that business.
Pro Tax Tip: Undergarments, socks or underwear, or anything you might wear under your uniform can’t be claimed.
Work clothing that is worn to protect yourself and keep you safe can be claimed. These items include steel-capped boots, high-vis vests, sunglasses, hard hats, gloves, masks and safety glasses. Sunscreen or sun protection items are valid tax deductions if working outdoors.
You can claim the cost of repairing, maintaining and laundering of your uniforms. Claims under $150 won’t need written documentation, but you’ll need to show a log book or diary of how you worked out your costs. The ATO will let you claim a cost of $1 per load if the load is for only washing your uniform, or 50 cents if the load is combined work and personal clothing. Dry cleaning and clothing repairs will require receipts to back your claims.
Pro Tax Tip: If your employer provides a uniform, safety items or launders your uniform, you can’t claim these costs.
Tools & Equipment
Work tools and equipment you need to use to generate an income can be claimed. If your costs fall under $300, you’ll be able to claim all of your costs in the year you incurred them. If your costs total more than $300, you’ll need to depreciate the costs over the tool’s effective life. Rates and lifetime are specified by the ATO.
Pro Tax Tip: If your tools and equipment have both a work and personal use, you’ll need to apportion the use and only claim the work portion.
Depending on your job, examples of the tools you can claim as a tax deduction include power tools, mobile phones, GPS equipment, laptops, satchels and bags to carry equipment, safety gear and first aid kits.
Phone and Internet
If you’ve had to use your private phone for work purposes while on the job, you’ll be able to claim a percentage of your phone calls, data and internet costs. If you need to stay in contact with your employer during off, period, you can also claim these costs.
Pro Tax Tip: You may be eligible to claim home office expenses if a part of your work requires you to work from home.
Other Tax Deductions
There are a few other tax deductions that can be made if you’re a FIFO worker. These expenses include self education, renewal or obtaining licenses, permits and certificates to operate equipment, medical examinations including drug and alcohol tests, and first aid courses and equipment.
Pro Tax Tip: You can’t claim your personal driver’s license even if that is a requirement of your work. Any testing prior to employment also can’t be claimed, even if that is a requirement for your job.
Other general expenses include the cost of seminars and conferences, including travel, meal and accommodation costs if they are incurred. Purchasing reference books and industry specific journals, tax agent fees, donation to registered charities, union fees and costs related to income insurance can be claimed.
Zone Tax Offset
You may be entitled to a tax offset if you live in a remote, isolated area of Australia for at least part of the tax year. This tax offset is designed to help people cope with the high costs of living in remote areas. Several factors are taken into account, such as marital status, dependants, carer duties, the location of your residence and how long you live there for.
There are some eligibility rules when it comes to receiving the Zone Tax Offset. A tax payer must reside in a specific remote area for more than 183 days in an income year to be eligible to receive the tax offset.
If your usual place of residence was in a zone, but you stayed there under 183 days, you may still be able to claim the tax offset. You must have been unable to claim the tax offset in the first year, or the total days you lived in the first year and the current income ear is more than 183 days, or the period you lived in a zone includes the first day of the income year.
Pro Tax Tip: Unfortunately FIFO workers are excluded from receiving this tax offset if their normal residence isn’t within the zone. Zones do not include offshore oil or gas rigs.
Remote areas are classified as either Zone A or Zone B. Find your zone here.
Pro Tax Tip: A tax offset will mean you pay less tax on your taxable income. The tax offset will come directly off your tax payable rather than being a tax deduction which simply reduces the taxable income on which you pay tax.
Claiming tax deductions for FIFO workers can be a mine field. There are a wealth of tax deductions that can be claimed however having the help of an experience tax agent can help claim all eligible deductions. ITP Accounting Professionals have helped countless FIFO workers lodge their income tax return every year. Call 1800 367 487 and chat with a friendly professional today.