Checklist of employment-related claims

This checklist is a guide only. The results may vary dependent on individual situations.

Income Tax Assessment Act 1997 (ITAA97) categorises income tax deductions into general deductions and specific deductions.

Largely, in accordance with s8-1 of the ITAA97, a tax deduction may only be claimed if:
• the expenditure has been sustained in producing the person’s assessable income, or incurred in carrying on a business for the purpose of producing assessable income, and
• it is not personal (domestic) or capital expenditure, and
• it is not capital in nature, and
• a explicit provision of the ITAA97 or Income Tax Assessment Act 1936 (ITAA36) does not exclude the expense from deduction, and
• the individual holds the relevant written proof where compulsory.
NOTE: How much of the expense proportion is permitted as an income tax deduction will be contingent on the extent the expenses are sustained in producing the person’s assessable income.
Note: All section and division references are to the Income Tax Assessment Act 1997 (ITAA97) unless otherwise stated.

Tax deductible?

Admission fees: For legal & other professionals. Excluded as capital cost. No
Airport lounge membership: Tax deductions to the degree used for work-related purposes. Yes
Annual practising license: Relates to professionals and other freelancers who must pay an
annual charge to practice in their chosen field. Yes
Bank Fees: Tax deductions are permitted if account earns interest. Not private transaction bank fees. Yes
Bribes to government officers and foreign government officers: Also excluded from the cost base
and reduced cost base of CGT assets and cost of depreciating assets. No
Briefcase: If used for work and/or business purposes the price is fully tax deductible. Yes
Calculators and electronic organisers: If used for work and/or business purposes the cost is fully tax deductible. Yes
Child care fees No
Cleaning: Of protective apparel and uniforms. Yes
Clothing, uniforms and footwear
• Compulsory uniform: Uniform should be distinctive and specific to an organisation (eg. corporate uniform). Yes
• Non-compulsory uniform: If on a record kept by the Department of Industry, Science and Tourism. Yes
• Occupational specific: The outfit identifies a particular trade, vocation or profession eg. chefs and nurses. Yes
• Protective: Must be used to protect the individual or their conventional clothing. May include sunscreen. Yes
Club membership dues No
Coaching classes: Permitted to performing artists to sustain existing skills or obtain related skills. Yes
Computers and software: Software is tax deductible. Yes
Conferences, seminars and training courses: Permitted if intended to maintain or increase employee’s knowledge, skills or ability. Yes
Conventional clothing No
Depreciation: Tools, equipment, and plant used for work purposes. Yes
Donations: See ‘Gifts’.
Driver’s licence: Fee of obtaining and renewing. No
Dry-cleaning: Permitted if the cost of the clothing is also deductible. See also ‘Laundry’. Yes
Election expenses of contenders: No limit for Federal, State and Territory.
Limit of $1,000 for local government. Yes
Employment agreements: Existing employer (see TR 2000/5).
Not available for new business/employer. Yes
Entertainment expenses No
Fines: Imposed by court, or under law of Commonwealth,
State, Territory or foreign country (s26-5). No
First Aid course: If it is directly related to occupation or business activities. Yes
Gaming licence: Hospitality and gaming industry. Yes
Gifts of $2 or more: If made to approved ‘deductible gift recipient’ body or fund.
See ato.gov.au for a full list. Gifts to clients are tax deductible if employees can demonstrate a direct
connection with producing assessable income. Yes
Glasses and contact lenses (prescription): These would qualify as medical expenses
Deductible if ‘protective clothing’. No
Glasses and sunglasses: Protective only. Yes
Personal grooming No
HELP/HECS repayments No
Home office expenses: Utility expenses (for example, heat, light, power and depreciation on depreciating assets). Yes
Occupancy expenses: For example, rental, insurance, rates and land tax. Deductible only to the degree that home or study is used for income producing purposes. Yes
Income continuance insurance: Permitted only if the proceeds are assessable. Yes
Insurance – sickness or accident: When benefits would be assessable income. Yes
Bank Interest: Allowed if money borrowed for work-related purposes or to finance income producing assets.
ATO Interest (eg. general interest charge) is tax deductible. Yes
Fines and administrative penalties are not tax deductible. Interest on capital protected loans is deductible except for non-deductible capital protection component. Yes
Internet and computer equipment: Expenses permitted to the degree incurred in deriving
person’s work-related income, carrying on a business or earning investment income (eg. share
investing). Yes
Laundry and maintenance: Permitted if the expense of clothing is permissible (see ‘Work related clothing’).
Reasonable claims of laundry costs up to $150 do not need to be substantiated. Yes
Legal expenses: Renewal of current employment contract. Yes
Meals
• Eaten throughout normal working day. No
• Meals eaten when travelling overnight for work-related purpose. Yes
• Meals when travelling (not overnight). No
• Overtime meals: If allowance received under award. Yes
Medical examination: Only if from the recommendation of a work-related business licence. Yes
Motor vehicle expenses: See ‘Travel expenses’.
Newspapers: Claims may be permissible in limited cases if the newspaper is directly linked to
income-producing activities. No
Overtime meal expenses: Only if award overtime meal allowance received. Yes
Parking fees and tolls: Includes bridge and road tolls (but not fines) paid while travelling for work associated purposes. Yes
Photographs (performing arts – with income producing purpose)
• Price of maintaining portfolio. Yes
• Price of preparing portfolio. No
Practising license: Applies to professional workers. Yes
Prepaid expenses for tax shelter arrangements: They must be spread over the duration in which
the services are provided. Yes
Prepaid expenses: Non-business individuals and SBE taxpayers claim is fully deductible if services
are to be performed in period not exceeding 12 months.
All other taxpayers must apportion claim over the period of service. Yes
Professional association dues Yes
Professional library (books, CDs, videos etc) Established library (depreciation allowed) Yes
• New books: Yes
Protective gear Includes harnesses, safety glasses, sunglasses, breathing masks, helmets, boots.
Deductions for sunscreens, sunglasses and wet weather gear permitted if used to provide protection from natural environment. Yes
Removal and relocation costs If paid by the employer, may be exempt from FBT, but tax deductible. No
Repairs (income producing property/or work-related equipment). Yes
Self-education Expenses: Claims for fees, books, travel (see below) and equipment etc. only allowed if there is a direct link between the course and the person’s income producing activities.
No claim for the first $250 if course is undertaken at school or other educational institution and the
course confers a qualification. However, that first $250 can be offset against private expenses, eg. travel, child minding fees, etc.  Yes
Seminars Including conference and training courses if sufficiently connected to work activities. Yes
Social functions No
Stationery (notebooks, diaries, log books etc.) Yes
Subscriptions & Publications If a direct link between publication and income produced by taxpayer. Yes
• Professional associations: Yes
• Sports clubs. No
Sun protection: Claims for sunglasses, hard hats and sunscreen permitted for taxpayers who work outside. Yes
Supreme Court library charges Applies to lawyers and solicitors if paid on annual basis. Yes
Tax agent fees (deduction can be claimed in the income year the expense is incurred).
• Travel and accommodation expenditures if for travel to a tax agent or any other recognised tax adviser to obtain tax advice, have returns prepared, be present at audit or object against an assessment. Yes
• Expense of other incidentals if incurred in having a tax return prepared, lodging an objection or appeal or defending an audit. Yes
Technical and professional periodicals Yes
Telephones and other communications equipment (Including mobile phone, pagers and
beepers.) Cost of telephone calls (related to work purposes). Yes
• Installation or connection fee. No
• Rental charges (if ‘on call’ or required to use on regular basis). Yes
• Private telephone number. No
Tools (work related only) Yes
Trauma insurance If benefits capital in nature. No
Travel expenditures such as public transport, motor vehicles and motor cycles, fares, accommodation, meals and incidentals:
• Travel to home and work. No
• Where worker has no usual place of employment (eg. travelling salesperson). Yes
• If ‘on call’ basis. No
• If essentially working before leaving home (eg. medic giving directives over phone from home). Yes
• Transport bulky tools (eg. builder with bulky tools). Yes
• Travel from home (which is a place of business) to usual place of work. No
• Travel from home to alternate work place (for work-related purposes) and return to normal work
place (or directly home). Yes
• Travel between normal work place and alternate place of work (or place of business) and
return (or directly home). Yes
• Travel between two employment places. Yes
• Travel in course of employment: Yes
• Travel with a relative (may be permissible if relative is also carrying out work-related duties). No
Union and professional association fees Yes
Vaccinations No
Union levees No
Watch: Except job specific such as a nurse’s job watch. No

Substantiation Rules

Claims for work-related expenses, car expenses, and travelling expenses incurred by an individual must be substantiated if the claims are to be allowed (Division 900 of ITAA97). As well as the requirement to incur
deductible expenditure, the ‘Substantiation’ rules impose a strict evidentiary requirement that must be
satisfied if claims are to be allowed.
Under the primary test in s8-1, the taxpayer must be able to show that they incurred the relevant expenses and
that those expenses were incurred in earning their assessable income, or were incurred in carrying on a business.
Once the primary test has been satisfied (i.e. the expense has been incurred and is allowable) the ‘substantiation rules’ impose a mandatory level of record keeping. If those records are not kept, the claim may be disallowed unless the relief rules apply (see below).

Records

Substantiation records must be retained for five years from the later of the due date for lodging the relevant return
or when it is lodged. As a general rule, employees are not required to substantiate:
• employment related expenses where the total claim is less than $300
• laundry expenses, up to a maximum of $150. Note: This amount forms part of the $300 limit
• sunscreen, sunglasses and hats if their job requires them to work in the sun
• reasonable travel claims where a travel allowance has been received
• overtime meal claims up to $27.70 in 2013-14 (TD 2013/16) for allowances paid under an Industrial Award
note that 2014-15 claim amounts are yet to be released at the time of writing, or
• some car expenses
Even though the strict substantiation rules do not need to be satisfied for the above expenses,
employees must be able to show that those expenses were incurred and how they calculated their claims.

WARNING! Self-employed persons, partners and individual trustees must have written evidence to prove
all of their claims.

The five-year period can be further extended automatically if any of the following are unresolved when the five
years ends:
• an objection
• a review or appeal arising from an objection, or
• a request for amendment.
The extended period lasts until the dispute is resolved. The Tax Office can require you to produce your records.
The Commissioner must give you 28 days’ notice to comply, but you may be allowed additional time.
If you receive such a notice you must produce in English:
• the required written records (or documents), and
• a summary containing this information:
— a cross-reference to the written evidence
— a summary of the particulars of the written evidence, and
— the amount of the expense in Australian currency (if the expense is in a foreign currency).
The claims will be disallowed if you fail to produce these records.

Call Tax Accountants Cranbourne at 1300 300 106 for further information.