Income and deductions

https://www.ato.gov.au/Individuals/Income-and-deductions/Last modified: 15 Jun 2020QC 31943

Income tax is paid on money you receive, such as salary and wages, Centrelinkpayments, investment income from rent, interest and dividends, and profits fromselling shares or property.

You may be able to reduce the amount of tax you pay by claiming certaindeductions that are directly related to earning your income.

Your tax may be further reduced if you are eligible for certain tax offsets orgovernment rebates.

Find out about:

Income you must declareDeductions you can claimOccupation and industry specific guidesOffsets and rebatesRecords you need to keepIncome tests

See also:

Income and deductions for businessWhat is income?

Income you must declare

https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Last modified: 15 Jun 2020QC 31915

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You must declare the income you have received for each financial year on yourannual tax return. Most income is pre-filled from information we receive fromemployers and financial institutions. However, there may be some information youwill need to enter manually.

Regardless of whether your income is pre-filled or manually entered, you need tomake sure it is accurate and complete.

The types of income you need to declare are:

Employment incomeSuper pensions and annuitiesGovernment payments and allowancesInvestment income (including interest, dividends, rent and capital gains tax)Business, partnership and trust incomeForeign incomeOther income – including compensation and insurance payments, discountedshares under employee share schemes, and prizes and awards.

You also need to declare any money or earnings you receive from:

CrowdfundingThe sharing economy and taxPersonal services income relating to labour-hire payments.

See also:

Amounts not included as incomeRental income you must declare

Employment income

https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Employment-income/Last modified: 06 Oct 2020QC 31914

Employment income is money you receive from working. You may be paid cash-in-hand, directly into your bank account, or in another way.

You need to make sure you include all your employment income on your tax returnregardless of whether you have one job or more, are full time, part-time or casual.

This page provides information on the types of employment income you need todeclare.

On this page:

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Salary and wagesAllowances and other employment incomeLump sum paymentsReportable fringe benefits and super contributions

Salary and wagesThe most common type of employment income is salary and wages. Salary andwage payments include:

your normal weekly, fortnightly or monthly payJobKeeper and stand-down payments your employer paid due to COVID-19commissionsbonuses – including retention bonuses to remain with your employermoney for part-time or casual workparental leave paydad-and-partner paypayments from

an income protection policya sickness or accident insurance policya workers compensation scheme.

pay and allowances for continuous full-time service in the Australian Naval,Army or Air Force Reserveforeign employment income – if you are an employee of an AustralianGovernment agency (and not a member of a disciplined force), include incomeearned from delivering Australian official development assistance.

If you received a COVID-19 related payment from your employer and are unsure ifyou need to declare this income on your tax return, see Tax on employment incomefor further information.

See also:

Exempt foreign employment incomeAustralian Defence Forces deployed overseasAustralia - United States Joint Space and Defence Projects

Allowances and other employment incomeYou may receive other payments in connection with your employment such as:

allowances – separately identified payments made to you by your employerincluding

car, travel, clothing and laundryworking conditions – for example, danger, height, dirt or hard lyingqualifications or special duties – for example, first aid certificate or safetyofficer

pandemic allowances your employer paid due to COVID-19

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tips, gratuities and payments for your servicesconsultation fees and payments for voluntary servicesjury attendance fees.

If you received a travel allowance or overtime meal allowance paid under anindustrial law, award or agreement, you don't have to include it on your tax return.The payment must meet all of the following conditions:

It was not shown on your income statement or payment summary.It doesn't exceed the Commissioner of Taxation's reasonable allowanceamount.You spent the whole amount on deductible expenses.

Lump sum paymentsA lump sum payment is a one-time payment that is taxed and reported differently toyour salary and wage income. Lump sum payments are assessable in the year youreceive them. You must include the lump sum amount in your tax return in thefinancial year you receive the payment.

You may receive a lump sum payment:

when you leave a job (such as, an employment termination payment (ETP),genuine redundancy or early retirement scheme payment that exceeds the tax-free limit)for unused annual leave, long service leave or special leave you may havebeen entitled to when you leave a jobin arrears (known as back pay or lump sum payments in arrears) for moneyowed to you from an earlier income year.

If you receive a lump sum payment in arrears, you don't need to amend prior yeartax returns. Tax offsets are in place for lump sum payments in arrears whichprevents you paying too much tax in the year you receive the payment.

See also:

Employment termination paymentsRedundancy paymentsLump sum payment in arrears tax offsets

Reportable fringe benefits and super contributionsOther employment-related income includes:

reportable fringe benefits given to you by your employer (such as, a work carfor private purposes, a cheap loan or free private health insurance)reportable super contributions made on your behalf by your employer.

You don't have to pay tax on these items but they are used to work out whether youare eligible to receive a range of government benefits and tax offsets.

See also:

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Reportable fringe benefits – facts for employeesGuide for employees and self-employed – reportable super contributionsIncome tests

Super pensions and annuities

https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Super-pensions-and-annuities/Last modified: 15 Jun 2020QC 31969

You must declare income you received from pensions paid to you as asuperannuation income stream and annuities.

On this page:

PensionsAnnuities

PensionsA pension is a series of regular payments made as a super income stream. Thisdoes not include government payments such as the age pension.

These payments may be provided:

by an Australian super fund, life assurance company or retirement savingsaccount (RSA) providerby a fund established for the benefit of Commonwealth, state or territoryemployees and their dependants (such as the Commonwealth SuperannuationScheme and the Public Sector Superannuation Scheme)as a result of another person's death (death benefit income stream).

What you need to declare

Your super income stream payments will have different items. Depending on yourage and the type of income stream you receive, you may need to declare differentitems in your tax return. This includes:

a taxed element – the part of your benefit on which tax has already been paidin the fundan untaxed element – the part of your benefit that is still taxable because taxhas not been paid in the funda tax-free component – the part of your benefit that is tax-free.

See also:

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How tax applies to your superTransfer balance cap – capped defined benefit income streams

AnnuitiesAn annuity is usually a series of regular payments made to you by a life insurancecompany in return for a lump sum payment.

Most annuities have both taxable and tax-free components.

Your assessable income will include your taxable annuity payments when received.This includes annuities received by you as a reversionary beneficiary.

See also:

Income tests

Government payments and allowances

https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Government-payments-and-allowances/Last modified: 15 Jun 2020QC 62675

There are certain Australian Government payments, pensions and allowances thatmust be declared on your tax return. These include:

the age pensioncarer paymentAustudyNewstartJobSeeker paymentYouth AllowanceDefence Force income support allowance (DFISA) where the pension,payment or allowance to which it relates is taxableVeteran paymentinvalidity service pension, if you have reached age-pension agedisability support pension, if you have reached age-pension ageincome support supplementsickness allowanceparenting paymentdisaster recovery allowance.

In some circumstances the disaster recover allowance is not taxable and is notdeclared on your tax return.

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For a full list of Australian Government payments, pensions and allowances thatmust be declared on your tax return, see:

Australian Government allowances and paymentsAustralian Government pensions and allowancesTax-free government pensions or benefits.

Tax-free government pensions or benefitsSome government payments are tax-free but you still need to declare them in yourtax return. We use this information to work out if you are eligible for any governmentbenefits or concessions and tax offsets.

Tax-free government pensions or benefits include:

carer payment under Part 2.5 of the Social Security Act 1991 (this is not thecarer allowance under Part 2.19 of the Social Security Act 1991)disability support pension paid by Centrelink, if you are under age-pension ageinvalidity service pension, if the veteran is under age-pension agepartner service pension where either

the partner and the veteran are under the age-pension age and theveteran is receiving an invalidity service pensionthe partner is under age-pension age, the veteran has died and wasreceiving an invalidity service pension at the time of death.

For more information on the exempt payments you need to include in your taxreturn, see Tax-free government pensions or benefits in Special circumstances andglossary.

See also:

Income testsAmounts you do not pay tax on

Investment income

https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Investment-income/Last modified: 15 Jun 2020QC 31937

Generally, you need to declare investment income regardless of whether it's paideither:

directly to you

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through a distribution for a partnership (such as a share club) or trust.

Investment income you must declare:

InterestDividendsRentManaged investment fundsCapital gains.

InterestIf you're an Australian resident and you receive interest, you must declare it asincome. Interest income includes:

interest earned from financial institution accounts and term depositsinterest earned from any other source including penalty interest received on aninvestmentinterest earned from children's savings accounts, if you

opened or operated an account for a child and the funds in the accountbelonged to youspent or used the funds in the account

interest we paid or credited to youlife insurance bonuses (you may be entitled to a tax offset equal to 30% of anybonus amounts included in your income)interest from foreign sources (you may be entitled to a tax offset for any taxpaid on this income).

See also:

Children's savings accountsInternational tax for individuals

DividendsA dividend can be paid to you as money or other property, including shares. If youreceive bonus shares instead of money, the company issuing the shares shouldgive you a statement showing if the bonus shares are a dividend.

Dividend income is usually paid from a:

listed investment companypublic trading trustcorporate unit trustcorporate limited partnership (in the form of a distribution).

Some dividends have imputation or franking credits attached that you must alsodeclare on your tax return. If a company pays or credits you with dividends thathave been franked, you'll generally be entitled to a franking tax offset.

See also:

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Children's share investmentsRefunding excess franking credits – individuals

RentYou must declare the full amount of any rent and rent-related payments that youreceive, or become entitled to, on your tax return.

Such payments include:

rental bond money if you become entitled to keep it – for example, becausea tenant defaulted on the rentdamage to your rental property requiring repairs

an insurance payout to compensate you for lost renta letting or booking feea reimbursement or recoupment for deductible expenditure, such as an amountfrom a tenant to cover the cost of repairing damage to your rental property(where you would include the whole amount you receive from the tenant inyour income and claim a deduction for the cost of the repairs)rent you receive from renting out a room or a whole house or unit for a shorttime basis, through a website or app.

If you receive goods and services in lieu of rent, you must work out and declare themonetary value.

See also:

Rental income you must declare

Co-ownership

Only include your share of rent and expenses on your tax return if you:

own a rental property jointly or in common with another personhave an interest in a partnership that carries on a rental property business.

Managed investment trustsYou must show any income or credits you receive from any trust investment producton your tax return. This includes income or credits from a:

cash management trustmoney market trustmortgage trustunit trustmanaged fund, such as a property trust, share trust, equity trust, growth trust,imputation trust or balanced trust.

Capital gainsGenerally, your capital gain is the difference between your asset's cost base (what

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you paid for it) and your capital proceeds (what you received for it).

You can also make a capital gain if a managed fund or other unit trust distributes acapital gain to you.

A capital gain is treated as part of your total income and not taxed separately.

See also:

Capital gains tax

Business, partnership and trust income

https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Business,-partnership-and-trust-income/Last modified: 15 Jun 2020QC 31934

The net income you receive from carrying on a business is assessable income andyou need to declare it on your tax return.

Income includes cash and other forms of payment for goods or services you supply.

On this page:

Income as an individual running a businessIncome from a partnershipIncome from a trust

Income as an individual running a businessIf you're an individual running a business, you must declare the income you earnfrom your business on your own tax return, using a separate business schedule.You don't need to lodge a separate tax return for your business.

If you’re an artist, blogger, creative or maker you may need to work out if you have ahobby or business. You can use the Hobby or business tool if you are gettingmoney or intend to get money from creating things, such as:

jewellerypaintingsbaked goodsblogsvideos.

Income from a partnership

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While a partnership business doesn't pay tax on its income, you must lodge aPartnership tax return declaring income earned and deductible expenses. It will alsoshow the distribution of the net income or loss between the partners.

Also, each partner must declare their individual share of the partnership's netincome or loss in their individual tax return. This is whether or not they actuallyreceived the income.

For capital gains tax (CGT) purposes, each partner:

owns a proportion of each CGT assetcalculates a capital gain or capital loss on their share of each asset.

The individual partners make a capital gain or capital loss from a CGT event, notthe partnership itself.

Income from a trustLike a partnership, a trust is not a separate taxable entity, but the trustee mustlodge a Trust tax return for the trust.

Generally, the beneficiaries of the trust declare the amount of their entitlement tothe trust's income in their own tax return. Then they pay tax on it, even if they didn'tactually receive the income.

An exception to this is, you don't need to declare a trust distribution if family trustdistribution tax has already been paid.

See also:

Yearly reports and returns (for business)

Foreign income

https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Foreign-income/Last modified: 15 Jun 2020QC 31917

If you're an Australian resident for tax purposes, you are taxed on your worldwideincome. You must declare any foreign income in your income tax return. You mayreceive foreign income from:

pensions and annuitiesbusiness activitiesemployment and personal services

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assets and investmentscapital gains on overseas assets.

On this page:

Income from employment and personal servicesIncome from assets and investmentsCapital gains on overseas assetsConsiderations for foreign income

Your foreign income could be subject to double taxation if tax is withheld in thesource country. To overcome this, Australia has a system of credits and exemptionsand has signed tax treaties with more than 40 countries. This includes all our majortrade and investment partners.

Since September 2018, we receive and exchange financial account information withparticipating foreign tax authorities. This ensures Australian residents with financialaccounts in other countries are complying with Australian tax law. You could receivepenalties and interest charges if you do not declare your foreign income.

If you're not an Australian resident for tax purposes, you are only taxed on yourAustralian-sourced income. You generally don't need to declare income you receivefrom outside Australia in your Australian tax return.

If you have a Higher Education Loan Program (HELP), Trade Support Loan (TSL)or VET Student Loan (VSL) debt and you're a non-resident for tax purposes you'llneed to either:

declare your worldwide incomelodge a non-lodgment advice.

You can do this using ATO online services via myGov, or through a registeredAustralian tax agent.

Your worldwide income may include income that we've asked you to ignore fordetermining your income tax obligations.

For a summary on income derived from overseas, download Foreign income (PDF642KB) .

Income from employment and personal servicesIf you have worked overseas or provided services to an organisation locatedoutside of Australia, you will need to declare all relevant income as if it were earnedin Australia. This may include:

salary and wagesdirectors feesconsultancy feesbusiness incomeany other remuneration.

For information on some specific circumstances in which the foreign salary is

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exempt, see:

Exempt foreign employment incomeAustralian Defence Forces deployed overseasAustralia/United States Joint Space and Defence Projects.

Income from assets and investmentsIf you own assets or investments overseas, including offshore (overseas) bankaccounts, you will need to declare all relevant returns as if they were in Australia.This may include:

interest from bank deposits or bondsdividends from sharesroyalties from intellectual propertyrental income from real estatepensions, annuities and lump sums from managed fundsincome streams from super fundssome government pensions.

See also:

Investing overseas

Capital gains on overseas assetsIf you own an asset overseas, you may have to pay Australian tax when you sell theasset. You need to keep appropriate records.

If you acquired an overseas asset before you became an Australian resident, youare taken to have acquired the asset when you became an Australian resident.

Similarly, if you stop being an Australian resident while holding an overseas asset,you are deemed to have disposed of that asset when you stop being an Australianresident.

To accurately calculate the capital gain or loss, ensure you keep a record of thevalue of your asset at these times. This is a complex area of tax law and exemptionsmay apply.

See also:

Capital gains tax

Considerations for foreign incomeTax paid on income overseas

If you have already paid tax in the country that you have derived the income from,you may be able to claim a foreign income tax offset.

To be eligible for a foreign income tax offset, you must:

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have paid the tax on the income overseashave records to prove that the tax has been paid.

The offset amount you are entitled to will not always be the same amount of the taxpaid overseas. If you are claiming more than $1,000, you will first need to work outyour foreign income tax offset limit to determine your entitlement.

See also:

Guide to foreign income tax offset rules

Convert foreign income to Australian dollars

You must convert all foreign income, deductions and tax offsets to Australian dollarsin your tax return.

Depending on your circumstances and the type of income, you will need to useeither the:

specific prevailing exchange rateaverage exchange rate.

See also:

Converting foreign income to Australian dollars

Apportion foreign income

Unlike Australia, most countries do not have an income year ending on 30 June.You may need to report your foreign income and associated tax offsets in multipletax returns in Australia.

You will need to determine which tax years the income amounts align to andapportion them accordingly.

See also:

International tax for individualsOverseas obligationsCommon Reporting Standard for the automatic exchange of financialinformation

Other income

https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Other-income/Last modified: 15 Jun 2020

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QC 31968

Other income you need to declare on your tax return includes:

Compensation and insurance paymentsPrizes and awardsIncome from rendering personal servicesATO interest – remissions or recoupments.

Compensation and insurance paymentsYou must declare any amounts you received for lost salary or wages under anincome protection, sickness or accident insurance policy or workers compensationscheme.

If you've made a personal injury claim and you agree to a settlement, or a courtorder is made in your favour, you may receive compensation. You may receive thisin the form of a lump sum payment, structural (periodic) payments or both. Suchpayments are tax-free, provided certain conditions are met (see Structuredsettlements – examples).

You don't include payments made to you under an income protection, sickness oraccident insurance policy (where the premiums are deductible and the paymentsreplaced income) if:

tax has already been withheldyou've already included them on your tax return.

You must check whether tax has been withheld from payments made to you underan income protection, sickness or accident insurance policy that you own as apolicyholder. Tax is not withheld from payments made by an insurer directly to theowner of a relevant policy. If tax has not already been withheld, you will need todeclare these payments as 'other income' on your tax return.

Prizes and awardsYou must declare on your tax return the value of any prizes or benefits you receivefrom a prize draw or lottery run by your:

bankbuilding societycredit unioninvestment body.

Prizes may include cash, low-interest or interest-free loans, holidays or cars.

However, you don't need to declare prizes won in ordinary lotteries such as lottodraws and raffles.

If you've been a game show contestant, you only declare prizes you win if youregularly receive appearance fees or game-show winnings.

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If you sell or otherwise dispose of an asset that was a prize from a lottery you mustdeclare any capital gains you make on your tax return.

See also:

Capital gains tax

Income from rendering personal servicesYou must include amounts you receive for providing personal services outside ofemployment or in a non-business capacity in your assessable income. For example,working in the sharing economy may produce assessable income.

Other amounts may also be assessable income. For example, recurring or one-offgrants received from a government under a contract to provide your services over agiven period.

The income is assessable in the year you receive them.

See also:

The sharing economy and tax

ATO interest – remissions or recoupmentsYou must declare any amount of interest we impose that is remitted or recouped, ifyou have or can claim a deduction for that interest.

See also:

PS LA 2011/12 Remission of General Interest Charge ATO interest – calculation and reporting

Amounts not included as income

https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Amounts-not-included-as-income/Last modified: 15 Jun 2020QC 31936

You might have received amounts which aren't included as income in your taxreturn. However, those amounts may be used in other calculations and may need tobe included elsewhere in your tax return.

We classify the amounts you don’t include as income into three different categories:

Exempt income

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Non-assessable, non-exempt incomeOther amounts that are not taxable

Exempt incomeExempt income is income you don't pay tax on. However, certain exempt incomemay be taken into account when calculating the:

tax losses of earlier income years that you can deductadjusted taxable income of your dependants.

Exempt income includes:

certain Australian Government pensions, including the disability supportpension paid by Centrelink to a person who is under age-pension agecertain Australian Government allowances and payments, including the carerallowance and the child care subsidycertain overseas pay and allowances for Australian Defence Force andFederal Police personnelAustralian Government education payments, such as allowances for studentsunder 16 years oldsome scholarships, bursaries, grants and awardsa lump sum payment you received on surrender of an insurance policy whereyou are the original beneficial owner of the policy – generally these paymentsare not earned, expected, relied upon or occur regularly – examples include

mortgage protectionterminal illnessa permanent injury occurring at work.

See also:

Is my scholarship taxable?Working overseas as a member of the Australian Defence Forces or theAustralian Federal PoliceAustralian defence forces deployed overseasAmounts that you do not pay tax onAdjusted taxable income

Non-assessable, non-exempt incomeNon-assessable, non-exempt income is income you don't pay tax on. It doesn'taffect your tax losses.

Non-assessable, non-exempt income includes:

the tax-free component of an employment termination payment (ETP)genuine redundancy payments and early retirement scheme payments shownas 'Lump sum D' amounts on your income statementsuper co-contributionsa payment made on or after 1 January 2020 by a State or Territory for loss of

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income as a result of you performing volunteer work with a fire service of aState or Territory in the 2019-20 income yearDisaster Recovery Allowance paid directly as a result of the bushfirescommencing in Australia in the 2019-20 income yearEx-gratia disaster income support allowance for special category visa(subclass 444) holders paid directly as a result of the bushfires commencing inAustralia in the 2019-20 income yearpayments by a State or Territory relating to the 2019-20 bushfires under theDisaster Recovery Funding Arrangements 2018 .

See also:

Disaster assistance paymentsBushfires 2019-20

Other amounts that are not taxableGenerally, you don't have to declare:

rewards or gifts received on special occasions, such as cash birthday presentsand gifts from relatives given out of love (however, gifts may be taxable if youreceive them as part of a business-like activity or in relation to your income-earning activities as an employee or contractor)prizes you won in ordinary lotteries, such as lotto draws and rafflesprizes you won in game shows, unless you regularly receive appearance feesor game-show winningschild support and spouse maintenance payments you receive.

See also:

Income tests

Deductions you can claim

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Last modified: 15 Jun 2020QC 31967

When completing your tax return, you're entitled to claim deductions for someexpenses, most of which are directly related to earning your income.

On this page:

Work-related expensesOccupation and specific industry guides

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Managing your deductions

Work-related expensesTo claim a work-related deduction:

you must have spent the money yourself and weren't reimbursedit must directly relate to earning your incomeyou must have a record to prove it.

If the expense was for both work and private purposes, you can only claim adeduction for the work-related portion. Work expenses reimbursed to you by youremployer are not deductible.

We can seek information from your employer if we think you have claimed adeduction for an expense that you have already been reimbursed for.

You may be able to claim a deduction for expenses that directly relate to your work,including:

Vehicle and travel expensesClothing, laundry and dry-cleaning expensesHome office expenses – for employees working from home as a result ofCOVID-19, we have specific information available about home office expensesSelf-education expensesTools, equipment and other assetsOther work-related deductions

Employees (including casuals) can claim work-related expenses in the financial yearthey are incurred. This means if you start employment in June but don’t receiveincome until the next financial year, you can claim deductions for work-relatedexpenses incurred in June.

If you employ someone to assist you in your employment, generally you can't claima deduction for employing that person.

Other deductions

You may also be able to claim a deduction for:

ATO interest – calculating and reportingCost of managing tax affairsGifts and donationsInterest charged by the ATOInterest, dividend and other investment income deductionsPersonal super contributionsUndeducted purchase price of a foreign pension or annuity

Occupation and industry specific guidesTo find out more about income, allowances and deductions you can claim for work-related expenses in your industry or occupation, see Occupation and industry

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specific guides.

Watch:

This video shows how to get your deductions right.

Managing your deductionsAre you always on the go? Save time and keep your tax organised with themyDeductions tool in the ATO app.

myDeductions is a record-keeping tool to make it easier and more convenient foryou to keep track of your records all in one place.

You can use the myDeductions tool to:

upload your completed records to uspre-fill your myTax return.

If you use a registered tax agent, you can share your records directly with them viaemail.

The myDeductions record-keeping tool helps you keep records for:

all work-related expenses (including car trips)interest and dividend deductionsgifts or donationscosts of managing tax affairssole trader expenses and business incomeother deductions.

Watch:

This video shows how easy it is to keep your records using myDeductions.

See also:

The sharing economy and taxOffsets and rebatesRecords you need to keepEmployees guide for work expenses

Media: [Get your deductions right]http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubgwof44 (Duration: 1:08)

Media: [How to add and review deductions in myTax]http://tv.ato.gov.au/ato-tv/media?v=bd1bdiuboi3ynb (Duration: 2:53)

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Vehicle and travel expenses

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Last modified: 15 Jun 2020QC 31916

You can claim vehicle and other travel expenses you incur when you travel in thecourse of performing your work duties. However, you generally can't claim fornormal trips between home and work as this is considered private travel.

You need to keep records of your travel expenses.

Deductions you may be able to claim for vehicle and other travel expenses include:

Travel between home and work and between workplacesCar expensesRemoval or relocationOther travel expensesAccommodation allowances and expenses when travelling away from home forworkAward transport expenses

See also:

Keeping travel expense recordsTravel diaryExceptions for keeping travel expense recordsmyDeductions – record-keeping tool in the ATO app

Travel between home and work and betweenworkplaces

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Travel-between-home-and-work-and-between-workplaces/Last modified: 15 Jun 2020QC 31983

Trips between home and work are generally considered private travel. In somecircumstances, you can claim a deduction for travel between home and work, aswell as for some travel between two workplaces.

If your travel was partly private, you can only claim what you incurred in the course

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of performing your work duties.

On this page:

What you can claimWhat you can't claimItinerant work

What you can claimYou can claim the cost of travelling:

directly between two separate workplaces – for example, when you have asecond job (if one of these places isn't your home)from your normal workplace to an alternative workplace that is not a regularworkplace (for example, a client's premises) while still on duty, and back toyour normal workplace or directly homeif your home was a base of employment – you're required to start your work athome then travel to a workplace to continue your work for the same employerif you had shifting places of employment – you regularly work at more than onesite each day before returning homefrom your home to an alternative workplace that is not a regular workplace forwork purposes, and then to your normal workplace or directly home (thisdoesn't apply where the alternative workplace has become a regularworkplace)if you need to carry bulky tools or equipment that your employer requires youto use for work but you can't leave at your workplace (for example, anextension ladder or a cello) – the tools or equipment are bulky, meaning thatbecause of the size or weight they are awkward to transport and can only betransported conveniently by motor vehicle.

Transport expenses can include the cost of driving your car, ride-share (such asUber) and ride-sourcing, flights or catching a train, taxi or bus.

See also:

Car expensesOther travel expenses

What you can't claimYou can't claim the cost of driving your car between work and home if:

you do minor work-related tasks – for example, picking up the mail on the wayto work or homeyou have to drive between your home and your workplace more than once adayyou are on call – for example, you are on stand-by duty and your employercontacts you at home to come into workthere is no public transport near where you workyou work outside normal business hours – for example, shift work or overtime

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your home was a place where you ran your own business and you travelleddirectly to a place of work where you worked for somebody elseyou do some work at home.

Watch: Transporting bulky tools and equipment

See also:

Home-based business

Itinerant workIf you do itinerant work (or have shifting places of work) you can claim transportexpenses you incur when travelling between workplaces and your home.

The following factors may indicate you do itinerant work:

Travel is a fundamental part of your work, as the very nature of your work, notjust because it is convenient to you or your employer.You have a 'web' of work places you travel to, throughout the day.You continually travel from one work site to another.Your home is a base of operations – if you start work at home and can'tcomplete it until you attend your work site.You are often uncertain of the location of your work site.Your employer provides an allowance in recognition of your need to travelcontinually between different work sites and you use this allowance to pay foryour travel.

It is important to also note that the travel needs to be fundamentally tied to youremployment income. If the travel is merely a matter of convenience for you or youremployer it will still be considered a private expense and not deductible.

Example 1 – work that is not itinerant

Chloe is a substitute teacher, who travels to different schools when teachersare away. She sometimes attends a school for just one day, and at othertimes for a few weeks.

Chloe is not carrying out itinerant work. While she may not know where sheis going to work each day, she will only ever work at one location for theday. She can't claim a deduction for the cost of the transport between homeand work.

Media: [Transporting bulky tools and equipment]https://tv.ato.gov.au/ato-tv/media?v=bd1bdiubx7d1ys (Duration: 00:52)

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Example 2 – work that is itinerant

Mitchell works as an apprentice roof tiler and is dispatched to various siteseach day. He travels to the first location from his home and returns home atthe end of the day from the last site at which he has worked. Mitchell iscarrying out itinerant work as he is travelling between sites all day and canclaim a deduction for the transport expenses he incurs when he travelsbetween home and work each day.

Mitchell can also claim the cost of his transport to travel between each siteduring the day. However, if Mitchell only attended one site and worked therefor several days until the job was finished, he would not be carrying outitinerant work.

See also:

Car expensesOther travel expensesmyDeductions – record-keeping tool in the ATO app

Car expenses

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Car-expenses/Last modified: 22 Jul 2020QC 31951

If you use your own car in performing your work-related duties (including a car youlease or hire), you may be able to claim a deduction for car expenses.

If the travel was partly private, you can claim only the work-related portion.

This information relates to car expenses only. A car is defined as a motor vehicle(excluding motor cycles and similar vehicles) designed to carry a load less thanone tonne and less than nine passengers. Many four-wheel drive vehicles areincluded in this definition.

For a summary of this content in poster format, see Car expenses (PDF, 548KB) .

On this page:

When you can and can't claim car expensesUsing someone else's car or other vehicle

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Calculating your deductionsOwned or leased carsDamage to a third-party motor vehicle

When you can and can't claim car expensesWhen you can claim

You can claim a deduction for work-related car expenses if you use your own car inthe course of performing your job as an employee – for example, to:

carry bulky tools or equipment (such as an extension ladder or cello) that youremployer requires you to use for work and there is no secure storage availableat workattend work-related conferences or meetings away from your normal workplacedeliver items or collect suppliestravel between two separate places of employment, but not if one of the placesis your home (for example, when you have a second job)travel from your normal workplace to an alternative workplace (that isn't aregular workplace) and back to your normal workplace or directly hometravel from your normal workplace or your home to an alternative workplacethat is not a regular workplace – for example, a client’s premisesperform itinerant work.

If you receive an allowance from your employer for car expenses, it is assessableincome and the allowance must be included on your tax return. The amount of theallowance is usually shown on your income statement or payment summary.

Using someone else's car or other vehicleIf you use someone else's car or other vehicle (that is not defined as a car) for workpurposes, you may be able to claim the direct costs (such as fuel) as a travelexpense.

Other vehicles include:

motorcyclesvehicles with a carrying capacity of

one tonne or more, such as a ute, truck or panel vannine passengers or more, such as a minivan.

When working out your claim, you need to use the actual costs of your motorvehicle expenses. You need to keep receipts for the actual costs you incur such asfuel and oil. You can use a logbook or diary to separate private use from work-related trips. You can use the myDeductions tool to help keep your records.

See also:

Other travel expenses – for more information about using someone else's caror other vehicles

When you can't claim

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Generally, you can't claim the cost of travel between home and work because thistravel is private.

You can't claim a deduction for car expenses that have been salary sacrificed orwhere you have been reimbursed for these expenses.

For motorcycles and other vehicles (that are not cars), you can't claim work-relateddeductions under car expenses. However, you may be able to claim for work-relateddeductions under travel expenses (see Other travel expenses). You can only claimyour actual expenses for these vehicles. You must use the logbook method to showyour work-related use.

Calculating your deductionsYou can choose one of the following two methods to calculate deductions for carexpenses:

cents per kilometre methodlogbook method.

If you are claiming car expenses for more than one car, you can use differentmethods for different cars. You can also switch between the two methods fordifferent income years for the same car.

The myDeductions tool can help you keep records of your car use for both of thecalculation methods. There are three options for recording your car trips inmyDeductions, including:

a point to point tripa GPS tripan odometer trip.

If you're using the logbook method, you can create a valid logbook record usingmyDeductions.

Cents per kilometre method

Under the cents per kilometre method:

A single rate is used. The rate is:72 cents per kilometre from 1 July 202068 cents per kilometre for 2018–19 and 2019–2066 cents per kilometre for the 2017–18, 2016–17 and 2015–16.

You can claim a maximum of 5,000 business kilometres per car.You may need to provide written evidence to show how you worked out yourbusiness kilometres (for example, by producing diary records of work-relatedtrips).Where you and another joint owner use the car for separate income-producingpurposes, you can each claim up to a maximum of 5,000 business kilometres.

Logbook method

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Under the logbook method:

Your claim is based on the business-use percentage of the expenses for thecar.Expenses include running costs and decline in value but not capital costs,such as

the purchase price of your carthe principal on any money borrowed to buy itany improvement costs.

To work out your business-use percentage, you need a logbook and theodometer readings for the logbook period. The logbook period is a minimumcontinuous period of 12 weeks.You can claim fuel and oil costs based on either your

actual receiptsestimate of the expenses based on odometer records that show readingsfrom the start and the end of the period you had the car during the year.

You need written evidence for all other expenses for the car.

See also:

Logbook method – calculation and keeping recordsWork-related car expenses calculatorRecords you need to keep

Owned or leased carsYou can claim a deduction for using a car that you owned, leased or hired under ahire-purchase agreement using either the:

cents per kilometre methodlogbook method.

You can't claim any expenses relating to a car owned or leased by someone else,including your employer or another member of your family.

However, we consider you to be the owner or lessee of a car and eligible to claimexpenses where a family or private arrangement made you the owner or lesseeeven though you were not the registered owner. For example, you can claim for acar that was given to you by another member of your family and which, although itwas not registered in your name, you used as your own and for which you paid allexpenses.

See also:

Calculating your deductions

Damage to a third-party motor vehicleIf you use your own motor vehicle in the course of your employment and you areinvolved in an accident that causes damage to another vehicle, you may be able toclaim a deduction for the costs you incurred.

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If you are liable for the damages or compensation for the damage to the othervehicle, you may be able to claim a deduction for the costs you incurred.

If an accident occurs in the course of your employment, the expenses relating toyour liability to pay for the damage to the other vehicle in the accident are incidentaland relevant to you earning your assessable income. They are not capital, privateor domestic.

See also:

Taxation Ruling TR 97/7 Income tax: section 8-1 – meaning of 'incurred' –timing of deductionsRecords you need to keep

Removal and relocation

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Removal-and-relocation/Last modified: 15 Jun 2020QC 49859

You can't claim a deduction for the cost involved in taking up:

a transfer in an existing employmentnew employment with a different employer.

Other travel expenses

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Other-travel-expenses/Last modified: 15 Jun 2020QC 31982

Other travel expenses you have incurred as an employee that you may be able toclaim as a deduction include:

expenses you incurred for meals, accommodation and incidentals whentravelling away overnight for work, such as going to an interstate workconference (generally, you can't claim for meals if your travel did not involve anovernight stay)

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the costs you incur for driving your car (such as fuel, oil, repairs andmaintenance costs) when using someone else's car or other vehicle that is notdefined as a car for work purposesair, bus, train, tram and taxi faresbridge and road tollscar parking and car-hire fees.

Vehicles other than cars are motorcycles, scooters, vehicles with greater thanone tonne carrying capacity such as utes, trucks, heavy vehicles or a van withcapacity for nine or more passengers.

You can't claim:

the purchase of other vehicles, but you can claim the decline in value of thevehicle over its effective lifea deduction for

any fines you receive, such as speeding or parking infringementsnormal daily trips between home and work – this is private travel.

You have to reduce your claim to exclude any private portion of your trip.

For a summary of this content in poster format, see Travel expenses (PDF, 526KB) .

On this page:

If you receive a travel allowanceApportioning travel expensesTravel expense records

If you receive a travel allowanceReceiving a travel allowance from your employer does not automatically entitle youto a deduction. Travel allowances may or may not be shown on your incomestatement or payment summary.

If it’s on your income statement or payment summary, you will need to:

include the allowance in your tax returnclaim a deduction for the amount you spent on deductible expenses.

If it’s not on your income statement or payment summary and you spent the fullamount on deductible expenses, you can either:

not include the allowance in your tax return and not claim a deduction for yourexpensesinclude the allowance in your tax return and claim a deduction for the amountyou spent on deductible expenses.

If it’s not on your income statement or payment summary and you didn't spend thefull amount on deductible expenses, you will need to:

include the allowance in your tax returnclaim a deduction for the amount you spent on deductible expenses.

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If you claim more than the reasonable allowance amount we set, you need to keeprecords of your expenditure.

Watch:

Examples of travel expenses

Example 1 – allowances listed on income statement

William works for a company in Sydney. William’s employer requires him tovisit clients located in country New South Wales twice per month (ie everysecond week). This involves William sleeping away from his home foraround three to four nights every second week.

William’s employer pays him an allowance of $150 per night to coveraccommodation, meal and incidental expenses and includes the allowanceon his income statement.

As William’s employer has shown the travel allowance on his incomestatement, he must include that allowance in his income on his tax return.William can claim a deduction for the amount he spends on meals andaccommodation without keeping receipts or other written evidence, as longas his claim doesn't exceed the reasonable allowance amount. If Williamwishes to claim more than the reasonable allowance amount, he will need tokeep written evidence for all his expenses.

William can't automatically claim the reasonable amount as a deduction justbecause he has received an allowance. He can only claim the amount hespends on accommodation, meal and incidental expenses.

Even if William does rely on the exception from keeping receipts or otherwritten evidence, he may still be required to show the basis for determiningthe amount of his claim, that he spent the money, and that the travel was forwork-related purposes.

Example 2 – allowances not listed on income statement

Assume William from Example 1 received an allowance of $150 per nightfrom his employer to cover his accommodation, meal and incidental

Media: [Need to claim overnight work-related expenses?]http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubx7do7d (Duration: 01:18)

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expenses and that William’s employer does not show the allowance on hisincome statement.

William isn't required to include the amount as income on his tax return,provided he has spent the entire amount and isn't seeking to claim anyexcess. As the allowance isn't included in William’s assessable income, heisn't entitled to claim a deduction for the amount he spends onaccommodation, meal and incidental expenses.

Example 3 – work vs private

Assume William from Example 1 travels to Wagga Wagga on one of the tripshe takes to visit clients and decides to stay two extra nights in order to visithis sister. William stays at his sister’s house for the two extra nights hespends in Wagga Wagga and his employer doesn't pay him an allowance forthose nights.

As William’s trip to Wagga Wagga is for a work-related purpose as well as aprivate purpose, he must reduce his claim to exclude any private portion.The nights William spends in Wagga Wagga visiting his sister don't relate tohis work duties. Accordingly, he is unable to claim a deduction for anymoney he spends on meal or incidental expenses while he is staying withhis sister. However, he can still claim a deduction for the amount he spendson accommodation, meals and incidentals during the period he is visitingclients in Wagga Wagga.

Example 4 – deductions for a decline in value

Michelle works for a company in Brisbane. In order to service a number ofcountry-based clients, Michelle travels on average every few weeks. Theduration of her trips is approximately three days but can extend up toapproximately two weeks. Michelle normally stays at any given town for onlyone or two nights per week. Michelle is required to meet her travel costs asher salary has been increased to cover such trips. Michelle owns a caravanand uses it as accommodation and as an office when she travels. Thecaravan is never used by Michelle for private purposes.

As Michelle is required to sleep away from her home overnight for workpurposes, it is considered that her caravan is used for a taxable purpose.Michelle is therefore entitled to claim a deduction for the decline in value of

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the caravan. She is also entitled to a deduction for the amount she spendson meals and incidentals during the period she is travelling away from homefor work purposes.

Example 5 – claiming deductions without receipts

Assume Michelle from Example 4, instead of having an increased salary,received an allowance from her employer of $140 per night to coveraccommodation, meal and incidental expenses. The allowance is includedon Michelle’s income statement. When Michelle arrives in a country area,she purchases food so she can eat breakfast in the caravan each morning.Occasionally, she also cooks dinner for herself in the kitchen in her caravan.

As Michelle’s employer has shown the travel allowance on her incomestatement, she must include that allowance in her assessable income on hertax return. Michelle can't automatically claim the reasonable amount as adeduction just because she has received an allowance. Michelle can onlyclaim a deduction for the decline in value of her caravan and the amount shespends on food, meals eaten out and incidentals.

If the amount of her claim is not more than the reasonable allowanceamount, Michelle can make a claim without providing receipts or otherwritten evidence in respect of her meals, caravan park rental andincidentals. She will need to retain records in respect of her caravan.However, she may still be required to show the basis for determining theamount of the meals, caravan park rental and incidentals claimed, that themoney was spent, and that it was for work-related purposes.

Example 6 – private travel isn't deductible

Max and Doris have retired from full-time work and spend their timetravelling around Australia. They use their caravan as accommodation whilethey are travelling. When Max and Doris need some extra money, they workas fruit pickers for a couple of weeks at a time.

During the year of income, Max and Doris spend 42 weeks travelling aroundAustralia and ten weeks working at several different farms.

Max and Doris aren't entitled to a deduction for the decline in value of theircaravan or for any amounts they spend on meals, caravan park rental and

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incidentals during the ten week period they spent working. The caravan isn'tused for a taxable purpose and the meal, caravan park rental and incidentalexpenses are private in nature.

Apportioning travel expensesYou need to apportion your expenses if they are partly private in nature. If you travelon a work trip, you may not be required to apportion your costs where there is aminor private component that is merely incidental to the work.

Examples of apportioning travel expenses

Example 7 – travelling with a spouse of family member

If you take your partner or children away with you when you travel for workyou can't claim the cost of any travel expenses you incur for them. Forexample, if you pay for a two bedroom apartment to accommodate yourchildren, you can only claim a deduction for the cost you would haveincurred on a one bedroom apartment had you travelled alone.

Example 8 – travel to another destination from a work location

If you fly to Perth for a seven day work conference and add on a return tripto Broome for four days. You can only claim your flights to and from Perth.You can only claim the accommodation, meals and incidental expenses thatyou incurred during the seven days of work-related travel.

Example 9 – combined personal and work-related trip to same destination

While you are in the process of booking a holiday to Sydney to see an artexhibit your employer asks if you’d like to attend a three day work-relatedconference in Sydney which coincidently is to be held from the Mondayfollowing your planned holiday. You change your travel arrangements toinclude the additional time in Sydney. In total, you spend three days inSydney for private purposes followed by three days at the conference. Youmust apportion your flights for the private component of your trip (50%) andonly claim the accommodation, meals and incidental expenses you incur

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during the three days of work-related travel.

Example 10 – personal travel incidental to work-related travel

You fly to London for a 10 day international, work-related conference. Youstay over for an extra two days to do some sightseeing. While you can'tclaim the cost of accommodation and meals for the two days of privatetravel, the private component of the trip is merely incidental and so you canclaim the full cost of your airfares.

Example 11 – attending work-related events during personal travel

You are holidaying in Cairns when you become aware of a work-relatedseminar which runs for half a day. You can claim the cost of attending theseminar, but you can't claim your airfares to and from Cairns, oraccommodation whilst in Cairns, as the primary purpose of the travel isprivate.

See also:

Occupation and industry specific guidesmyDeductions – record-keeping tool in the ATO app

Travel expense recordsYou need to keep receipts or other written evidence for your travel expenses.

You also need travel records (such as a travel diary) if you are away from home forsix or more nights in a row. This is in addition to keeping receipts for your expenses.

There are some exceptions for expenses on accommodation, meals and incidentalexpenses. You don’t have to keep all your receipts if:

you receive an allowance from your employer, andyour deduction is less than the Commissioner's reasonable amount.

You can only claim expenses you actually incurred. You can't claim a deduction forthose travel expenses which are reimbursed to you.

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If you claim a deduction for more than the Commissioner’s reasonable amount youneed to keep receipts for all expenses, not just for the amount over theCommissioner’s reasonable amount.

If you are not required to keep receipts, you must still be able to explain your claimand show you spent the amounts. For example, show your work diary records, yourbank statements, the travel allowance you received and that you correctly declaredyour travel allowance.

Travel diary

A travel diary is a record of your travel movements and activities you undertakeduring your travel. It will help you work out the work-related and private elements ofyour trip.

You will need a travel diary for each trip you take away from home for six or morenights in a row.

You should record your movements and activities in whatever diary or journal youuse. It can be paper or electronic and must be in English.

You must record your travel movements and activities before they end, or as soonas possible afterwards. You need to state:

where you werewhat you were doingthe times the activities started and ended.

See also:

Keeping travel expense recordsTravel diaryExceptions for keeping travel expense recordsTD 2019/11 – Income tax: what are the reasonable travel and overtime mealallowance expense amounts for the 2019-20 income year?

Accommodation allowances and expenseswhen travelling away from home for work

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Accommodation-expenses-when-travelling-for-work/Last modified: 15 Jun 2020QC 50760

As a general rule, you must declare any travel allowance you receive as income in

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your tax return.

You do not have to declare the allowance as income in your tax return if all of thefollowing apply:

the travel allowance is not shown on your income statement or paymentsummarythe travel allowance doesn't exceed the Commissioner of Taxation'sreasonable allowance amountyou spent the whole allowance on deductible accommodation costs (and mealand incidental expenses, if applicable).

If you don't declare your allowance as income, you can't deduct youraccommodation costs (and meal and incidental expenses, if applicable) – even ifthey are more than your allowance.

You can claim a deduction if the allowance you received has been folded into yoursalary and wages. You must keep written evidence of your expenditure.

On this page:

Accommodation expenses claimsKeeping records for accommodationClaiming expenses for accommodation you purchase or rentExamples of accommodation expenses

Accommodation expense claimsYou can deduct your accommodation costs (as well as meal and incidentalexpenses), if all of the following apply. You:

declare any travel allowance you receive as income on your tax returnare required as part of performing your work duties to travel away from homeare only working away from home for relatively short periods of time (you aren'tliving away from home)did not incur the expenses because of a choice you made to maintain yourresidence in a different location to your place of employmenthave a permanent home at a location away from the work location that you aretravelling topay for the accommodation yourself and aren't reimbursed for the costs youincur.

Keeping records for accommodationTo claim a deduction, you generally need to keep written evidence to substantiateyour costs.

Substantiation isn't required if:

you have received a travel allowance for travel within Australiathe deduction you claim for accommodation (and meals and incidental

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expenses, if applicable) is equal to or less than the amount we considerreasonable.

The amounts we consider reasonable are published each year. TaxationDeterminations TD 2018/11 and TD 2019/11 set out the amounts for various traveldestinations for the 2018–19 and 2019–20 income years respectively.

Even where you don’t need to substantiate your costs, we may still ask you to showall of the following:

you paid the expense yourselfthe cost is deductible – you met the conditions required to deduct the expenseyou received a travel allowanceyou stayed in short-term commercial accommodation.

See also:

TD 2018/11 Income tax: what are the reasonable travel and overtime mealallowance expense amounts for the 2018–19 income year?TD 2019/11 Income tax: what are the reasonable travel and overtime mealallowance expense amounts for the 2019–20 income year?TR 2004/6 Income tax: substantiation exception for reasonable travel andovertime meal allowance expenses

Claiming expenses for accommodation you purchase orrentMost people required to travel away from home temporarily to perform their workduties stay in short-term commercial accommodation. For example a hotel, motel orserviced apartment. However, a person may decide to stay in rentedaccommodation or in accommodation they have purchased.

The costs of financing, holding and maintaining accommodation you purchase orrent to stay in when you travel to perform your work duties may be deductible aswork-related travel expenses.

You must declare any travel allowance you receive as income in your tax return ifyou want to claim a deduction for your accommodation costs (as well as meal andincidental expenses).

Types of costs

Costs you can claim:

rentinterest on loans used to purchase the accommodationratestaxesinsurancegeneral maintenance of the accommodationthe decline in value of certain assets, such as furniture and household

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equipment.

See also:

Guide to depreciating assets

Costs you can't claim:

capital expenses such as the costs of purchasing or renovating theaccommodationpurchase costs of furniture, household equipment and other assets for theaccommodation.

This content doesn't explain capital gains tax (CGT) implications.

See also:

Capital gains tax

Apportioning your costs

You might have to apportion your costs of financing, holding and maintainingaccommodation you purchase or rent (see Costs you can claim) if either:

the costs are disproportionate to what you would have spent on suitablecommercial accommodation for the period of travelthe accommodation is used for private or domestic purposes and not wholly forwork-related travel.

You can't claim a deduction for the cost of financing, holding and maintaining yourhome.

Examples of accommodation expenses

Example 1 – short-term commercial accommodation

Jane started a new job with a company in Brisbane. During the first year ofemployment, Jane must attend training at the company's head office inSydney one week in every four.

Jane stays at a hotel close to the head office in Sydney when she needs tobe in Sydney for training.

Jane receives a travel allowance from her employer to cover the cost ofaccommodation, meals and incidental expenses for the periods she stays inSydney. The travel allowance isn't shown on her income statement.

Jane spends her travel allowance on accommodation, meals and incidentalexpenses when in Sydney for work.

Jane chooses not to declare her travel allowance on her income tax returnand doesn't claim her expenses.

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Example 2 – purchased accommodation where costs are notdisproportionate

John works for a company in Melbourne that has a regional branch inBendigo. The company requires John to work in the Bendigo branch for oneworking week each fortnight.

John purchases a two bedroom apartment in Bendigo to stay in when he isthere for work. During the time he is not there for work, the apartment isvacant.

John receives a travel allowance from his employer to cover the cost ofaccommodation, meals and incidental expenses for the periods he stays inBendigo. The travel allowance is shown on his income statement.

The cost of financing, holding and maintaining the apartment in Bendigo forthe year aren't disproportionate to John obtaining suitable short-termcommercial accommodation for the periods he stays in Bendigo. Johndoesn't use the Bendigo apartment for private or domestic use during theyear.

John must include the travel allowance as income in his tax return becauseit's on his income statement. John can claim a deduction for the cost offinancing, holding and maintaining the Bendigo apartment for the year.

Example 3 – purchased accommodation with some private use

John (from example 2) decides to spend his four weeks annual leave at hisapartment in Bendigo.

John must apportion the cost of financing, holding and maintaining theapartment for the year to take into account this private use, because hiscosts aren't wholly for work-related travel.

Example 4 – purchased accommodation where costs are not

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disproportionate

Brianna is a Member of Federal Parliament who lives with her family in herelectorate on the north coast of NSW. Brianna must travel to Canberra for atleast 20 weeks during the year while Parliament is sitting.

Brianna purchases a one bedroom apartment close to Parliament Housewhere she stays while Parliament is sitting. The apartment is vacant whenBrianna isn't using it for work.

Brianna receives a travel allowance to cover the cost of accommodation,meals and incidental expenses for the periods she is in Canberra. The travelallowance isn't shown on her income statement.

Brianna spends her travel allowance on accommodation, meals andincidental expenses when in Canberra for work.

The cost of financing, holding and maintaining the apartment in Canberra forthe year aren't disproportionate to the cost of Brianna obtaining suitableshort-term commercial accommodation in Canberra. Brianna didn't use theCanberra apartment for private or domestic purposes during the year.

Brianna chooses not to declare her travel allowance on her income taxreturn and doesn't claim her expenses.

Example 5 – leased apartment where costs aren't disproportionate

Geoff works and lives in Perth. Geoff's employer requires him to travel to acompany branch in Karratha for two working weeks in every four.

Geoff leases a one bedroom serviced apartment in Karratha for the year.When he is not in Karratha for work, the apartment is vacant.

Geoff receives a travel allowance from his employer to cover the cost ofaccommodation, meals and incidental expenses for the periods he is inKarratha. The travel allowance is shown on his income statement.

Geoff spends his travel allowance on accommodation, meals and incidentalexpenses when in Karratha for work.

Geoff’s costs of leasing the apartment for the year aren't disproportionate tothe costs of Geoff obtaining suitable short-term commercial accommodationin Karratha for the periods he stays there for work. Geoff didn't use theKarratha apartment for private or domestic purposes during the year.

Geoff must include the travel allowance as income in his tax return because

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it's on his income statement. Geoff can claim a deduction for the cost offinancing, holding and maintaining the Karratha apartment for the year.

Example 6 – purchased accommodation for private travel

Alanna works in the Melbourne CBD, but lives in Lorne.

It takes more than two hours to travel between her home and her workplace,so Alanna purchases a one bedroom apartment in the Melbourne CBD tostay in during the working week and returns home to Lorne for theweekends.

Alanna can't claim the cost of financing, holding and maintaining theapartment in the Melbourne CBD because the travel to Melbourne isn't partof her employment duties. She has chosen to live in Lorne.

Example 7 – purchased accommodation with disproportionate costs

James is an executive working and living in Adelaide. James must travel toMelbourne for two weeks seven times a year.

James purchases a three bedroom apartment in the Melbourne CBD to stayin when he is in Melbourne for work and as an investment. The apartmentremains empty when James isn't using it.

James receives a travel allowance from his employer to cover the cost ofaccommodation, meals and incidental expenses for the periods he is inMelbourne for work. The travel allowance isn't shown on his incomestatement.

The combined amount James spends on meals, incidental expenses and infinancing, holding and maintaining the apartment in Melbourne for the yearis more than the amount of his travel allowance.

James’ costs of financing, holding and maintaining the apartment inMelbourne for the year are disproportionate to obtaining suitable short-termcommercial accommodation in Melbourne for the periods he travels there forwork.

James also has another purpose in incurring the accommodation expenses,being investment.

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Because the travel allowance isn't on his income statement and the amounthe spends is equal to or more than his allowance, James can choose not toinclude the travel allowance as income on his income tax return and notclaim any of his expenses for accommodation, meals and incidentals.

If he chooses to claim a deduction for accommodation, meals or incidentals,he must include the travel allowance as income in his tax return.

If he chooses to claim a deduction, James must apportion the cost offinancing, holding and maintaining the apartment in Melbourne. The amountby which his costs exceed the costs of obtaining suitable short-termcommercial accommodation in Melbourne, for the periods James had totravel there for work, aren't deductible. They relate to investment.

Award transport payments

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Award-transport-payments/Last modified: 15 Jun 2020QC 31950

If you receive an allowance from your employer for transport expenses or carexpenses and it's paid to you under an award, it's assessable income and you mustinclude it on your tax return. You may be able to claim a deduction for work-relatedtransport expenses covered by these payments.

To work out how much you can claim, you need to know the award amount as thisaffects whether you will need written evidence to support your claim.

If you claim less than the award amount, you don't need written evidence.

If you want to claim more, you will need written evidence for the whole of your claim.

Car expense reimbursementThe award transport payment sets a 'car expense reimbursement' amount for acertain number of kilometres. If you travel more kilometres than the limit, they aren'tcovered by the award transport payment. You can claim the extra kilometres onyour tax return and use either the:

logbook method (you will need written evidence)cents per kilometre method.

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If you're already claiming kilometres under the award transport payment, you can'tcount them as business kilometres under either the cents per kilometre or logbookmethod. However, you will count them as part of the total kilometres travelled for thelogbook method.

Alternatively, you can choose not to link any part of your claim for work-related carexpenses to the award amount. If this is the case, when you make your claim onyour tax return, don't claim car expenses covered by your award transport payment.You can then use either of the two methods to calculate your car expenses.

Treat any work-related kilometres covered as business kilometres. You will need toprovide the written evidence required by the method you select when calculatingyour deduction.

See also:

Car expensesClaiming a deduction for car expenses – award transport payments

Keeping travel expense records

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Keeping-travel-expense-records/Last modified: 11 Aug 2020QC 31952

This information is about keeping your travel expense records. If you want to checkif you can claim a deduction, see Deductions you can claim. To see if you areeligible to keep less detailed records, see Exceptions for keeping travel expenserecords.

There are specific record-keeping requirements for travel expenses, depending on:

whether your travel allowance is shown on your income statement or paymentsummarywhether your travel was domestic or overseasthe length of your travelyour occupation.

On this page:

Vehicle expenses – other than a carTravel expenses

Vehicle expenses – other than a car

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If you're eligible to claim expenses for using a borrowed car or a vehicle other than acar, you need to keep receipts for:

fuel and oilrepairs and servicinginterest on a car loanlease paymentsinsuranceregistration.

Travel expensesIf your travel allowance is shown on your income statement or payment summaryand you want to make a claim against it, you may need written evidence for thewhole of your claim. Not just the excess over the reasonable allowance amount.

The records you need to keep for travel expenses for fares, accommodation, food,drink and incidentals depend on the length of your trip and if it is domestic orinternational.

If you travel for six or more nights in a row, you may need to keep a travel diary. Inthe travel diary you record the dates, places, times and duration of your activitiesand travel. The purpose of a travel diary is to allow accurate calculation ofemployment-related and private elements of your trip.

The records you need to keep depend on whether your travel was:

Domestic travel and you didn't receive a travel allowanceOverseas travel and you didn't receive a travel allowanceDomestic travel and you received a travel allowance and your claim doesn'texceed the reasonable allowance amountOverseas travel and you received a travel allowance and your claim doesn'texceed the reasonable allowance amountDomestic travel and you received a travel allowance and your claim exceedsthe reasonable allowance amountOverseas travel and you received a travel allowance and your claim exceedsthe reasonable allowance amount

Domestic travel and you didn't receive a travel allowance

Length of travel Written evidence Travel diary

Less than 6 nights in a row Yes No

6 or more nights in a row Yes Yes

Overseas travel and you didn't receive a travel allowance

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Length of travel Written evidence Travel diary

Less than 6 nights in a row Yes No

6 or more nights in a row Yes Yes

Domestic travel and you received a travel allowance and yourclaim doesn't exceed the reasonable allowance amount

Length of travel Written evidence Travel diary

Less than 6 nights in a row No No

6 or more nights in a row No No

Overseas travel and you received a travel allowance and your claim doesn't exceedthe reasonable allowance amount

Lengthoftravel

Written evidence Travel diary

Lessthan 6nightsin arow

Required for overseasaccommodation expenses –but not for food, drink andincidentals

No

6 ormorenightsin arow

Required for overseasaccommodation expenses –but not for food, drink andincidentals

Members of an international aircrew – no if you limit your claim tothe amount of allowance youreceivedOther people – yes

Domestic travel and you received a travel allowance and yourclaim exceeds the reasonable allowance amount

Length of travel Written evidence Travel diary

Less than 6 nights in a row Yes No

6 or more nights in a row Yes Yes

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Overseas travel and you received a travel allowance and your claim exceeds thereasonable allowance amount

Length oftravel

Writtenevidence Travel diary

Less than 6nights in arow

Yes No

6 or morenights in arow

Yes Members of an international air crew – no if you limityour claim to the amount of allowance you receivedOther people – yes

See also:

Travel diaryExceptions for keeping travel expense recordsmyDeductions – record-keeping tool in the ATO app

Exceptions for keeping travel expense records

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Exceptions-for-keeping-travel-expense-records/Last modified: 15 Jun 2020QC 56003

Generally, you need to get and keep written evidence, such as receipts, if you claima deduction for work-related travel expenses. This is known as substantiation ofyour travel expenses. You may need to keep a travel diary if you travel for six ormore nights in a row as substantiation for your travel expenses. However, there maybe an exception if:

the deduction you claim is less than the reasonable amount that we set eachyear and all of the following apply

you are required to travel for workyou receive a travel allowance from your employer for the travelyou spent money on accommodation, food or drink or other deductibleexpenses incidental to the travel and you weren't reimbursed.

Reasonable amounts for accommodation, food or drink and incidentals are set eachyear for substantiation purposes. These amounts are only used to work out if an

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exception applies. They aren't the amount you can claim as a deduction. Youshould claim only the amount you actually spend.

The reasonable amounts are set in an annual taxation determination. Refer toTD 2019/11 Income tax: what are the reasonable travel and overtime mealallowance expense amounts for the 2019–20 income year?

On this page:

Records to keep if the exception appliesTravel expense substantiation exceptionsTravel allowances and exceptions

Records to keep if the exception appliesIf you don't receive an allowance from your employer, you need to keep receiptsand a travel diary to claim a deduction. This is because the substantiationexceptions for travel expenses don't apply to you.

If the expense was for both work and private purposes, you can only claim adeduction for the work-related portion.

Even if you don't claim more than the reasonable amounts (and an exceptionapplies), we may still check your tax return and ask you to show:

how you spent the money in the course of performing your work duties – forexample, in travelling away from home overnight on a work triphow you worked out your claim – for example, kept a diary showing the timesyou were away and how many meals you ate and whereyou spent the money yourself – for example, credit card statement or otherbanking records – and you were not reimbursedyou correctly declared your allowance as income in your tax return.

See also:

Employment income for when to declare travel allowance

Example – meal allowance

Zoran works in Melbourne. His employer requires him to travel to the officein Sydney for a week. Zoran is paid a $600 meal allowance to coverbreakfast, lunch and dinner for the five days he is required to be in Sydney.Zoran's employer pays for accommodation directly.

Zoran keeps a record of his meal expenses over the week and calculates hespent $500 over the five days on food and drink. This is less than thereasonable amount set by the ATO.

Zoran isn't required to keep all of his receipts for his expenses on food anddrink for this trip to Sydney as the travel substantiation exception applies.However, Zoran keeps records as evidence that he was travelling for work.

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He keeps his credit card statements or other records to show he spent theamount he claimed as a deduction. He also keeps a record to show hedeclared the $600 allowance in his tax return.

Zoran can't claim a deduction for accommodation because his employerpays for this expense directly.

Zoran must keep all receipts for any incidental expenses he has when inSydney. As he didn't receive an allowance for incidental expenses, he can'trely on a travel substantiation exception for incidental expenses.

Travel expense substantiation exceptionsYou may not be required to substantiate your expenses in the following situations:

Domestic travelInternational travelCrew on international flights

Domestic travel

If you travel within Australia, you don't need to keep receipts or a travel diary (fortravel six nights or more in a row) when claiming your travel expenses on food anddrink, accommodation and incidental expenses, if you:

receive a travel allowance for the travel expense from your employeronly claim up to the reasonable amount.

Example – allowance on income statement

Ellie received a travel allowance for food, drink and incidentals when shetravelled within Australia for work. The allowance paid was shown on herincome statement.

Ellie includes the travel allowance as income in her tax return. She claims adeduction for the amount she spends on work-related travel expenses. Theallowance paid to Ellie was the same amount as the ATO's reasonableamount so Ellie doesn't have to keep receipts for all of the expenses thatshe claims in her tax return for the work travel.

If asked by us, Ellie will still have to show she went away overnight for workand that she received and declared her travel allowance. She will also haveto show how she spent the amount that she is claiming as a deduction, forexample, from her bank records.

International travel

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If you are undertaking international travel, you don't need to keep receipts whenclaiming your travel expenses on food and drink, and incidental expenses, if you:

receive a travel allowance for the travel expense from your employeronly claim up to the reasonable amount.

You can only claim expenses you actually incurred. You must still get and keepreceipts for all accommodation expenses overseas. The exception does not apply.

You must still keep a travel diary if you are travelling away from home for six ormore nights in a row overseas. The exception does not apply.

Crew on international flights

If you are a crew member on an international flight, you don't need to keep a traveldiary (for travel for six or more nights in a row) if:

you receive a travel allowance for you to travel as a crew member of an aircraftyou only claim up to the amount of your allowancethe travel is mainly outside of Australia.

Travel allowances and exceptionsYou can't automatically claim a deduction just because you receive an allowance.Where you do receive an allowance, you might not have to keep receipts and adiary (as applicable).

For the exceptions to apply, the travel allowance must be:

for accommodation, food or drink, or other expenses incidental to your travel –if you only receive an allowance for food and drink, you can't rely on theexceptions for your accommodation or incidental expensesto cover a specific work-related journey – the allowance must be calculatedbased on your journey(s). It cannot be a fixed amount paid to you regardless ofhow much travel you doa bona fide travel allowance – the allowance must be an amount which willreasonably cover your expenses, and not just a token amountpaid to you as an allowance – the allowance can't be folded in to your salary orwages – it must be a separate amount paid as a travel allowance for yourtravel.

Some travel allowances might not appear on your income statement or paymentsummary.

Example – not a bona fide travel allowance

Mel receives $30 a day from her employer when she is required to travel.The employer does not pay for any travel expenses directly. This means Melhas to organise and pay for everything herself, including meals andaccommodation.

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Mel keeps a record of her travel expenses when travelling. Even though theamount she claims in her tax return is less than the ATO's reasonableamounts, she must keep all of her receipts. This is because the amount shereceives from her employer is not considered to be a bona fide travelallowance – it will not cover the costs Mel will incur when she travels.

See also:

Travel allowances

Travelling for work

You can only claim a deduction for accommodation, food or drink, and otherexpenses incidental to your travel if all of the following apply:

your work activities require you to undertake travelthe work requires you to sleep away from home overnightyou have a permanent home elsewhereyou don't incur the expenses in the course of relocating or living away fromhome.

You aren't sleeping away from home overnight if:

you are on duty while sleeping at a workplace near your home – for example,you are a hostel worker, a care worker or overnight supervisor at a boardingschoolyou choose to sleep near your workplace, rather than returning home betweenyour shifts.

Example – meal by meal approach to reasonable amounts

Bruce is required to travel for work overnight. He leaves at 3pm and returnshome at 7pm the following day. Bruce's employer pays him a travelallowance for meals and incidentals for the period of his travel. This isshown on Bruce's income statement.

The employer pays for the accommodation directly. To determine if thesubstantiation exception applies, Bruce must separately calculate hisexpenses. Bruce separately calculates the following:

his dinner on day onehis expenses for breakfast, lunch and dinner on day twohis incidental expenses for day one and day two.

As long as Bruce's claim for deduction for each meal and day of incidentalexpenses is not more than the ATO's reasonable amount for each meal anddaily incidental amount, Bruce is not required to keep receipts.

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Travel diary

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Travel-diary/Last modified: 15 Jun 2020QC 56005

A travel diary shows the dates, places, times and duration of your activities andtravel.

The purpose of a travel diary is to help work out the work-related and privateelements of your trip. If any part of the travel is private, you can only claim the work-related part.

This information is about keeping a travel diary. If you want to check if you canclaim a deduction, see Deductions you can claim. To see if you are eligible to keepless detailed records, see Exceptions for keeping travel expense records.

On this page:

Do you need to keep a travel diaryHow to keep a travel diary

Do you need to keep a travel diaryIf you travel away from home for six or more nights in a row, you need to keep atravel diary except in the following circumstances:

You receive a travel allowance for your travel, you are travelling in Australia,and the amount you are claiming is up to our reasonable travel allowanceexpense amount.You are a crew member on an international flight, you receive a travelallowance for your travel, your travel is mainly overseas, and your claim is notmore than the amount of allowance you receive.

You don’t need to keep a travel diary if your travel away from home is for less thansix nights in a row.

It can still be helpful to keep details of your travel, even if you aren't required tokeep a travel diary.

See also:

TD 2019/11 Income tax: what are the reasonable travel and overtime mealallowance expense amounts for the 2019–20 income year?Travel allowances

How to keep a travel diaryTo ensure you keep a valid travel diary, you should record your:

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travel movements and activities in a diary or journal of your choice that hasadequate space for information, such as

where you werewhat you were doingthe start and end times for activities

travel movements and activities before the activity ends, or as soon aspossible afterwardsdiary entries in English.

Example – domestic travel with no private component

James is a sales consultant who lives and works in Melbourne. He isrequired to attend a sales conference in Wangaratta over three days. Hethen does some store visits in this area over the next four days.

James does not receive a travel allowance for his travel. His employer giveshim a credit card to use to pay for accommodation while he is away fromhome. James pays for his own meals and incidental expenses.

Because James is away from home for six nights, and does not receive atravel allowance, he must keep a travel diary.

James' travel diary

Day Activities

Monday 6:00am travel to Wangaratta – arrive 9:00am9:30am – 5:30pm Sales conferenceOvernight at conference centre

Tuesday 9:30am – 5:30pm Sales conference WangarattaOvernight conference centre

Wednesday 9:30am – 5:30pm Sales conference WangarattaOvernight conference centre

Thursday 8:00am travel to Shepparton, arrive 9:15am10:00am meet Mr Smith for display meeting1:00pm – 5:00pm Shepparton store reviewOvernight Shepparton hotel

Friday 6:00am travel to Echuca, arrive 7:00am8:00am – 12:00pm Echuca store review12:30pm – 12:45pm drive to Moama store1:00pm – 5:00pm Moama store reviewOvernight Moama hotel

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Saturday 7:00am travel to Bendigo, arrive 8:30am9:00am – 6:00pm State Rep meeting6:00pm dinner with State RepsOvernight Bendigo Motor Inn

Sunday 8:00am State Rep breakfast conference, finish 10:00am10:00am travel home to Melbourne, arrive 12:30pm

Example – overseas travel with private component

Grace is a university lecturer who lives and works in Perth. She attends asix-day international convention in England as a keynote speaker. After theconvention is finished, Grace has a holiday.

Because Grace is travelling for more than six nights overseas, she isrequired to keep a travel diary.

Grace's travel diary for September

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

4No diaryentry

5No diaryentry

6No diaryentry

7No diaryentry

8No diaryentry

910am flightQ13 toLondon(via Dubai)

10ArriveLondon1pm localtime. Trainto Oxford7pm–8:30pm

11Restday

12Internationalteachersconventionstarts 9am

13Conventionday 2

14Conventionday 3

15Conventionday 4

16Conventionday 5

17Conventionday 6,ends 3pm

18Train toLondon9am–10:30am

19Holiday –Sightseeingin London

20Holiday –London

21Holiday –Paris

22Holiday –Paris

23Holiday –Lyon

24Holiday –Milan

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25Holiday–Florence

26Holiday –Rome

27Holiday –Rome

28Flighthome Q236pm, arrive10pm localtime

29No diaryentry

30No diaryentry

1No diaryentry

Grace’s diary entries show that she was travelling for 20 days. Only half ofthese were for work purposes as she spent half the time enjoying a holidaywhile overseas. Grace can only claim deductions for the work-relatedportion of travel.

Clothing, laundry and dry-cleaning expenses

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Clothing,-laundry-and-dry-cleaning-expenses/Last modified: 15 Jun 2020QC 31907

You can claim a deduction for the cost of buying and cleaning occupation-specificclothing, protective clothing and unique, distinctive uniforms.

To claim a deduction you may need to have written evidence that you purchasedthe clothing and diary records or written evidence of your cleaning costs. Writtenevidence must be kept for a representative period of at least one month if both ofthe following apply:

the amount you claim is greater than $150your total claim for work-related expenses exceeds $300.

You may receive an allowance from your employer for clothing, uniforms, laundry ordry-cleaning. If you do, make sure you show the amount of the allowance on yourtax return as it is assessable income. You can only claim a deduction for the amountyou actually spent.

For a summary of this content in poster format, see Clothing and laundry (PDF,197KB) .

On this page:

Occupation-specific clothingProtective clothingWork uniformsCleaning of work clothing

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Occupation-specific clothingYou can claim for clothing that is specific to your occupation, isn't everyday innature and allows the public to easily recognise your occupation. For example, thechecked pants a chef wears.

You can't claim the cost of purchasing or cleaning clothes you bought to wear forwork that are not specific to your occupation. Examples include a bartender's blacktrousers and white shirt, a business person's suit or a swimming instructor'sswimwear.

See also:

Occupation and industry specific guides

Protective clothingYou can claim for clothing and footwear that you wear to protect yourself from therisk of illness or injury posed by your income-earning activities or your workenvironment. To be considered protective, the items must provide a sufficientdegree of protection against that risk.

Protective clothing includes:

fire-resistant and sun-protection clothingsafety-coloured vestsnon-slip nurse's shoesrubber boots for concreterssteel-capped boots, gloves, and heavy-duty shirts and trousersoveralls, smocks or aprons you wear to avoid damage or soiling your ordinaryclothes during your income-earning activities.

Ordinary clothes you wear at work (such as jeans, drill shirts, shorts, trousers,socks, closed shoes) are not regarded as protective clothing if they lack protectivequalities designed for the risks of your work.

Clothing that provides a degree of protection against the risk of illness or injuryincludes, but is not limited to, clothing that:

is made to cope with more rigorous conditions, where conventional clothingwould be inadequateis designed to protect you – for example heavy duty shirts and trousers,distinct from ordinary cotton drill trousers, shorts and short sleeve shirts thatmay be considered as work wear but do not adequately protect the wearerfrom the risk of injury or illnesshas a density of weave which gives a UV rating sufficient to protect you fromthe sun where your job requires you to work outdoors.

Example: can't claim a deduction for conventional clothing

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Bob works on a building site. He wears jeans with T-shirts or long sleeveshirts at work. Bob wears these clothes to work as they are comfortable and,although not very durable, they afford Bob some protection from skinabrasions when handling tools and building materials at the building site.

The jeans and shirts resemble clothes commonly worn as regular clothingand Bob also wears them when travelling to and from work. The cost ofBob's jeans and shirts is not an allowable deduction.

Even if Bob wore the items only at work, a deduction would still not beallowable. The clothing provides only limited protection from injury. Thismeans the expense is mainly for his personal needs of modesty, decencyand warmth.

Example: claiming a deduction for protective clothing

At other times Bob, from the previous example, wears heavy denim trousers,steel capped boots and a hard hat when working at the building site. Theinherently protective nature of these items means their main use is for Bob'sprotection at work, rather than his requirements of modesty, decency andwarmth.

The expense is not private or domestic in nature and there is the necessaryconnection between the expense and Bob's income earning activities. Thismeans he can claim a deduction for the cost of these items.

You can't claim the cost of purchasing or cleaning ordinary clothes you wear forwork that may also protect you. For example, you can't claim for normal, closedshoes, even though you wear them to protect your feet.

Work uniformsYou can claim for a uniform, either compulsory or non-compulsory, that is uniqueand distinctive to the organisation you work for.

Clothing is unique if it has been designed and made only for the employer. Clothingis distinctive if it has the employer's logo permanently attached and the clothing isnot available to the public.

You can't claim the cost of purchasing or cleaning a plain uniform.

Compulsory work uniform

This is a set of clothing that identifies you as an employee of an organisation. The

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organisation has a strictly enforced policy that makes it compulsory for you to wearthe uniform while you're at work.

You may be able to claim a deduction for shoes, socks and stockings if:

they are an essential part of a distinctive compulsory uniformtheir characteristics (colour, style and type) are specified in your employer'suniform policy.

You may be able to claim for a single item of distinctive clothing, such as a jumper, ifit's compulsory for you to wear it at work.

Non-compulsory work uniform

You can't claim expenses incurred for non-compulsory work uniforms unless youremployer has registered the design with AusIndustry.

Shoes, socks and stockings can never form part of a non-compulsory work uniform,and neither can a single item such as a jumper.

See also:

Approved Occupational Clothing Guidelines

Cleaning of work clothingYou can claim the costs of washing, drying and ironing eligible work clothes, orhaving them dry-cleaned, even if the clothing is supplied by your employer.

If your employer launders your clothing or reimburses you, you can't claim adeduction.

You must have written evidence, such as diary entries and receipts, for your laundryexpenses if both:

the amount of your claim is greater than $150the amount your total claim for work-related expenses exceeds $300 – notincluding car, meal allowance, award transport payments allowance and travelallowance expenses.

If your laundry expenses are $150 or less, you can claim the amount you incur onlaundry without providing written evidence of your laundry expenses. This is even ifyour total claim for work-related expenses is more than $300 which includes yourlaundry expenses. However, if the total claim of your work-related expenses is morethan $300, you must have written evidence for your other work-related expenses.

You need to be able to show how you came up with the total of your laundryexpense claim. This isn't an automatic deduction. You may use a reasonable basisto work out your claim.

We consider a reasonable basis for working out your laundry claim for washing,drying and ironing you do yourself is:

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$1 per load – this includes washing, drying and ironing – if the load is made uponly of work-related clothing50 cents per load if other laundry items are included.

If you choose a different basis to work out your claim, we may ask you to explainthat basis.

Dry-cleaning expenses

You can claim your actual cost of dry-cleaning work-related clothing. You must havewritten evidence to substantiate your claim if your total claim for work-relatedexpenses exceeds $300 – not including car, meal allowance, award transportpayments allowance and travel allowance expenses.

See also:

myDeductions – record-keeping tool in the ATO app

Home office expenses

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Home-office-expenses/Last modified: 29 Sep 2020QC 31977

If you're an employee who works from home, you may be able to claim a deductionfor expenses you incur relating to that work. These can be additional runningexpenses such as electricity, the decline in value of equipment or furniture andphone and internet expenses.

If your home is your principal place of business, you should refer to running yourbusiness from home.

In most cases, if you are working from home as an employee, there will be nocapital gains tax (CGT) implications for your home.

On this page:

Expenses you can't claimCalculation methodsExamples – comparing methodsRecords for change in circumstances

Expenses you can't claimThere are some expenses you can't claim a deduction for as an employee.Employees who work at home can't claim costs:

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for coffee, tea, milk and other general household items your employer mayprovide you at workfor your children and their education including

setting them up for online learningteaching them at homebuying equipment such as iPads and desks

your employer pays for or repays you for the expensefor the decline in value of items provided by your employer – for example, alaptop or a phone.

Employees generally can't claim occupancy expenses such as rent, mortgageinterest, water and rates.

Calculation methodsThere are three ways of calculating home office expenses depending on yourcircumstances. The methods are the:

Shortcut method (80 cents) – only available between 1 March and31 December 2020Fixed rate method (52 cents)Actual cost method

You must meet the record keeping requirements and working criteria to use eachmethod.

Use our Home office expenses calculators to help work out your deduction.

Once you have calculated your deduction, enter the amount at 'Other work-relatedexpenses' in your tax return.

Shortcut method

The shortcut method simplifies how you calculate your deduction for working fromhome. Using this method, you can claim 80 cents per hour for each hour you workfrom home.

This method is temporary and can only be used to work out your work from homededuction between:

1 March to 30 June 2020 in the 2019–20 income year1 July and 31 December 2020 in the 2020–21 income year.

All employees who work from home during these dates can use this method if you:

are working from home to fulfil your employment duties, not just carrying outminimal tasks such as occasionally checking emails or taking callshave incurred additional running expenses as a result of working from home.

The shortcut method covers all your working from home expenses, such as:

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phone expensesinternet expensesthe decline in value of equipment and furnitureelectricity and gas for heating, cooling and lighting.

If you use this method, you can't claim any other expenses for working from home.

You don't need to have a dedicated work area to use this method. However, youmust keep a record of the number of hours you have worked from home. This couldbe a timesheet, roster, a diary or documents that set out the hours you worked fromhome.

You don’t have to use the shortcut method, you can choose to use one of theexisting methods to calculate your deduction. You can use the method or methodsthat will give you the best outcome as long as you meet the working criteria andrecord keeping requirements for each method.

If you had a work from home arrangement before 1 March 2020, you will need touse one of the existing methods to calculate your deduction for the period 1 July2019 to 29 February 2020.

The shortcut method includes decline in value of all items. If you choose to use thismethod there is no requirement to separately calculate the decline in value ofequipment or depreciating assets. However, as you may combine methods or use adifferent method in later years it's important to keep the:

receipts for depreciating assets or equipment you use when working fromhomerecords of how you calculated your work-related use of the assetyour decline in value calculations.

See also:

Decline in value of depreciating assets

Fixed rate method

You can claim a deduction for additional running expenses you incur when you workfrom home. The fixed rate is 52 cents for each hour you work from home. The ratecovers the additional running expenses you incur for:

the decline in value of home office furniture and furnishings – for example, adeskelectricity and gas for heating, cooling and lightingthe cost of repairs to your home office equipment, furniture and furnishings.

To claim using this method, you must keep records of either:

your actual hours spent working at home for the yeara diary for a representative four-week period to show your usual pattern ofworking at home.

You can apply the four-week representative period across the remainder of the year

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to determine your full deduction amount. However, if your work pattern changes youwill need to create a new record.

To use this method, you need to have a dedicated work area, such as a home officewhen you work from home.

This method doesn't include the following, so you will need to separately calculateyour work-related use for:

phone expensesinternet expensescomputer consumables and stationery – such as inkdecline in value of equipment – such as phones, computers and laptops.

To claim the work-related portion of these expenses you must have records suchas:

receipts or other written evidence that shows the amount spent on expensesand depreciating assets you purchasedphone accounts identifying your work-related calls and private calls to work outyour percentage of work-related use for a representative perioda diary that shows

a representative four-week period of your usual pattern of working athomeany small expenses ($10 or less) that you can't get a receipt for totallingno more than $200your work-related internet usethe percentage of the year you used depreciating assets exclusively forwork.

Watch: Claiming for a computer, phone or other electronic device as a work-relatedexpense

You can watch Claiming for a computer, phone or other electronic device as a work-related expense in full screen on atoTV.

See also:

Claiming mobile phone, internet and home phone expensesDecline in value of depreciating assetsDepreciation and capital allowances tool

Actual cost method

You can claim a deduction for additional running expenses you incur when you work

Media:[Claiming for a computer, phone or other electronic device as a work-relatedexpense]http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubgwogok (Duration: 1:01)

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from home. Using the actual expenses method, you work out your deduction fromactual costs you incur as a result of working from home. This may include thefollowing expenses:

electricity and gas for cooling, heating and lightingthe decline in value of home office furniture (desk, chair) and furnishings,the decline in value of phones, computers, laptops or similar devicesphone expensesinternet expensescleaning (if you use a dedicated area for working)computer consumables and stationery – such as ink

If you don't have a dedicated work area, such as a home office, you will generallyonly incur minimal additional running expenses. For example, if the area you use forwork is a common area of the home such as a lounge room and that area is beingused by other members of your household for another purpose (such as, familymembers watching television) at the same time you're working, you won't beincurring any additional costs for lighting, heating or cooling as a result of working inthat room.

To work out the work-related portion of your actual expenses you must haverecords. You can either keep:

a record of the number of actual hours you work from home during the incomeyeara diary for a representative four-week period to show your usual pattern ofworking at homework out the decline in value of depreciating assets and

keep receipts showing the amount you spent on the assetsshow the percentage of the year you used those depreciating assetsexclusively for work – you can claim for the portion of the decline in valuethat reflects your work-related use of the depreciating assets

work out the cost of your cleaning expenses (if you have a dedicated workarea) – for example, a room set up as a home office, by adding together yourreceipts and multiplying it by the floor area of your dedicated work area (floorarea of the dedicated work area divided by the whole area of the house as apercentage) – your claim should be apportioned for any

private use of your home officeuse of the home office by other family members

work out the cost of your heating, cooling and lighting by working out thefollowing

the cost per unit of power used – refer to your utility bill for thisinformationthe average units used per hour – this is the power consumption perkilowatt hour for each appliance, equipment or light usedthe total annual hours used for work-related purposes – refer to yourrecord of hours worked or your diary for this information

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work out the cost of your phone or internet plan expenses – where you receivean itemised bill, you need to determine your percentage of work use over afour-week representative period. See Claiming mobile phone, internet andhome phone expenses.work out the cost of computer consumables and stationery by keeping receiptsfor the items purchased.

You must take into account other members of your household when you work outyour expenses. If a member of your household is using the same area of the houseor the same service when you're working, you must apportion your expensesaccordingly.

To claim a deduction for an asset that cost $300 or more, you need to calculate thedecline in value for both the period you:

owned the assets during the income yearused the assets for work-related purposes.

You can use the depreciation and capital allowances tool to calculate yourdeduction for the decline in value of equipment, furniture and furnishings that costmore than $300, use the depreciation and capital allowances tool to work this out.

You can use the myDeductions tool in the ATO app to keep track of your expensesand receipts throughout the year. It’s a fast, easy way to capture information on thego by taking and uploading photos of receipts.

See also:

Home office expenses calculatorDecline in value of depreciating assetsDepreciation and capital allowances tool

Examples – comparing methods

Example 1: work out the method that gives the best outcome using acomparison of the deduction available for each method

Linus is employed as an engineer. Linus has an agreement with hisemployer to work from home one day per week and occasionally before orafter a site visit. Linus’s employer provides him with a laptop and mobilephone, his employer also pays for the monthly mobile plan.

When Linus works from home he uses his own internet and has an office heuses as a dedicated work area. His monthly internet plan costs $69 permonth.

Due to the COVID-19 situation Linus increases his work from home to fivedays per week starting on 17 March. Linus also continues to do site visits.

As Linus is working from home more, on 19 March he decides to buy anergonomic chair for $249 to use. The rest of his office furniture is over

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10 years old.

When completing his tax return, Linus usually claims his home officeexpenses using the fixed rate method. He keeps the required records toshow how he calculates his claim. Linus uses his home office including thedesk and chair for both work and private purposes. He works out that hisprivate use is 10%.

Linus is aware of the increased fixed rate using the shortcut method for theperiod 1 March to 30 June 2020. As Linus’s work from home arrangementchanged as a result of COVID-19, he can choose to use the method thatworks best for him so, he decides to do a comparison between the methods.

Calculating the time spent working from home

Linus looks at records he has kept for the year (these include a diary for arepresentative period of four weeks and his timesheets).

He works out that from 1 July 2019 to 29 February 2020, he worked fromhome for 12 hours per week on average. Except for the three weeks he hadoff over Christmas.

Linus calculates the hours he spent working from home for the period from1 July 2019 to 29 February 2020 as:

(35 weeks − 3 weeks leave) × 12 hours per week = 384 hours

He determines his work-related internet usage was 10% for the period upuntil 16 March and 30% for the period from 17 March to 30 June 2020,taking into account his family’s use and his private use.

In the period 1 March to 16 March 2020, Linus continues to work from homefor an average of 12 hours per week. The total hours worked from homeduring the two week period is:

12 hours per week × 2 weeks = 24 hours

From 17 March to 30 June 2020, Linus works out that he worked:

on site visits for a total of 75 hoursat home for 555 hours.

Linus can't use any of the methods to claim for the cost of his work-relatedphone calls or the decline in value of his laptop and phone handset. This isbecause his laptop and phone are provided by his employer and his callsare paid for by his employer.

Based on his calculations (detailed in the examples below), Linus works outhe would be able to claim:

$625.62 using the fixed rate method (52 cents) – see Example 2$708.48 using a combination of the fixed rate (52 cents) and shortcut

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method (80 cents) – see Example 3$613.77 using the actual cost method – see Example 4.

Linus decides to use the fixed rate method for the period 1 July 2019 until29 February 2020 and the shortcut method from 1 March 2020 to 30 June2020 as that gives him the best result.

Example 2: Linus's deduction using the fixed rate method (52 cents)

Using the fixed rate method for the entire year, Linus calculates hisdeduction as:

(384 hours + 24 hours + 555 hours) × 0.52 (hourly rate) = $500.76

Linus also calculates his internet expenses as these are not covered by thefixed rate. Linus calculates his internet use for the period:

1 July 2019 to 16 March 2020

8.5 months × $69 per month = $586.50

$586.50 × 10% = $58.65

17 March to 30 June 2020

3.5 months × $69 per month = $241.50

$241.50 × 30% = $72.45

The 52 cents per hour rate covers the decline in value of office furniture,therefore Linus cannot claim a separate deduction for the decline in value ofhis chair.

Total deduction:

$500.76 + $58.65 + $72.45 = $631.86

Example 3: Linus's deduction using the Fixed rate and Shortcut method

Using the fixed rate method for the period 1 July 2019 to 29 February 2020and using the shortcut method for the period 1 March to 30 June 2020,Linus calculates his deduction as below.

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Period from 1 July 2019 to 29 February 2020:

Fixed hourly rate

384 hours × 0.52 = $199.68

Internet expenses

8 months × $69 per month = $552

$552 × 10% = $55.20

Total claim amount is:

$199.68 + $55.20 = $254.88

Period from 1 March to 30 June 2020:

Shortcut rate:

(24 hours + 555 hours) × 0.80 = $463.20

Total deduction:

$254.88 (fixed rate) + $463.20 (shortcut rate) = $718.08

Linus doesn’t include the cost of the chair as the decline in value is includedin both of the rates. He also doesn’t include his internet usage in the periodfrom 1 March to 30 June as the internet usage is included in the shortcutrate.

Example 4: Linus's deduction using the Actual costs method

Using this method, Linus will claim directly for any deductible expenses heincurs. He will need to have records for all of his expenses. For his runningexpenses he can claim his additional costs.

Internet expenses:

8.5 months × $69 per month = $586.50

$586.50 × 10% = $58.65

3.5 months × $69 per month = $241.50

$241.50 × 30% = $72.45

Deduction amount:

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$58.65 + $72.45 = $131.10

Decline in value of office chair:

As the cost of the office chair was less than $300, Linus can claim the fullcost in the year it was purchased. However, it must be apportioned toaccount for his private use.

Decline in value calculation:

$249 × 90% (work use percentage) = $224.10

Electricity

Linus uses electricity for his computer and to light, cool and heat his homeoffice while he is working at home. Based on his records he:

used his air conditioning for 50% of the time he spent working fromhome – the air conditioner uses 2kW for cooling and heating per hour.used two 12 watt LED lights in the office whenever he is working.used his laptop whenever he is working from home – the laptop uses50 watts per hour.pays 25 cents per kW hour for electricity.

Lighting

12 watts ÷ 1000 = 0.012 kW

0.012kW × (2 × 25 cents) = 0.6 cents

0.006 cents × 963 hours = $5.78

Air conditioner

2kW × 25 cents = 50 cents

0.50 cents × (963× 50%) = $240.75

Laptop

50 watts÷1000 = 0.05 kW

0.05 × 25 cents = 1.25 cents

0.0125 cents × 963 hours = $12.04

Total claim:

$131.10 + $224.10 + $5.78 + $240.75 + $12.04 = $613.77

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Records for change in circumstancesRegardless of the method you choose to use to calculate your expenses for workingfrom home, you will need to have records.

If your circumstances change part way through the income year – for example, yourusual pattern of work from home changes – you will need to keep separate recordsto show this change.

If you use the four-week representative period to calculate your usage over theincome year, you will need to either:

complete a new four-week representative period to show your usage in yournew circumstanceskeep separate records for the period your circumstances changed.

For example, if you usually work from home one day a week and due to anemergency situation such as COVID-19 or bush fires you're required to work fromhome for a period, you will need to keep separate records for both situations. Thisincludes:

the actual hours you’ve worked from home due to the emergency situationyour usual working from home arrangements.

Your four-week representative period will no longer be valid in these circumstances.

See also:

Records you need to keep – working from home expense recordsmyDeductions – record-keeping tool in the ATO app

Self-education expenses

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Self-education-expenses/Last modified: 15 Jun 2020QC 31970

You may be able to claim a deduction for self-education expenses if your self-education relates to your current work activities as an employee or if you receive ataxable bonded scholarship. In some circumstances, you have to reduce the amountof your claim by $250.

For a summary of this content in poster format, see Self-education expenses (PDF,290KB) .

On this page:

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Course eligibilityExpenses you can claimExpenses you can't claim$250 reduction in expensesApportioning expensesRecording self-education expenses

Course eligibilitySelf-education expenses are deductible when the course you undertake leads to aformal qualification and meets the following conditions.

The course must have a sufficient connection to your current work activities as anemployee and:

maintain or improve the specific skills or knowledge you require in your currentwork activitiesresult in, or is likely to result in, an increase in your income from your currentwork activities.

You can't claim a deduction for self-education expenses for a course that doesn'thave a sufficient connection to your current work activities even though it:

might be generally related to it – such as undertaking a full-time fashionphotography course and working as a casual sales assistant on the weekendsenables you to get new employment – such as moving employment as a nurseto employment as a doctor.

Taxable bonded scholarship recipients

You can claim a deduction for self-education expenses if, in doing the course, youare satisfying study requirements to maintain your right to a taxable bondedscholarship.

If you are employed by the scholarship provider, normal work-related self-educationrules apply.

Expenses you can claimYou can claim a deduction for following expenses related to your eligible self-education:

General course expensesDepreciating assetsCar expenses.

General course expenses

You can claim a deduction for the following general course expenses:

accommodation and meals (if away from home overnight)car expenses

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computer consumables – for example, printer cartridgescourse and tuition fees, if paid directly by youdecline in value for depreciating assets (cost exceeds $300)purchase of equipment or technical instruments (costing $300 or less)equipment repairsfaresfees payable on some Higher Education Loan Program (HELP) loans, but notthe loan itselfhome office running costsinterestinternet usage (excluding connection fees)parking fees (only for work-related claims)phone callspostagestationerystudent union feesstudent services and amenities feestextbookstrade, professional, or academic journalstravel costs, including car expenses

between home and your place of educationbetween your workplace and the place of education.

Some travel for journeys can't be claimed, but you may be able to offset the cost ofthese journeys against the $250 reduction.

If an expense is partly for your self-education and partly for other purposes, you canonly claim a deduction for the amount that relates to your self-education.

Depreciating assets

You may be able to claim a deduction for assets that lose their value over time suchas computer and printers.

Depreciating assets that cost more than $300 are usually claimed over the life of theasset (decline in value). However, if you have a depreciating asset that cost $300 orless you can claim a deduction for the full cost of the asset to the extent that youused it for study in the financial year you bought it. If you also use the asset forprivate purposes you must apportion your costs.

See also:

Apportioning expenses

Car expenses

If your self-education has sufficient connection to your current employment, you canclaim daily travel expenses from your:

home to your place of education and back

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work to your place of education and back.

However, you can't claim the cost of the last stage of your travel for example, fromhome to your place of education and then to work.

See also:

Self-education expenses calculatorClaiming self-education expenses – specific expensesmyDeductions – record-keeping tool in the ATO app

Expenses you can't claimYou can't claim the following expenses in relation to your self-education:

tuition fees paid by someone else or that you have been reimbursed forstudent contribution amountsrepayments of Higher Education Loan Program (HELP) loans (although thefees paid by some HELP loans are)Student Financial Supplement Scheme (SFSS) repaymentsVET Student Loan (VSL) repaymentsStudent Start-up Loan (SSL) repaymentsTrade Support Loan Program (TSL) repaymentshome office occupancy expenses – for example, rent, mortgage interest orratesaccommodation and meals (unless sleeping away from home for study, suchas to attend a residential school).

From the 2011-12 income year, you can’t claim a deduction for self-educationexpenses you incur if you only receive a qualifying Australian Governmentallowance or payment, as that allowance or payment is a rebatable benefit andeligible for the beneficiary tax offset.

Example: receiving Austudy payments

Alison starts a full time Bachelor of Pharmacy. As she has two youngchildren, she applies for and receives Austudy payments from Centrelinkrather than finding employment to support herself while studying. Austudy isa taxable government assistance payment and is eligible for the beneficiarytax offset.

Alison isn't eligible to claim a deduction for her self-education expensesbecause she received Austudy payments and Austudy is a rebatable benefit.

See also:

Claiming self-education expenses – specific expensesTaxation Ruling 98/9 – Income tax: deductibility of self-education expenses

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incurred by an employee or a person in business

$250 reduction in expensesSelf-education expenses are broken into five categories. If all of your self-educationexpenses are 'category A' items then you have to reduce your deduction by $250.

However 'category E' expenses' can be used to offset the $250.

Expenses offset against the $250 reduction

While you can't claim a deduction for the following expenses, you can use them tooffset the $250 reduction. These expenses include:

childcare while attending self-education activitiescapital expenses related to your self-education such as, the purchase of adeskfares, travel or car expenses for these journeys

for work-related self-education, the second leg of a trip if you went fromhome to your place of education and then to work, or the other wayaroundif you receive a taxable bonded scholarship and are not employed by thescholarship provider, travel from home to your normal place of educationand back.

See also:

Self-education expenses calculatorClaiming self-education expenses – specific expenses

Apportioning expensesYou need to apportion some expenses between private purposes and use for self-education, such as travel costs and depreciating assets.

If you use equipment such as computers and printers privately and for study, youmust apportion the expenses based on the percentage you use the equipment foryour self-education. For example, if you use a computer 50% of the time for self-education and 50% for private purposes, you can only claim half the cost of thecomputer as a deduction.

Use our self-education expense calculator to get an estimate of your self-educationdeductions. It also provides information on your claim eligibility.

See also:

Depreciating assetsSelf-education expenses calculator

Recording self-education expenses

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You may need to keep receipts or other documents showing your self-educationexpenses such as:

course feestextbooksstationerydecline in value of and repairs to depreciating assets.

You must also keep receipts, documents or diary entries for travel expenses. Youcan use our myDeductions tool in the ATO app to record your self-educationexpenses.

See also:

myDeductions – record-keeping tool in the ATO appRecords you need to keep

Tools, equipment and other assets

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Tools,-equipment-and-other-assets/Last modified: 15 Jun 2020QC 31938

If you buy tools, equipment or other assets to help earn your income, you can claima deduction for some or all of the cost.

On this page:

Examples of tools, equipment or assetsCosmetics containing sun protectionHandbags, briefcases and satchels

If you use the tools for both work and private purposes you can only claim for thework-related part. For example, if you have a computer that you use for privatepurposes for half of the time you can only deduct 50% of the cost.

The type of deduction you can claim depends on the cost of the asset:

for items that aren't part of a set and cost $300 or less, or form part of a setthat together cost $300 or less, you can claim an immediate deduction for theircostfor items that cost more than $300, or that form part of a set that together costmore than $300, you can claim a deduction for their decline in value.

See also:

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Decline in value of depreciating assets – individualsCapital allowances – $300 immediate deduction tests

Examples of tools, equipment or assetsCalculatorsComputers and softwareDesks, chairs and lampsFiling cabinets and bookshelvesHand tools, such as spanners, hammers and screwdrivers or power tools, suchas grinders, sanders and hammer drills.Protective items, such as hard hats, safety glasses, sunglasses, sunscreensand cosmetics containing sun protectionProfessional librariesSafety equipmentTechnical instruments

You can also claim the cost of repairing and insuring your tools and equipment andany interest on money you borrowed to buy these items.

If you use items for both personal and work-related purposes you need to keeprecords, such as a diary to show the purpose of use of the item. So that, ifrequested, you can show how you worked out the amount of personal and work-related use.

For more information on tools, equipment and other assets see Occupation andindustry specific guides.

See also:

Records you need to keepmyDeductions – record-keeping tool in the ATO app

Cosmetics containing sun protectionPersonal items can perform more than one function, and so can have more thanone use. For example, some creams and cosmetics can function both as a sunprotection and as a cosmetic. If the primary purpose of the item is for use as acosmetic or the product is marketed as a cosmetic, it generally won't be treated as asun protection product.

You can only claim a deduction for the cost of a product containing sun protection if:

your work exposes you to the effects of the sun because you are required toperform your duties for prolonged periods outdoorsyou wear a sunscreen while you are at work to protect you from that risk.

If you use a sunscreen for private purposes and work purposes, you need toapportion for your private usage.

You can't claim a deduction if:

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your work doesn't require you to perform your duties in the sun for prolongedperiodsyou purchase a cosmetic with added sunblock protection.

Cosmetics are designed to change a person's appearance or cleanse, perfume orprotect an external part of the body. This means that they are usually a privateexpense and the addition of sun protection does not make them deductible.

If your product is a sunscreen or a cosmetic

The Department of Health, Therapeutic Goods Administration (TGA) regulates if aproduct is safe and effective as a sunscreen.

Products regulated as therapeutic goods by the TGA include:

primary sunscreens (intended primarily for sun protection)moisturisers containing sunscreen with Sun Protection Factor (SPF) greaterthan 15sunscreens with ingredients from humans, cows, sheep, goats or mule deerorgansall sunscreens (with SPF 4 or more) that contain insect repellent.

If a product is safe and effective as a sunscreen, it's given an Australian Register ofTherapeutic Goods (ARTG ID) number by the TGA. This is displayed on theproduct as an AUST L number.

We accept any product with an ARTG ID and an AUST L number on the label assunscreen rather than a cosmetic.

To find out whether a product has been given an ARTG ID you can visit the TGAwebsite .

Example – no deduction allowable deduction for products that are not asunscreen

Jackie is a teacher and has bought a cosmetic with added sunblock. Once aweek, Jackie is required to supervise pupils at their sports afternoonoutdoors. Jackie wears the cosmetic every day and she finds it suitable assun protection but it isn't a sunscreen approved by the TGA. As Jackie usesthe product primarily as a cosmetic, she will not be entitled to a deduction forthe purchase. This is even though she is exposed to the sun when she isperforming her duties on sports afternoon.

If the product Jackie purchased had been given an ARTG ID by the TGA,she would have to apportion the deduction she claimed for the product toaccount for her personal use. Her personal use would include the timeJackie does not spend in the sun performing her duties and any other timeshe wears the cosmetic outside school hours.

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Example – no deduction allowable for products used for night duties

Teegan is a hospitality worker and works at night at a restaurant. Shebought a cosmetic with a high level sunblock to wear at all times. AlthoughTeegan wears the cosmetic when she goes to work, her duties don't exposeher to the effects of the sun and sun protection isn't required by her in thecourse of earning her income. Teegan isn't able to claim a deduction for thecosmetic.

Example – deduction allowed for cosmetic containing sunscreen

Wendy works as a gardener and spends the majority of her working dayoutdoors. Wendy purchases a tinted moisturiser with a high level sunblockto use on her face when she is working along with a sunscreen for her armsand legs. Wendy doesn’t use these products when she isn't working. Wendychecks the TGA website and finds that both the products she uses have anARTG ID.

As Wendy is exposed to the sun for long periods as a result of performingher duties, the cost of the products is incurred in earning her assessableincome. This means she is entitled to a deduction for the tinted moisturiserand sunscreen she purchases.

Handbags, briefcases and satchelsYou may be able to claim a deduction for a handbag, briefcase or satchel you buyto carry items you are required to use and carry for your work, such as laptops,tablets, work papers or diaries. The amount of the deduction will depend on the howmuch you use the bag for work purposes.

You can't claim a deduction if you mainly use the bag for personal purposes, suchas carrying your lunch and beauty and hygiene products. This is private use.

When you use the bag for both private and income producing purposes, you mayneed to apportion the deduction you claim based on the amount of time you use thebag for work and for private purposes.

Where you use the bag for work purposes and it costs less than $300, you canclaim the deduction immediately. Where the bag costs more than $300, you willgenerally work out any deduction using its effective life.

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Example – allowable deduction for a handbag

Elizabeth buys a handbag for $150 to carry her tablet and work diarybetween appointments with clients The handbag is only used to carry thework items and she carries another bag for her personal items. She doesnot use the handbag that carries her tablet outside of work hours. As she isrequired to use the tablet and diary for her work the bag is being used forthe production of assessable income, Elizabeth can claim a deduction.

Example – no deduction is allowable for a satchel

Arki buys a messenger satchel for $220 to carry his lunch and snacks,personal medical kit and private grooming items. He also uses it to carry amini tablet, which he uses in his income producing occupation.

Arki also carries the satchel outside of work hours. This means the satchelis not mainly used for the purposes of producing assessable income. Arki isnot able to claim a deduction for the satchel.

Example – apportioned deduction for a handbag

Theresa buys a large handbag for $280 to replace her current handbag, asshe is now regularly required to take a small laptop type item and clientpaperwork to and from work. She continues to use her handbag to carrypersonal items and takes it with her outside of work hours. The largehandbag is being used for both income producing and private purposes sothe deduction would need to be apportioned between both uses.

Watch: Transporting bulky tools and equipment

See also:

Decline in value of depreciating assets – individuals

Media: [Transporting bulky tools and equipment]http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubx7d1ys (Duration: 00:52)

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Capital allowances – $300 immediate deduction testsDepreciation and capital allowances toolOccupation and industry specific guides

Other work-related deductions

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Last modified: 14 Jul 2020QC 58826

Generally, if you need to spend money as part of your income producing activities,you can claim a deduction for the expense. Depending on the deduction this can bean immediate deduction or over time.

To claim a deduction for a work-related expense:

you must have spent the money yourself and weren't reimbursedit must be directly related to earning your incomeyou must have a record to prove it (usually a receipt).

Expenses that relate to you earning an income can include:

Books, periodicals and digital informationCash shortages or client bad debtsClaiming mobile phone, internet and home phone expensesElection expensesGlasses, contact lenses and protective glassesIncome protection insuranceOvertime mealsProject pool deductionsSeminars, conferences and education workshopsUnion fees, subscriptions to associations and bargaining agents feesWorking with children checksHome office expenses – for employees working from home as a result ofCOVID-19, we have specific information available about home office expensesTools, equipment and other assets.

See also:

Deductions you can claimOther deductions

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Books, periodicals and digital information

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Books,-periodicals-and-digital-information/Last modified: 15 Jun 2020QC 31988

You may be able to claim a deduction for books, periodicals and digital informationexpenses you incur as part of earning your employment income.

'Digital information' includes:

online subscriptionselectronic published material, such as e-books or e-journalsother purchased digital materials.

If the item costs $300 or less you can claim an immediate deduction where itsatisfies all of the following requirements:

It is predominantly used for earning assessable employment income (that is notincome from carrying on a business).It is not part of a set of assets acquired in the same income year that costsmore than $300.It is not one of a number of identical or substantially identical items acquired inthe same income year that together cost more than $300.

If the item cost more than $300, or is part of a set that cost more than $300, you canadd it to your professional library and claim a deduction for the decline in value.

See also:

Decline in value of depreciating assets – individualsCapital allowances – $300 immediate deduction testsDepreciation and capital allowances tool

Cash shortages or client bad debts

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Cash-shortages-or-client-bad-debts/Last modified: 15 Jun 2020QC 53953

If you deal with money as part of your employment and you are required to repayyour employer amounts (you can substantiate) in respect of cash shortages or client

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bad debts, then:

you have incurred a deductible loss or outgoing in earning employment incomeyou are entitled to claim a deduction for those amounts.

Claiming mobile phone, internet and homephone expenses

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Claiming-mobile-phone,-internet-and-home-phone-expenses/Last modified: 15 Jun 2020QC 46119

If you use your own phone or internet for work purposes, you may be able to claim adeduction if all of the following conditions apply:

you spent the money yourselfthe expense is directly related to earning your incomeyou must have a record to prove it.

You can't claim a deduction where you haven't incurred any expenses, or you'rereimbursed for any costs by your employer.

For employees working from home as a result of COVID-19, we have specificinformation available about claiming home office expenses, including phone andinternet expenses.

If you use your phone or internet for both work and private use, you will need towork out the percentage that reasonably relates to your work use.

On this page:

Substantiating your claimsWhen you can’t claim a deduction for your phoneHow to apportion work use of your phone

Substantiating your claimsTo claim a deduction of more than $50, you need to keep records for a four-weekrepresentative period in each income year. These records may include diaryentries, including electronic records, and bills. Evidence that your employer expectsyou to work at home or make some work-related calls from home will also help youshow that you are entitled to a deduction.

When you can’t claim a deduction for your phone80 of 155

Employer provided phone

If your employer provides you with a phone for work use and they are billed for theusage (phone calls, text messages, data) then you can't claim a deduction.Similarly, if you pay for your usage and are then reimbursed by your employer, youcan't claim a deduction.

Costs you incur before work commences

If you use your phone to seek employment you can't claim a deduction as you arenot yet generating income from the use of the phone.

Similarly, if you are a casual employee and an employer calls you to ask you towork, or you call them to check on work availability, you can't claim a deduction.The cost is not considered to be one that directly relates to your income producingactivities. Instead, it's an activity that is putting you in a position to earn that income.

You can only claim a deduction for the portion of your phone use when you'reearning assessable income and your employer requires you to use your phonedirectly in earning that income.

For more information on costs that are usually considered private or capital innature and are disallowed or which require apportionment, such as installationcosts, line rental, and joint usage expenses, see the Employees guide for workexpenses.

How to apportion work use of your phoneAs there are many different types of plans available, you will need to determine yourwork use using a reasonable basis.

Incidental use

If your work use is incidental and you are not claiming a deduction of more than $50in total, you may make a claim based on the following, without having to analyseyour bills:

$0.25 for work calls made from your landline$0.75 for work calls made from your mobile$0.10 for text messages sent from your mobile.

Usage is itemised on your bills

If you have a phone plan with an itemised bill, you need to work out yourpercentage of work use over a four-week representative period, which you can thenapply to the full year.

You need to work out the percentage using a reasonable basis. This could includethe:

number of work calls made as a percentage of total calls

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amount of time spent on work calls as a percentage of your total callsamount of data downloaded for work purposes as a percentage of your totaldownloads.

Example: Phone calls are itemised on your bill

Julie has an $80 per month mobile phone plan, which includes $500 worthof calls and 1.5GB of data. She receives a bill that itemises her phone callsand provides her with her monthly data use.

Over a four-week representative period, Julie identifies that 20% of her callsare work-related. She worked for 11 months during the income year, havinghad one month of leave. Julie can claim a deduction of $176 in her tax return(20% × $80 × 11 months).

Usage is not itemised on your bills

If you have a phone plan where you don’t receive an itemised bill, you determineyour work use by keeping a record of all your calls over a four-week representativeperiod and then calculate your claim using a reasonable basis.

Example: Non-itemised account

Ahmed has a prepaid mobile phone plan that costs him $50 per month.Ahmed does not receive a monthly bill so he keeps a record of his calls for afour-week representative period. During this four-week period, Ahmedmakes 25 work calls and 75 private calls. Ahmed worked for 11 monthsduring the income year, having had one month of leave.

Ahmed calculates his work use as 25% (25 work calls ÷ 100 total calls). Heclaims a deduction of $138 in his tax return (25% × $50 × 11 months).

Bundled phone and internet plans

Phone and internet services are often bundled. If you are claiming deductions forwork-related use of one or more services, you need to apportion your costs basedon your work use for each service.

If other members in your household also use the services, you need to take intoaccount their use in your calculation.

If you have a bundled plan, you need to identify your work use for each service overa four-week representative period during the income year. This will allow you todetermine your pattern of work use, which you can then apply to the full year.

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A reasonable basis to work out your work-related use could include:

Internetthe amount of data downloaded for work as a percentage of the total datadownloaded by all members of your householdany additional costs incurred as a result of your work-related use, forexample, if your work-related use results in you exceeding your monthlycap.

Phone

the number of work calls made as a percentage of total callsthe amount of time spent on work calls as a percentage of your total callsany additional costs incurred as a result of your work-related calls, forexample, if your work-related use results in you exceeding your monthlycap.

Example: Apportioning bundled services

Sujita has a $100 per month home phone and internet bundle. The billidentifies that the monthly cost of Sujita’s phone service in her bundle is$40, and her internet service is $60. Sujita brings in her mobile phone planof $90 per month and receives a $10 per month discount. Her total costs forall services are $180 per month.

Sujita worked for 11 months during the income year, having had one monthof leave.

Based on her itemised accounts, Sujita determines that the work-related useof her mobile phone is 20%. Sujita also uses her home internet for workpurposes and based on her use she determines that 10% of her use is forwork. Sujita does not use her home phone for work calls.

As the components are part of a bundle Sujita can calculate her work-related use as follows:

Step 1 – work out the value of each bundled component

Mobile phone: $90 per month minus the $10 per month discount = $80per monthInternet: $60 per monthHome phone: Sujita does not need to determine the home phone costsas she does not use this service for work purposes.

Step 2 – apportion work-related use

Mobile phone use: 20% work-related use × $80 permonth × 11 months = $176Home internet use: 10% work-related use × $60 permonth × 11 months = $66

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In her tax return, Sujita claims a deduction of $242 for the financial year($176 mobile phone use + $66 home internet use).

Example: Apportioning bundled services

Des has a $90 per month home phone and internet bundle, and unlimitedinternet use as part of his plan. There is no clear breakdown for the cost ofeach service. By keeping a record of the calls he makes over a four-weekrepresentative period, Des determines that 25% of his calls are for workpurposes. Des also keeps a record for four weeks of the data downloadedand determines that 30% of the total amount used was for work.

Des worked for 11 months during the income year, having had one month ofleave.

As there is no clear breakdown of the cost of each service (calls anddownloads), it is reasonable for Des to allocate 50% of the total monthlycost to each service.

Step 1 – work out the value of each bundled component

Internet: $45 per month ($90 ÷ two services)Home phone: $45 per month ($90 ÷ two services)

Step 2 – apportion work-related use

Internet: 30% work-related use × $45 per month × 11 months = $149Home phone: 25% work related use × $45 permonth × 11 months = $124

In his tax return, Des claims a deduction of $273 ($149 + $124) for the year.

Purchasing a smartphone, tablet or other electronic device

If you bought a smartphone, tablet or other electronic device and you use it for workyou can claim a deduction for a percentage of its cost.

See also:

myDeductions – record-keeping tool in the ATO appEmployees working from home

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myGovID expenses you can claim

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/myGovID-expenses-you-can-claim/Last modified: 25 Mar 2020QC 61932

If you use your smartphone, device or data to obtain and use a myGovID to accessour online services to carry out your employment duties, you can claim a deductionfor the expenses you incur.

You need to apportion your expenses if you use your smartphone, device or datafor both work and private purposes.

On this page:

You provide the phoneYour employer provides the phoneYou receive an allowance from your employerRecords for phone and data expenses

You provide the phoneIf you provide the smartphone or device and it is used mainly to produce youremployment income, you can claim:

an immediate deduction if it cost $300 or lessa deduction for its cost over its effective life (the decline in value of the item) ifit cost more than $300.

Smartphones and devices start to decline in value from when you first use them forany purpose.

You may be able to claim a deduction for the decline in value of a smartphone ordevice you own that you first bought for a private purpose, if both of the followingconditions are met:

the smartphone or device cost $300 or moreyou use it at a later time for a work purpose (such as accessing our onlineservices).

See – Example 2.

Find out about:

Immediate deduction for certain non-business depreciating assets (costing$300 or less)How to work out the decline in value

Example 1: Employee purchases a smartphone for less than $300

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Gerry is employed as an in-house accountant for a company. His dutiesinvolve lodging his employer’s income tax returns and business activitystatements. Gerry also requires access to ATO online services so that hecan view statements of account and Single Touch Payroll reports.

Gerry purchases a smartphone for $199 to use only at work for the purposeof setting up a myGovID to access the ATO online services. Gerry’semployer provides him with authorisation to access ATO online servicesthrough the Relationship Authorisation Manager and access to the companyinternet via wi-fi. Gerry leaves the smartphone at work.

As the device cost less than $300, Gerry can claim an immediate deductionfor the full amount he incurred to purchase the phone ($199) in the incomeyear he purchased it in.

Gerry can't claim a deduction for data because the company has providedGerry access to their internet. Therefore, Gerry doesn't incur any expensefor the data he uses.

Example 2: Employee uses existing smartphone – apportioned personal andwork use

Eliza works in the payroll department of a large company. Her duties involvecalculating the pay for employees and ensuring that her employer meetstheir Superannuation guarantee obligations. In order to carry out theseduties, Eliza requires a myGovID to access ATO online services on behalf ofher employer.

Eliza purchased her smartphone on 1 July 2019 for $1,100. Eliza uses hersmartphone for private and making and receiving work-related calls. On29 February 2020, she uses it to set up myGovID and her employer givesher authorisation to access ATO online services through the RelationshipAuthorisation Manager.

As Eliza has been using her smartphone for both private and work purposesduring the income year, she has kept itemised accounts and diary recordsrepresenting a four week period. Eliza's records prior to using hersmartphone to access ATO online services, show that up until 29 February2020 when she registered for myGovID, she used her smartphone 40% forwork purposes.

From 1 March 2020 when she started using her myGovID for workpurposes, Eliza found that her use of the smartphone increased to 50% forwork purposes. She works this out by looking at the increase in data usedfrom that date.

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As Eliza is on a $50 per month bring your own phone plan, she can claim adeduction for 40% of her monthly plan rate from 1 July 2019 to 29 February2020. Eliza took four weeks leave during this period so she excludes thefour weeks from her calculation for that period.

Eliza can also claim a deduction for 50% of her monthly plan for the periodfrom 1 March 2020 to 30 June 2020.

Her deduction of $240 for her monthly plan is calculated as follows:

($50 × 7 months) × 40% = $140($50 × 4 months) × 50% = $100$140 + $100 = $240

Eliza can also claim a deduction for the decline in value of her phone($1,100). She decides to use the diminishing value method and calculatesthe decline in value as follows:

$1,100 × 366 ÷ 365 × 200% ÷3 years = $735($735 × 7 ÷ 12 months) × 40% = $171($735 × 4 ÷ 12 months) × 50% = $122$171 + $122 = $293

In her return for the 2019–20 income year, Eliza can claim a total deductionfor her phone expenses of $533, ($240 + $293).

See also:

Claiming mobile phone, internet and home phone expensesEmployees guide for work expenses

Your employer provides the phoneYou can't claim a deduction if your employer either:

provides you with a smartphone or device to obtain and use a myGovID andpays for any associated datareimburses you for costs you incur to buy a smartphone or device and theassociated data.

Example 3: Employer provides smartphone to employee

Leo works for an accounting firm. He prepares accounts, lodges income taxreturns and lodges business activity statements for clients.

On 29 February 2020, his employer gives him authorisation to access ATOonline services through the Relationship Authorisation Manager. In order toset up a myGovID and access online services, his employer provides himwith a mobile phone to use at work. Leo uses his employer’s wi-fi to access

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the online services.

As Leo doesn't incur any expenses for the smartphone or data he uses, hecan't claim deduction for its use. However, his employer will be entitled toclaim a deduction for the cost of supplying the smartphone and data to Leofor this purpose.

You receive an allowance from your employerIf you receive an allowance to cover the cost of a smartphone, device or data for thepurpose of obtaining and using myGovID to access our online services, you mustinclude the allowance as income in your tax return. You can claim a deduction forthe smartphone or device you buy and the amount you spent on data for thispurpose. You can claim the:

immediate cost if the amount of the smartphone or device is $300 or lessdecline in value where the cost of the smartphone or device is more than $300.

Example 4: Employer pays employee an allowance to purchase asmartphone

Priya is employed as a tax agent and BAS agent. As Priya requires accessto ATO online services in order to carry out her employment duties. Priyasets up a myGovID and her employer gives her authorisation to access ATOonline services through the Relationship Authorisation Manager.

In the 2019–20 income year, Priya’s employer pays her an allowance of$500 to cover the cost of buying a smartphone or device and any data sherequires to set up and use a myGovID to access online services.

On 1 March 2020, Priya purchases a smartphone at a cost of $299 andenters into a contract for a plan at a cost of $30 per month. Priya choosesthe plan on the basis that it includes enough data for her to regularly accessonline services. The phone Priya purchases is only used for work purposesas she already has a smartphone that she uses for private purposes.

In her tax return for the 2019–20 year of income, Priya declares theallowance of $500 from her employer as income and claims a deduction of$419 calculated as:

($299 + ($30 × 4 months)) =$419

See also:

Employees guide for work expensesPS LA 2001/6 Verification approaches for home office running expenses and

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electronic device expensesAccessing online services with myGovID and RAM

Records for phone and data expensesYou must have records to support your claim for phone and data expenses.

These records may include diary entries, including electronic records, and bills.Evidence that you are required to use myGovID to access online services for workpurposes will also help you show that you are entitled to a deduction.

See also:

Records you need to keepmyDeductions – record-keeping tool in the ATO appClaiming mobile phone, internet and home phone expenses

Election expenses

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Election-expenses/Last modified: 15 Jun 2020QC 31991

You can claim a deduction for election expenses, including a candidate's costs ofcontesting a:

local government election – your deduction for local government body electionexpenses cannot exceed $1,000 for each election contested, even if theexpenditure is incurred in more than one year of incomestate or territory electionfederal election.

If you claim a deduction for any election expense and you get a reimbursement, youmust include the reimbursement as income on your tax return.

You can't claim a deduction for union election expenses if there is no continuity ofoffice. Continuity of office only occurs when a union position is guaranteed withoutan election. Election or re-election expenses aren't incurred in performing unionduties so they are not deductible.

See also:

Gifts and donationsTR 1999/10 – Income tax and fringe benefits tax: Members of Parliament -allowances, reimbursements, donations and gifts, benefits, deductions and

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recoupments

Glasses, contact lenses and protectiveglasses

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Glasses,-contact-lenses-and-protective-glasses/Last modified: 15 Jun 2020QC 49860

You can't claim a deduction for the cost of buying or repairing prescription glassesor contact lenses even if you wear them while working. It's a private expenserelating to a personal medical condition.

You may be able to claim a deduction for equipment that is used to protect youreyes from the risk of illness or injury at work. To claim such a deduction, you mustbe able to show that there is sufficient connection with your income earningactivities.

You may be able to claim a deduction for the work-related portion of the cost of:

safety goggles – if you're required to work in an environment that could beharmful if adequate safety precautions aren't taken.protective sunglasses – if you are required to work outdoors and are exposedto the risk of eye damage from sunlight. This includes prescription sunglassesand anti-glare glasses.

See also:

Glasses and contact lensesProtective clothing

Overtime meals

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Overtime-meals/Last modified: 15 Jun 2020QC 31960

You can claim a deduction for overtime meals without getting written evidence, if all

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the following apply, you:

get paid an overtime meal allowance under an industrial instrument (such asan award)buy food and drink and consume it on overtimeonly claim up to the reasonable allowance expenses amount.

However, you can still only claim the amount you have actually spent.

If you claim more than the reasonable allowance expense amount, you need to keepwritten evidence of all of your expenses on your food and drink. Not just writtenevidence for the excess amount.

Overtime meal allowancesGenerally, you must include amounts received as overtime meal allowances asincome on your tax return. If your award overtime meal allowance was not shown onyour income statement or payment summary and was not more than the reasonableallowance amount for each meal, you don't have to include the amount on your taxreturn providing that you:

have fully spent the allowancedon't claim a deduction for overtime meal expenses.

See also:

Exceptions for keeping travel expense recordsTD 2019/11 – Income tax: what are the reasonable travel and overtime mealallowance expense amounts for the 2019-20 income year?

Project pool deductions

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Project-pool-deductions/Last modified: 15 Jun 2020QC 31953

If you have capital expenditure directly connected with a project, you may be able toclaim a deduction for capital expenditure allocated to a project pool.

A project is carried on if it involves some form of continuing activity. Holding a less-active investment, such as a rental property, would not have sufficient activity toconstitute the carrying on of a project.

The project must be either:

operated for a taxable purpose, that is, for the purpose of producing

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assessable incomecarried on or proposed to be carried on for a taxable purpose which wasabandoned, sold or otherwise disposed of before or after it started to operate.

You can't claim a deduction for private or domestic expenditure, such as the cost ofconstructing a driveway at your home.

See also:

Guide to depreciating assets (NAT 1996)

Seminars, conferences and training courses

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Seminars,-conferences-and-training-courses/Last modified: 15 Jun 2020QC 31928

You can claim the cost of attending seminars, conferences or training courses tomaintain or increase the knowledge, capabilities or skills you need to earn yourincome in your current employment. This can include formal education coursesprovided by professional associations.

If there is a non-work related component to attending the seminar, conference ortraining course, then you may not be able to claim all of your expenses:

If the non-work related component of attending the seminar, conference ortraining course is incidental (such as catered lunches or a reception fordelegates), then you can still claim all of the expenses to attend.If the main purpose is non-work related and the conference, seminar or trainingcourse is incidental (not the main purpose), you can only claim the direct costsfor the conference, seminar or training course.

If attendance involves travel, you may have to show that you have reduced yourclaim to exclude the private portion of any trip.

See also:

Self-education expensesmyDeductions – record-keeping tool in the ATO app

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Union fees, subscriptions to associations andbargaining agents fees

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Union-fees,-subscriptions-to-associations-and-bargaining-agents-fees/Last modified: 15 Jun 2020QC 31912

You can claim a deduction for:

union feessubscriptions to trade, business or professional associationsthe payment of a bargaining agent’s fee to a union for negotiations in relationto a new enterprise agreement award with your existing employer.

You can only claim payments of levies to a strike fund where the fund is used solelyto maintain or improve the contributors' pay.

Most unions and associations send members statements of the fees orsubscriptions paid.

See also:

myDeductions – record-keeping tool in the ATO app

Working with children check

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-work-related-deductions/Working-with-children-checks/Last modified: 15 Jun 2020QC 44085

Many people working with children need to get a working with children check.

Claiming a deduction for a working with children checkYou can claim a deduction for the cost of a working with children check applicationyou paid for as an employee, if you are:

an existing employee and need to have a suitability notice to continue to earnassessable income in your positiona new employee and recently earned assessable income from beingcontinuously employed in the child-related employment field.

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Example 1: new teacher previously employed in child-related employment

Freda receives most of her income in the child-related employment field. Foryears she has worked at a range of schools as a teacher, employed under aseries of temporary contracts. Her last contract ended in March 2020 andshe accepted another contract at a different school in May 2020. In order forFreda to start this new contract, the principal of the school is now requiredto apply for a suitability notice for Freda. Freda pays the application fee forthe suitability notice to work with children.

Freda can claim the cost of the application as a deduction. Although she is anew employee at this particular school, she has been continuouslyemployed in the child-related employment field and the expense isnecessary to her employment.

Example 2: renewal of notice

Adam is working as a head of middle school when his suitability notice towork with children expires. The principal applies for a renewal of the noticeand Adam pays the application fee. Adam can claim a deduction for the costof the renewal. The expense is necessary to maintain his existing incomestream.

When you can't claim a deductionYou can't claim a deduction for the cost of getting an initial working with childrencheck if you are both:

a new employeehaven't recently been employed in the child-related employment field.

Example 3: cleaner not previously in child-related employment

Catriona was once employed as a cleaner in a school. However, for anextended period of time, she has not worked in child-related employmentand her suitability notice to work with children has expired. In June 2019,she accepted another position as a cleaner with a new school. The principalof the school applies for a suitability notice for her. Catriona pays theapplication fee.

Catriona is not entitled to a deduction, although her previous employment

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was child-related. The time elapsed and the fact that she has since had jobsin other fields of employment removes the connection between the expenseand her income.

She needs the notice to allow her to re-enter the field of child-relatedemployment as a new employee, rather than to preserve the continuity of anexisting income stream. The expense precedes the earning of assessableincome from that field.

See also:

Teachers and education professionals – income and work-related deductionsCR 2001/38 – Income tax: The deductibility for Queensland schoolemployees of the cost of obtaining a suitability notice for working withchildren

Other deductions

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Last modified: 15 Jun 2020QC 31921

You may be able to claim a deduction for other expenses related to managing yourtax affairs.

Other expenses you may be able to claim include:

ATO interest – calculation and reportingCost of managing tax affairsGifts and donationsInterest charged by the ATOInterest, dividend and other investment income deductionsPersonal super contributionsUndeducted purchase price of a foreign pension or annuityIncome protection insurance

See also:

Deductions you can claimOther work-related expenses

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ATO interest – calculation and reporting

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/ATO-interest---calculation-and-reporting/Last modified: 15 Jun 2020QC 49294

This information may be useful if you need to manually calculate your ATO interestdeductions or income. It may also be useful if you need to adjust interest amountswhen using the ATO interest pre-fill data when preparing your tax return.

The Year to date interest summary report available to tax agents is not intended tobe used for completing income tax returns (see Recurring data issues – calculatingATO interest.)

It is important that you check your statement of account to ensure the accuracy ofthe pre-fill data before lodging your tax return.

On this page:

ATO interest – reportingATO interest – calculationManually calculating ATO interest

ATO interest – reportingWe provide ATO interest data to individual taxpayers for the 2014 and later incomeyears. Interest data is pre-filled in the relevant income tax return labels when youprepare your return using myTax.

We also provide this data to tax agents via the Pre-filling report and the practitionerlodgment service. We will display a message in the Pre-filling report advising if aclient has ATO interest for 2013 and prior income years.

Interest data is sourced from the income tax, fringe benefit tax (from 2018) and theintegrated client accounts (ICA). The following interest types are reported:

General interest charge (GIC)Shortfall interest charge (SIC)Late payment interest (LPI)Interest on early payment (IEP)Interest on overpayment (IOP)Delayed refund interest (DRI).

We report on interest that:

may be claimed as a deduction (GIC, SIC, LPI)must be claimed as assessable income (GIC, SIC or LPI remissions orrecoupments)must be claimed as interest paid by the ATO (IOP, IEP, DRI).

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In 2016, we introduced a new way of capturing and reporting GIC, SIC and LPI. Thisreporting method applies to individual taxpayers only – see, ATO interest –calculation.

Individual taxpayers can choose to report ATO interest deductions and incomeusing this new method or they can choose to calculate the interest amountsmanually – see Manually calculating ATO interest.

We changed the individual income tax return labels you use to report ATO interestas follows:

For 2017 and prior income yearsinterest deductions are reported at item D10 Cost of managing affairsassessable interest is reported at item 24Y Other incomeinterest paid by the ATO (that is, IOP, IEP, DRI) is reported at item 10Gross interest.

For 2018 and later income years

interest deductions are reported at item D10N Cost of managing taxaffairs – Interest charged by the ATOassessable interest is reported at item 24X Other income – Category 2(ATO interest)interest paid by the ATO is reported at item 10 Gross interest.

Recurring data issues

You should check your statements of account and other source documents toensure the pre-fill data reflects your specific circumstance before lodging your taxreturn.

Interest calculations will not capture an individual taxpayer's specific circumstancesin the following situations:

Recoupments of interest chargedWhen we report interest remission and credit adjustments as assessableincome we assume you have claimed a deduction for interest that we imposed.If you have not claimed a deduction and the period for requesting anamendment of your return to claim the deduction has lapsed, you don't have toinclude that interest income. (You may need to adjust the interest totals wehave provided to remove the amount you are not claiming.)Change in residency statusWe report interest paid by the ATO on the basis of your residency status whenthe interest data is extracted from your account at the end of the financial year.If you were a non-resident at the date of extraction, no interest paid data will beprovided. If you were a non-resident when we paid you interest, then weshould have withheld tax from that payment. If this is the case you don't haveto declare this interest in your income tax return. If tax was not withheld, youwill need to declare the interest as income at item 10 Gross interest.

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You may need to adjust the interest totals we have provided to remove or addthe interest paid by the ATO. See Examples 5 and 6.Movement of transactions across ICAWe move transactions across accounts to undertake a number ofadministrative actions (for example, to isolate pre and post-bankruptcytransactions; to isolate amounts that are in dispute). When a transaction ismoved between accounts, the process date is reported as the date thetransaction was moved. This means interest previously reported may bereported again in a later pre-fill report. We have revised our business rules toprevent this duplication in the report for 2018 and later years. You may need toadjust the interest totals we provide for the 2017 and prior years if youraccounts contain moved transactions.

ATO interest – calculationFor the 2015 and prior income years, we use the effective date and processed dateto capture separate interest totals for:

interest deductionsassessable interestinterest paid by the ATO.

Non-individual taxpayers will need to continue using these calculation rules for allincome years.

For the 2016 and later income years, we capture all interest transactions in the pre-fill totals for individual taxpayers using the processed date only. We also reporteither a net deduction or a net assessable interest amount instead of a separatetotal for these interest categories. Interest is reported as follows:

net interest deductions at item D10 or D10N (where the interest imposedexceeds the interest income), ornet assessable interest at item 24Y or 24X (where the interest income exceedsthe interest imposed), andinterest paid by the ATO at item 10.

Where the net balance of interest calculations is nil, no interest will be reported. Norwill we provide a message that there is any interest.

Individual taxpayers don't have to rely on the pre-fill interest amounts. They can usethe previous method of calculation – see Manually calculating ATO interest.

Transitional year adjustments

This only impacts the calculation of pre-fill interest for the 2016 income tax year.

The 2015 Pre-filling report was changed to a static report on 9 November 2015 tocater for the introduction of the new reporting method. This means:

the debit interest transactions processed on or after 9 November 2015 with aneffective date of 30 June 2015 or earlier will be included in the interest totals

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for the 2016 pre-fill reportthe debit interest transactions processed on or after 1 July 2015 but before9 November 2015 with an effective date of 30 June 2015 or earlier may becaptured in the interest totals in several pre-fill reports – the 2016 and earlieryear reports – depending on when interest was incurred.

If you lodged your 2015 tax return before 9 November 2015 using ATO pre-fill data,you may need to adjust the 2016 pre-fill interest figures (see Example 4).

The following may assist you to determine if adjustments will be needed:

Did you have ATO interest in 2015? If no, no adjustment to 2016 data is needed.

Did you lodge your 2014-15 return using pre-fill data before 9 November2015?

Adjust 2016 pre-fill data (see note 1) by any debit interest transaction with

process date between 1 July 2015 and the date you lodged, andeffective date between 1 July 2014 and 30 June 2015.

Did you lodge your 2014-15 return using pre-filled figures after 9 November2015?

Adjust 2016 pre-fill data (see note 1) by any debit interest transaction with

process date between 1 July 2015 and 9 Novembereffective date between 1 July 2014 and 30 June 2015.

Did you lodge your 2014-15 return using non-prefilled figures?

Manual calculation method required.

1. An adjustment will be needed if the same debit interest transaction is captured inthe 2015 and 2016 interest totals. This is done by reducing the 2016 deductionsclaimed – that is, increase 24Y or decrease D10 by the amount of the duplicatedtransaction. Adjustments to credit transactions are not needed.

How the new reporting process works – examples

Example 1: Net amount of ATO interest is nil

Chris has an outstanding debt with us and was charged $1,200 GIC in theperiod 1 July 2015 to 31 January 2016. Chris paid his debt and requestedleniency with the charges. A full remission was granted on 31 January 2016.In this case, Chris has a $1,200 deductible interest expense and $1,200assessable interest income (due to the GIC remission). Under the newapproach, we will not provide pre-fill information as the net balance of the

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interest deductions and interest income is nil.

Under the legislative rules, Chris would claim a deduction expense of $1,200at label D10 and include interest income of $1,200 at label 24Y in thesupplementary return. Under the new reporting approach, he will not declareATO interest at these labels.

Example 2: Net amount of deductible interest

Jenny has an outstanding debt with us and was charged $2,300 GIC in theperiod 1 July 2015 to 30 June 2016. There were GIC remissions of $56 inthis period. Jenny lodged a credit amendment for the 2014 income year inthe same period and this reduced the debt payable. The GIC debt was alsoreduced by $505. In this case, Jenny has a $2,300 deductible interestexpense and $561 assessable interest income (due to the GIC remissionand credit reduction). Under the new approach, we will report a $1,739 netdeductible interest expense.

Under the legislative rules, Jenny would claim a deduction expense of$2,300 at label D10 and include interest income of $561 at label 24Y in thesupplementary return. Under the new reporting approach, Jenny will declare$1,739 at label D10.

Example 3: Net amount of assessable interest income

John has an outstanding debt with us relating to the 2014 income year andwas charged:

$1,265 GIC in the period 1 July 2015 to 30 June 2016$981 GIC for the period 1 July 2014 to 30 June 2015.

John lodged a credit amendment for the 2014 income year on 30 September2015 which resulted in a refund. The GIC charged in the 2015 and 2016income years was subsequently reduced to nil. In this case, John has a$1,265 deductible interest expense and $2,246 assessable interest income(due to the GIC adjustments in the 2016 income year). Under the newapproach, we will report $981 net assessable interest (John would haveclaimed a $981 deduction in his 2015 tax return.)

Under the legislative rules, John would claim a deduction expense of $1,265at label D10 and include interest income of $2,246 at label 24Y in the

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supplementary return. Under the new reporting approach, John will declare$981 at label 24Y.

Example 4: Transitional year calculations – 2016 tax return only

Eva has an outstanding debt with us relating to the 2014 income year:

$435 GIC was processed in the period 1 July 2015 to 30 June 2016(this includes the $45 and $53 mentioned below)$550 GIC was incurred in the period 1 July 2014 to 30 June 2015 (thisincludes the $45 mentioned below)

$45 processed 7 July 2015 with effective date of 30 June 2015(end of year GIC calculation$53 processed 10 November 2015 with effective date prior to30 June 2015 (this amount will be included in the calculation ofinterest in 2016 only).

Eva lodged her 2015 tax return on 30 August 2015 using ATO pre-fill dataand declared a deductible expense of $505 ($550 − $45). She will need toconsider whether to amend this return to declare the $53 imposed on heraccount after lodging the 2015 return, if she uses the legislative rules tocalculate her entitlements.

Under the new 2016 approach we will report $435 net deductible interest.Eva will need to adjust this total for the $45 claimed as a deduction in the2015 return.

Under the legislative rules, Eva is entitled to claim a deduction expense of$337 ($435 − $45 − $53) at label D10 in her 2016 tax return. Under the newreporting approach, Eva will declare $390 at label D10. She will not need toamend her 2015 tax return to claim the $53 processed in November 2016 asthe new process results in the deduction being claimed in the later year.

Example 5: part year residency – taxpayer resides in Australia

Steven returned to Australia on 30 October 2018 and updated his addresswith the ATO.

The 2019 income year pre-fill interest data included $125 IOP paid to

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Steven by the ATO on 10 August 2018 from which tax was withheld. As taxhas already been paid, the IOP doesn't have to be declared. When Stevenlodged his return on 21 September 2019, he removed $125 from the IOPinterest total pre-filled at item 10 Gross interest to ensure he is not taxedagain on this interest.

Example 6: part year residency – taxpayer resides overseas

Susan left Australia to reside overseas on 20 May 2019. She notified theATO of her change of address prior to her departure. As Susan wasrecorded as a non-resident when the interest data was extracted for 2019,the interest paid by the ATO to Susan in that financial year is not included inthe pre-fill interest totals.

When Susan checked her statement of account, she noted that she hadreceived IOP of $120 on 15 November 2018. As she was a resident whenthis was paid, tax was not withheld by the ATO from the payment. WhenSusan prepares her 2019 income tax return she will need to adjust the 2019pre-fill data to add in the $120 IOP at item 10 Gross interest to ensure thisincome is declared.

Manually calculating ATO interestYou must manually calculate the ATO interest you want to claim as a deduction ormust declare as assessable income, where:

you haven't been provided pre-fill interest data but your statement of accountshows ATO interestthe tax agent Pre-filling report does not provide pre-fill interest data butdisplays a message advising that the client has ATO interest on accountinterest transactions were processed on your account in the period 1 July 2015to 9 November 2015 with an effective date prior to 1 July 2015 and these wereincluded in prior interest claims – see Transitional year adjustments.

You may wish to manually calculate the ATO interest where:

you prefer to report interest separately at the relevant labels in your tax returnyou don't wish to rely on ATO pre-fill datayou want to determine which reporting method provides the best outcome foryou.

General rules for assessing ATO interest transactions

Effective date – the date a transaction affects the account for determining the

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daily balance and calculating GIC.Processed date – the date a transaction is processed on the account.

Item 10 Gross interestThis label includes the interest we've paid or credited to you (IOP, IEP, DRI).

The same rules apply for both the legislative process and the new reportingprocess.

For the calculation:

use the processed date to determine when interest is paidreport if there is a new credit balance.

Item D10 Cost of managing tax affairs or Item D10N Cost of managing taxaffairs – Interest charged by the ATOThis label includes an interest charge we imposed on you (GIC, SIC, LPI).

For the calculation under the legislative rules:

use the processed date and effective date to determine when interest isincurred (Noting that GIC with an effective date of 1 July that relates to interestimposed in the period prior to 1 July will be reported in that prior year)report net debit balance.

For the calculation under the business rules for the new reporting process:

use the processed datereport if net deduction is greater than net assessable interest.

Item 24Y Other income or Item 24X Other Income – Category 2 (ATOinterest)This label includes amounts of interest we imposed that have been remitted orrecouped (GIC remissions/credit adjustments, SIC remission/credit adjustments andLPI remission/credit adjustments).

It does not include certain transactions such as, write-offs or released amounts.

Under the legislative rules you must declare interest that has been remitted orreduced if you claimed a deduction, or can claim a deduction for the imposedinterest.

Interest is assessable in the year that it is remitted or recouped.

For the calculation under the legislative rules:

use the processed date to determine when the interest is recoupedreport net credit balance.

For the calculation under the business rules for the new reporting process:

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use processed datereport if net income is greater than net deduction total.

Applying the different calculation rules

You will need to analyse your statements of account and review all interesttransactions in the relevant timeframe. The examples below show how to calculateyour interest amounts using the new reporting process and applying the legislativerules.

Example: Statement of account #1 – Income tax

Processeddate

Effectivedate

Transaction descriptionDebit

$Credit

$

Runningbalanceaccount

$

DR/CR

02/06/2015 02/06/2015 General interest charge (GIC)from 01 Jun to 02 Jun 2015

5.46 0.00 13,003.94 DR

02/06/2015 02/06/2015 Remission of general interestcharge (GIC)

0.00 −5.46 12,998.48 DR

01/07/2015 01/07/2015 General interest charge (GIC)calculated from 02 Jun to30 Jun 2015

99.82 0.00 13,098.30 DR

01/07/2015 01/07/2015 Remission of general interestcharge (GIC)

0.00 −99.82 12,998.48 DR

01/08/2015 01/08/2015 General interest charge (GIC)calculated from 01 Jul to31 Jul 2015

107.40 0.00 13,105.88 DR

01/09/2015 01/09/2015 General interest charge (GIC)calculated from 01 Aug to31 Aug 2015

108.29 0.00 13,214.17 DR

01/10/2015 01/10/2015 General interest charge (GIC)calculated from 01 Sep to30 Sep 2015

105.64 0.00 13,319.81 DR

03/11/2015 03/11/2015 General interest charge (GIC)calculated from 01 Oct to02 Nov 2015

116.46 0.00 13,436.27 DR

01/12/2015 01/12/2015 General interest charge (GIC)calculated from 03 Nov to30 Nov 2015

99.61 0.00 13,535.88 DR

01/12/2015 01/12/2015 Remission of general interest 0.00 −99.61 13,436.27 DR

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charge (GIC)

02/01/2016 02/01/2016 General interest charge (GIC)calculated from 01 Dec 2015to 01 Jan 2016

113.93 0.00 13,550.20 DR

02/02/2016 02/02/2016 General interest charge (GIC)calculated from 02 Jan to01 Feb 2016

112.65 0.00 13,662.85 DR

02/03/2016 02/03/2016 General interest charge (GIC)calculated from 02 Feb to01 Mar 2016

102.56 0.00 13,765.41 DR

Calculating ATO interest under the new process – statement 1Identify the interest transactions processed in the period 1 July 2015 to 30 June2016.

For the transitional 2016 year we adjust the report to exclude the GIC processed on1 July as this was reported in the 2015 pre-fill report.

Total deductible interest = $107.40 + $108.29 + $105.64 + $116.46 + $99.61+ $113.93 + $112.65 + $102.56 = $866.54Total assessable interest income = $99.82 + $99.61 = $199.43

Net interest reported:

Net deductible interest to report at item D10 = $866.54 − $199.43 = $667.11

Calculating ATO interest under the legislative rules – statement 1Identify the income year GIC was incurred (generally by the effective date of thetransaction) and interest that was remitted or reduced (by the processed date of thetransaction).

Interest reported:

Total deductible interest expense to report at item D10 = $866.54Total assessable interest income to report at item 24Y = $199.43

Example: Statement of account #2 – Income tax

Processeddate

Effectivedate

Transaction descriptionDebit

$Credit

$

Runningbalanceaccount

DR/CR

26/09/2015 05/06/2014 Tax return individuals –Income Tax for theperiod from 01 Jul 2012to 30 Jun 2013

1,199.15 0.00 1,199.15 DR

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26/09/2015 21/11/2014 Tax return individuals –Income Tax for theperiod from 01 Jul 2013to 30 Jun 2014

15,644.15 0.00 16,843.30 DR

26/09/2015 26/09/2015 Credit offset from ClientIntegrated Account

0.00 −9,343.00 7,500.30 DR

29/09/2015 01/07/2014 General interest charge(GIC) calculated from01 Oct 2013 to 30 Jun2014

8.52 0.00 7,508.82 DR

29/09/2015 01/07/2014 Remission of generalinterest charge (GIC)

0.00 −8.52 7,500.30 DR

29/09/2015 02/06/2015 Amended generalinterest charge (GIC)calculated from 01 Jul2014 to 01 Jun 2015

926.45 0.00 8,426.75 DR

29/09/2015 02/06/2015 Remission of generalinterest charge (GIC)

0.00 −926.45 7,500.30 DR

30/09/2015 01/07/2014 Amended generalinterest charge (GIC)calculated from 01 Jun2013 to 30 Jun 2014(see note)

62.32 0.00 7,562.62 DR

30/09/2015 30/09/2015 Remission of generalinterest charge (GIC)

0.00 −62.32 7,500.30 DR

Amended general interest charge denotes an account correction by the ATO. Thismay impact interest amounts in prior years depending on the reporting method youuse.

Calculating ATO interest under the new process – statement 2Identify the interest transactions processed in the period 1 July 2015 to 30 June2016.

Total deductible interest to report at item D10 = $8.52 + $926.45 + $62.32 =$997.29Total assessable interest income to report at item 24Y = $8.52 + $926.45 +$62.32 = $997.29

Net interest reported:

Net deductible interest = $997.29 − $997.29 = $0.00

There is no interest to be reported at items D10 or 24Y in the 2016 tax return.

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Calculating ATO interest under the legislative rules – statement 2The account adjustment by the ATO does not change the timing of the deduction forthe GIC which is incurred in the 2014 income year. It corrects the GIC that can beclaimed as a deduction in the tax return for that year.

2014 income year:

Total deductible interest to report at item D10 = $62.32

You will need to lodge an out of time objection if you wish to include this deductionwith any other deductions claimed, if any.

2016 income year:

Total deductible interest to report at item D10 = $8.52 + $926.45 = $934.97Total assessable interest income to report at item 24Y = $8.52 + $926.45 +$62.32 = $997.29

The 2013 and 2014 tax returns were lodged late in the 2016 income year. The GICof $8.52 and $926.45 imposed on the liabilities established by the notices ofassessment for these income years, is incurred in 2016. The $62.32 is incurred inthe 2014 income year as the account adjustment retrospectively alters the interestimposed in that year.

See also:

General interest chargeShortfall interest chargeTD 2012/2 Income tax: when is the shortfall interest charge incurred for thepurposed of paragraph 25-5(1)(c) of the Income Tax Assessment Act 1997PS LA 2011/12 Administration of general interest charge (GIC) imposed forlate payment or under estimation of liabilityInterest charged by the ATOInterest on early payments, overpayments of tax and on delayed refunds of arunning balance account surplus

Cost of managing tax affairs

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Cost-of-managing-tax-affairs/Last modified: 15 Jun 2020QC 31959

You can claim a deduction for expenses you incur in managing your own tax affairs,including:

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preparing and lodging your tax return and activity statementstravel associated with obtaining tax advice – for example, the travel costs ofattending a meeting with a recognised tax adviserlitigation costs – including court and Administrative Appeals Tribunal fees, andsolicitor, barrister and other legal costsobtaining a valuation for a deductible gift or donation of property, or for adeduction for entering into a conservation covenantan interest charge we imposed on you – see Interest charged by the ATO.

Fees for preparing income tax returns for yourself or associated persons (such as aspouse) need to be apportioned if you have a single invoice for these costs. Youmust be able to show how you have apportioned these costs, including keepingevidence to support the deduction claimed.

Expenses relating to preparing and lodging your tax return and activity statementsinclude the costs of:

buying tax reference materialtax return preparation courseslodging your tax return through a registered tax agentobtaining tax advice from a recognised tax adviser (a registered tax agent,barrister or solicitor)dealing with us about your tax affairspurchasing software to allow the completion and lodgment of your tax return.You must apportion the cost of the software if you also used it for otherpurposes.

You generally incur the fees in the year you pay them.

See also:

myDeductions – record-keeping tool in the ATO app

Gifts and donations

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Gifts-and-donations/Last modified: 05 Jun 2020QC 31906

Organisations entitled to receive tax deductible gifts are called 'deductible giftrecipients' (DGRs). You can only claim a tax deduction for gifts or donations toorganisations that have DGR status.

The person that makes the gift (the donor) is the person that can claim a deduction.

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On this page:

What is a DGR?When a gift or donation is deductibleWhat you can claimWhat you can't claimKeeping donation records

For a summary of this content in poster format, see Gifts and Donations (PDF,340KB) .

What is a DGR?A deductible gift recipient (DGR) is an organisation or fund that can receive taxdeductible gifts.

Not all charities are DGRs. For example, in recent times crowdfunding campaignshave become a popular way to raise money for charitable causes. However, manyof these crowdfunding websites are not run by DGRs. This means donations tothese campaigns aren't tax deductible.

You can check the DGR status of an organisation at ABN Look-up: Deductible giftrecipients .

When a gift or donation is deductibleTo claim a tax deduction for a gift or donation, it must meet four conditions:

It must be made to a DGR.It must truly be a gift or donation – that is, you are voluntarily transferringmoney or property without receiving, or expecting to receive, any materialbenefit or advantage in return. A material benefit is an item that has a monetaryvalue.The gift or donation must be of money or property. This can include financialassets such as shares.The gift or donation must comply with any relevant gift conditions. For someDGRs, the income tax law adds extra conditions affecting types of deductiblegifts they can receive.

If you receive a material benefit in return for your gift or donation to a DGR, it'sconsidered a contribution and extra conditions apply. For more information see, Is ita gift or contribution?

To claim a deduction you must have a record of your donation, such as a receipt.

See also:

Keeping donation recordsABN Look-up: Deductible gift recipients

What you can claim

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The amount you can claim as a deduction depends on the type of gift:

Gifts of money – you can claim the amount of the gift, but it must be$2 or more.Gifts of property or shares – there are different rules depending on the typeand value of the property – see Gift types, requirements and valuation rules.Gifts under the Heritage and Cultural programs – there are specialcircumstances where donations can also be deductible – see Cultural GiftsProgram.

If you receive a token item for your donation you can still claim a deduction. Tokenitems are things of no material value that are used to promote the DGR, such aslapel pins, wristbands and stickers.

You can claim the deduction for your gift for the income year in which the gift wasgiven. In certain circumstances, you can elect to spread the tax deduction over aperiod of up to five income years – see When can I claim?

Bucket donations

If you made donations of $2 or more to bucket collections – for example, tocollections conducted by an approved organisation for natural disaster victims – youcan claim a tax deduction for gifts up to $10 without a receipt. To claim contributionsof more than $10 you need a receipt.

Political party and independent candidate donations

In some circumstances, your gifts and donations to registered political parties orindependent candidates may be claimed as a deduction.

This includes paying a membership subscription to a registered political party. Youmust have made the gift or donation as an individual (not in the course of carryingon a business) and it can't be a testamentary donation.

Your gift or donation must be worth $2 or more. If the gift is property, the propertymust have been purchased 12 months or more before making the donation.

The most you can claim in an income year is:

$1,500 for contributions and gifts to political parties$1,500 for contributions and gifts to independent candidates and members.

To claim a deduction you must have a written record of your donation.

See also:

Gifts and fundraisingClaiming political contributions and gifts

What you can't claimYou can't claim gifts or donations that provide you with a personal benefit, such as:

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raffle or art union tickets – for example, an RSL Art Union prize homeitems such as chocolates, mugs, keyrings, hats or toys that have an advertisedpricethe cost of attending fundraising dinners, even if the cost exceeds the value ofthe dinner. You may be eligible to claim a deduction as a contribution if thecost of the event was more than the minor benefit supplied as part of the eventmembership feespayments to school building funds made in return for a benefit or advantage –for example, as an alternative to an increase in school fees or placement on awaiting listpayments where you have an understanding with the recipient that thepayments will be used to provide a benefit to yougifts to family and friends, regardless of the reasondonations made under a salary sacrifice arrangementdonations made under a will.

You can't claim a tax deduction for donations made to social media or crowdfundingplatforms unless they are a registered DGR.

Example – material benefits where a deduction can't be claimed

Robbie is an office worker. Each year his workplace gets involved in theDaffodil day appeal to raise money and awareness for the Cancer Council.Robbie buys a teddy bear toy on Daffodil Day at a cost of $30.

Robbie can’t claim a deduction for the cost of the toy as he has received amaterial benefit in return for his contribution to the Cancer Council.

Example – no deduction for donating partially refunded membership fee tonon-DGR

Ruby purchased an annual membership for $100 for her football club inJanuary 2020. Her membership included a season pass to attend homegames as well as discounted food and drink at club bars and restaurants.Due to the physical distancing requirements put in place as a result of theCOVID-19 pandemic, the 2020 season was cancelled after round two andclub venues had to close.

The football club offers members a refund of $85, taking into account thefact that some benefits of their membership have been used in the shortseason. Ruby chooses to donate her $85 refund back to her club to supportthem. Ruby is not able to claim a tax deduction for this donation as herfootball club is not endorsed as a deductible gift recipient (DGR).

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Example – claiming partially refunded memberships as donations

Unlike Ruby, Gary decides to donate his partially refunded membership tothe Australian Sports Foundation (ASF), which is a DGR, via his footballclub. Gary is provided with a receipt from the ASF for the amount of hisdonation and can claim an $85 tax deduction. While Gary may nominate asa preferred beneficiary an ASF project that supports his football club, theASF has absolute discretion as to how the donation is allocated and maychoose to allocate the donation to a different ASF project.

See also:

Gift types, requirements and valuation rules

Keeping donation recordsYou should keep records of all tax deductible gifts and contributions you make.

When you make a donation the DGR will usually issue you with a receipt, althoughthey are not required to. In these circumstances you can still claim a deduction byusing other records, such as bank statements.

If a DGR issues a receipt for a deductible gift, the receipt must state:

the name of the fund, authority or institution to which the donation has beenmadethe DGR's Australian business number (ABN) (some DGRs listed by name inthe law may not have an ABN)that the receipt is for a gift.

If you give through a workplace giving program your income statement, paymentsummary or a written record from your employer is sufficient evidence.

You can use the myDeductions tool in the ATO app to keep track of your expensesand receipts throughout the year. It’s a fast, easy way to capture information on thego by taking and uploading photos of receipts. If you have an electronic copy ofyour receipts that are a true and clear reproduction of the original, you're notrequired to keep the original paper copy.

See also:

Records you need to keepmyDeductions – record-keeping tool in the ATO app

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Interest charged by the ATO

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Interest-charged-by-the-ATO/Last modified: 15 Jun 2020QC 31992

You can claim a deduction for interest we charge on:

late payment of taxes and penaltiesany increase in your tax liability as a result of an amendment to yourassessmentany increase in other tax liabilities, such as goods and services tax (GST) orpay as you go (PAYG) amountsany underestimation of your tax liability when you vary an instalment for GSTor PAYG.

The interest we impose includes:

general interest charge (GIC)shortfall interest charge (SIC)late payment interest.

You can claim any interest we impose in the year it is incurred. This will depend onwhen you actually became liable for the interest. For example:

SIC is incurred on an unpaid income tax shortfall in the year you are served anotice of amended assessment.GIC imposed on existing unpaid tax liabilities is incurred on a daily basis, in theyear it is imposed.

You claim a deduction for ATO interest at Cost of managing tax affairs – Interestcharged by the ATO, in your income tax return.

See also:

PS LA 2011/12: Remission of General Interest ChargeTD 2012/2: Income tax: when is the shortfall interest charge incurred for thepurpose of paragraph 25-5(1)(c) of the Income Tax Assessment Act 1997?ATO interest – calculation and reporting

Interest, dividend and other investment incomedeductions

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https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Interest,-dividend-and-other-investment-income-deductions/Last modified: 15 Jun 2020QC 31945

You can claim a deduction for expenses incurred in earning interest, dividend orother investment income.

You can't claim a deduction if you receive an exempt dividend or other exemptincome. If you attend an investment seminar, you are only entitled to claim adeduction for the portion of travel expenses relating to some investment incomeactivities.

On this page:

Interest income expensesDividend and share income expensesForestry managed investment scheme deduction

See also:

Rental expenses to claimRental properties and travel expensesInvestingSeminars, conferences and education workshopsOther travel expenses

Interest income expensesYou can claim account-keeping fees for an account held for investment purposes –for example, a cash management account. You will find these fees listed on yourstatements.

If you have a joint account, you can only claim your share of fees, charges or taxeson the account. For example, if you hold an equal share in an account with yourspouse, you can only claim half of any allowable account-keeping fees paid on thataccount.

You can't claim any deduction for interest on your personal tax debt – for example,on a loan to pay your personal tax debt.

See also:

Investing in bank accounts and income bonds

Dividend and share income expensesYou can claim a deduction for interest charged on money borrowed to buy sharesand other related investments that you derive assessable interest or dividendincome from.

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Only interest expenses incurred for an income-producing purpose are deductible.

If you used the money you borrowed for both private and income-producingpurposes, you must apportion the interest between each purpose.

What you can claim

Ongoing management fees or retainers and amounts paid for advice relating tochanges in the mix of investment.A portion of other costs if they were incurred in managing your investments,such as:

some travel expensesthe cost of specialist investment journals and subscriptionsborrowing coststhe cost of internet accessthe decline in value of your computer.

If you were an Australian resident when a listed investment company (LIC) paidyou a dividend, and the dividend included a LIC capital gain amount, you canclaim a deduction of 50% of the LIC capital gain amount.

See also:

Rental properties and travel expenses

What you can't claim

You can't claim a fee charged for drawing up an investment plan unless you werecarrying on an investment business.

Some interests are not deductible where money is borrowed under a capitalprotected borrowing arrangement to buy shares, units in unit trusts and stapledsecurities. It is treated as the cost of the capital protection feature.

Forestry managed investment scheme deductionIf you make payments to a forestry managed investment scheme (FMIS), you maybe able to claim a deduction for these payments if you:

currently hold a forestry interest in an FMIS, or held a forestry interest in anFMIS during the income year, andhave paid an amount to a forestry manager of an FMIS under a formalagreement.

You can only claim a deduction if the forestry manager has advised you that theFMIS satisfies the 70% direct forestry expenditure rule in Division 394 of the IncomeTax Assessment Act 1997.

See also:

Forestry managed investment schemes

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Personal super contributions

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Personal-super-contributions/Last modified: 15 Jun 2020QC 31985

If you made personal superannuation contributions during the year to a complyingsuper fund or a retirement savings account (RSA) you may be able to claim adeduction for those contributions if you get your income from:

salary and wagesa personal business (for example, people who are self-employed contractors,or freelancers)investments (including interest, dividends, rent and capital gains)government pensions or allowancessuperpartnership or trust distributionsa foreign source.

Claiming tax deductionsIf you want to claim (or vary) a tax deduction for personal contributions, you mustprovide a valid notice of intent to your super fund or retirement savings account(RSA) provider. You must have this notice acknowledged (in writing) by your fund.

You can give a valid notice by any of the following methods:

completing a Notice of intent to claim or vary a deduction for personal supercontributions (NAT 71121)using a form provided by your fundwriting to your fund, stating you wish to claim a tax deduction for your personalsuper contributions.

If you:

claim a tax deduction for a super contribution you have made, that contributionwill be subject to 15% tax in the fundclaim a tax deduction (and it is allowed), you are not eligible for the super co-contribution for the amount that you claim.

See also:

Claiming deductions for personal super contributionsSuper contributions – too much can mean extra tax

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Undeducted Purchase Price of a foreignpension or annuity

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Undeducted-Purchase-Price-of-a-foreign-pension-or-annuity/Last modified: 15 Jun 2020QC 31987

If you have income from a foreign pension or annuity you may be able to claim adeduction to reduce the taxable amount if your pension or annuity has anundeducted purchase price (UPP).

Only some foreign pensions and annuities have a UPP. The UPP is the amount youcontributed towards the purchase price of your pension or annuity – your personalcontributions.

If your pension is from another country and you think you are entitled to claim adeductible amount, complete a Request for a determination of the deductibleamount of UPP of a foreign pension or annuity.

Income protection insurance

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Income-protection-insurance/Last modified: 15 Jun 2020QC 31905

You can claim the cost of premiums you pay for insurance against the loss of yourincome. You must include any payment you receive under such a policy on your taxreturn.

If the policy provides benefits of an income and capital nature, only that part of thepremium that relates to the income benefit is deductible.

You can't claim a deduction for a premium or any part of a premium:

for a policy that compensates you for such things as physical injuryif the policy taken out is through your superannuation and insurance premiumsare deducted from your super contributions.

For example, you can't claim a deduction for:

life insurance premiums

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trauma insurance premiumscritical care insurance premiums.

Occupation and industry specific guides

https://www.ato.gov.au/Individuals/Income-and-deductions/Occupation-and-industry-specific-guides/Last modified: 23 Mar 2020QC 35914

You must include all the income you received during the financial year in your taxreturn, including salary and wages and allowances.

To claim a deduction for expenses that relate to your work:

you must have spent the money yourself and weren't reimbursedit must be directly related to earning your incomeyou must have a record to prove it.

The following guides for specific industries and occupations will help you tocorrectly report your income and allowances, and claim deductions for the work-related expenses you are entitled to:

Adult industry workersAgricultural workersAustralian Defence Force membersBuilding and construction employeesBus driversCall centre operatorsCleanersDoctor, specialist or other medical professionalEngineersFactory workersFire fightersFitness and sporting industry employeesFlight CrewGuards and security employeesHairdressers and beauty professionalsHospitality industry employeesIT professionalsLawyersMeat workersMedia professionalsMining site employeesNurses, midwives and direct carers

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Office workersParamedicsPerforming artistsPilotsPoliceProfessional sportspersonReal estate employeesRetail industry workersSales and marketingTradespersonTrain driversTeachers and education professionalsTravel agent employees Truck drivers

See also:

Employees guide for work expenses

Offsets and rebates

https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Last modified: 01 Oct 2020QC 31972

Tax offsets (sometimes referred to as rebates) directly reduce the amount of taxpayable on your taxable income.

In general, offsets can reduce your tax payable to zero, but on their own they can'tget you a refund.

The links below provide more information about offsets and rebates:

Private health insuranceAustralian Government allowances and payments tax offsetIf you maintained an invalid or invalid carerLow and middle income earnersMedical expensesSeniors and pensioners tax offsetSuper related tax offsetsZones and overseas forcesLump sum payment in arrears tax offsets

See also:

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Income tests

Private health insurance

https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Private-health-insurance/Last modified: 15 Jun 2020QC 31939

Your entitlement to a private health insurance rebate or tax offset depends on:

the age of the oldest person covered by your policy, andyour single or family income depending on your family status.

If you have private health insurance, the amount of private health insurance rebateyou can receive is reduced if your income is more than a certain amount.

We will calculate the amount of private health insurance rebate you are entitled toreceive when you lodge your tax return.

You can claim your private health insurance rebate as a:

premium reduction, which lowers the policy price charged by your insurerrefundable tax offset through your tax return.

This may result in you receiving a private health insurance tax offset or a liability,depending on:

how you claim your rebatethe level of rebate you have claimed for your policyyour income for surcharge purposes.

See also:

Private health insurance rebate calculatorPrivate health insurance rebateMedicare levy surcharge

Government allowances and payments and thebeneficiary tax offset

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https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Government-allowances-and-payments-and-the-beneficiary-tax-offset/Last modified: 15 Jun 2020QC 31940

If you receive certain Australian Government allowances and payments abeneficiary tax offset may be available to you. To claim the offset, you must declarethe payment you receive at the correct item on your tax return.

You can use the Beneficiary tax offset and seniors and pensioners tax offsetcalculator to help you determine your eligibility and calculate the amount of offsetyou can claim.

If you have no tax payable, the beneficiary tax offset is not available to be used asthere is nothing to offset.

You will pay no tax for the year if you:

only receive any of the qualifying Australian Government allowances andpayments, andhave no other taxable income.

If you have other assessable income you may still need to pay some tax.

We will automatically calculate the offset for you when we process your tax return.

See also:

Beneficiary tax offset and seniors and pensioner tax offset calculatorAustralian Government allowances and payments

If you maintained an invalid or invalid carer

https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/If-you-maintained-an-invalid-or-invalid-carer/Last modified: 15 Jun 2020QC 31971

You may be entitled to a tax offset if both of the following apply:

you maintained an invalid who was yourspousechild aged 16 years or oldersibling aged 16 years or olderspouse's child aged 16 years or olderspouse's sibling aged 16 years or olderparent

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spouse's parent they received either

a disability support pension under the Social Security Act 1991a special needs disability support pension under the Social SecurityAct 1991an invalidity service pension under the Veterans’ Entitlement Act 1986.

You may be entitled to a tax offset if you maintained an invalid carer who was yourspouse, parent or spouse's parent and they:

cared for your or your spouse’s invalid child aged 16 years or older, or your oryour spouse's sibling aged 16 years or older, andeither

received a carer payment or carer allowance under the Social SecurityAct 1991 for the care they provide for that personhave been wholly engaged in providing care to a person receiving

a disability support pension under the Social Security Act 1991a special needs disability support pension under the Social SecurityAct 1991, oran invalidity service pension under the Veterans’ EntitlementAct 1986.

See also:

Invalid and invalid carer tax offset calculatorAdjusted taxable income (ATI) for you and your dependants

Low and middle income earner tax offsets

https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Low-and-middle-income-earners/Last modified: 15 Oct 2020QC 31944

If you are an Australian resident for income tax purposes and you pay tax on yourtaxable income, you may be eligible for both the:

low income tax offsetlow and middle income tax offset.

You don't need to complete a section in your tax return to get these tax offsets. Wework out your tax offset for you once you lodge your tax return. If you are entitled to

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any offset, it is added to your tax return and you can see the amount on your noticeof assessment (you won't receive the offset as a separate payment).

On this page:

What is a tax offset?How tax offsets affect the tax you payClaiming the low and low and middle income tax offsetsLow income tax offsetLow and middle income tax offset

What is a tax offset?A tax offset means you pay less tax (also known as your tax payable) on yourtaxable income (that is, your total income minus any deductions).

This tax offset can only reduce the tax you pay to zero, but any unused offsetamount can't be refunded to you.

How tax offsets affect the tax you payThe tax offset amount you receive depends on your taxable income and the amountof tax you need to pay on this income (your tax payable).

Non-refundable tax offsets such as the low and low and middle income tax offsetscan only lower your tax payable to zero.

Offsets also can't reduce your Medicare levy and Medicare Levy Surcharge (if any).The Medicare levy is 2% of your taxable income, in addition to the tax you pay onyour taxable income.

So, if your taxable income is $18,200 or less and you:

have not paid any tax, an offset can't reduce the tax you pay– your tax payableamount is already zerohave paid any tax on this income, you will generally receive all of this tax backas a refund – your tax payable amount is zero so no offset can be applied.

If your taxable income is $18,201 or more, we use your taxable income to work outhow much tax you're required to pay. We then reduce the tax you need to pay withthe offset amount you're entitled to.

If you are under 18 years old, as at 30 June of the income year and you haveunearned income, these offsets can't reduce the tax payable on this income.

Claiming the low and low and middle income tax offsetsYou don't need to complete anything in your tax return in order for us to work outyour low or low and middle income tax offset. We work out the amount of this taxoffset for you once you lodge your tax return.

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Any offset you are entitled to is included when we work out the result of your taxreturn.

If you want to find out how much of an offset you were entitled to, you can see thisamount on your notice of assessment. Look for the Less non-refundable tax offsetssection.

If you lodge online, your notice of assessment will be sent to your myGov Inboxonce your return has been finalised.

If you receive a tax refund it will be deposited into your nominated bank account.Any refund may also be reduced by any debt you have with us or any Australiangovernment agency, the law requires us to use refunds or credits to pay debt.

Changes to the Personal Income Tax PlanIn the 2020–21 federal budget handed down on 6 October 2020, the governmentannounced they would bring forward the Personal Income Tax Plan. This means,the low and low and middle income tax offsets will be available for the 2020–21income year.

See also:

JobMaker Plan - bringing forward the Personal Income Tax Plan

Low income tax offsetThe maximum low income tax offset is $700. Increased from $445 as a result of the2020–21 federal budget.

If your taxable income is:

$37,500 or less you will get the full offset of $700between $37,501 and $45,000, you will get $700 minus 5 cents for every $1above $37,500between $45,001 and $66,667, you will $325 minus 1.5 cents for every $1above $45,000.

Low and middle income tax offsetThe low and middle income tax offset amount is between $255 and $1,080.

The full offset is $1,080 per annum but you might not be entitled to the full $1,080.The base amount is $255 per annum.

This offset is available for the 2018–19, 2019–20, 2020–21 and 2021–22 incomeyears.

If your taxable income is between $37,001 and $126,000, you will get some or all ofthe low and middle income tax offset. This is in addition to the low income tax offset.

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The amount of offset you receive depends on your circumstances, such as yourtaxable income and how much tax you have paid.

The table and graph below shows the amount of the offset you are entitled todepending on your taxable income.

Low and middle income tax offset

Taxable income Offset

$37,000 or less $255

Between $37,001and $48,000

$255 plus 7.5 cents for every dollar above $37,000, upto a maximum of $1,080

Between $48,001and $90,000

$1,080

Between $90,001and $126,000

$1,080 minus 3 cents for every dollar of the amountabove $90,000

Example – income up to $37,000

Jacqueline's taxable income is $18,000. She paid no tax because herincome is under the tax-free threshold.

As Jacqueline's income was less than $37,000, she is eligible to a low andmiddle income tax offset amount of $255. She is also eligible to a lowincome tax offset amount of $700.

Jacqueline is eligible for the two offsets but as she did not pay any tax. Hertax payable can't be reduced any lower than $0.

The low and middle income tax offset and low income tax offset are non-refundable tax offsets so the unused offset can't be refunded. Jacqueline'stax payable remains at $0 and she does not receive a tax refund.

Example – income exceeds $37,500 but is not more than $48,000

Jeff's taxable income is $45,000. He is eligible for both the low income taxoffset and the middle and low income tax offset.

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As Jeff's income is less $66,667 but above $37,500, he is eligible to a lowincome tax offset amount of $700 minus 5 cents for every dollar his incomeis above $37,500. That is:

$45,000 − $37,500 = $7,500

$7,500 × $0.015 = $375

$700 − $375 = $325

As Jeff's income is between $37,000 and $48,000, he is eligible to a low andmiddle income tax offset amount of $255 plus 7.5 cents for every dollar hisincome is above $37,000. That is:

$45,000 − $37,000 = $8,000

$0.075 × $8,000 = $600

$255 + $600 = $855

Both of the offset amounts reduce Jeff's tax payable.

$325 + $855 = $1,180

Jeff's tax payable can be reduced by up to $1,180 using the low income taxoffset and low and middle income tax offset.

Example – income exceeds $48,000 but is not more than $90,000

Anita's taxable income is $70,000. As Anita's income is more than $48,000but less than $90,000, she is eligible to a low and middle income tax offsetof $1,080. Anita is not eligible for the low income tax offset as her income isabove $66,667.

Anita's tax payable can be reduced by up to $1,080 using the low andmiddle income tax offset.

Example – income exceeds $90,000 but is not more than $126,000

Andre's taxable income is $92,000. Andre's income is more than $90,000 butless than $126,000. He is eligible to a low and middle income tax offsetamount of $1,080 minus 3 cents for every dollar his income is above$90,000. That is:

$92,000 − $90,000 = $2,000

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$0.03 × $2,000 = $60

$1,080 − $60 = $1,020

Andre's tax payable can be reduced by up to $1,020 using the low andmiddle income tax offset.

Andre was not eligible for the low income tax offset.

See also:

Income tax estimator – to get an estimate of the amount of tax you need to payYour income if you are under 18 years oldLower taxes for hard-working Australians: Building on the Personal Income TaxPlan

Medical expenses

https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Medical-expenses/Last modified: 15 Jun 2020QC 31918

The net medical expenses tax offset is no longer available from 1 July 2019.

You may still be eligible for this offset for previous income years from 2015–16 to2018–19. Claims for this offset are restricted to net eligible expenses for:

disability aidsattendant careaged care.

Net expenses are your total eligible medical expenses minus refunds you, orsomeone else, received from:

National Disability Insurance Scheme (NDIS)private health insurers.

If you received a reimbursement amount as part of a compensation payment, yougenerally do not have to reduce your eligible medical expenses. You have to reduceyour eligible medical expenses if the reimbursement was received from:

a governmentpublic authoritysociety

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associationfund.

This offset is income tested. If you are eligible for the offset, the percentage of netmedical expenses you can claim is determined by your adjusted taxable income(ATI) and family status.

See also:

Net medical expenses tax offset calculatorT5 Total net medical expenses

Seniors and pensioners tax offset

https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Seniors-and-pensioners-tax-offset/Last modified: 24 Aug 2020QC 31909

If you're a senior Australian, you may be eligible for the seniors and pensioners taxoffset (SAPTO). However, you can't claim the SAPTO if you were in jail for thewhole income year.

The SAPTO is available on assessment of your tax return.

The SAPTO can reduce the amount of tax you are liable to pay. In some cases, itmay reduce your tax payable to zero and you may not have to lodge a tax return. Itis a non-refundable tax offset.

In some cases, if you and your spouse are both eligible for SAPTO, you may beable to transfer your spouse's unused tax offset to you. We calculate their transferamount and include this amount when calculating your SAPTO.

On this page:

Eligibility for the seniors and pensioners tax offsetAmount of seniors and pensioners tax offset

Eligibility for the seniors and pensioners tax offsetTo be eligible for the seniors and pensioners tax offset (SAPTO), you must meetcertain conditions relating to:

your eligibility for an Australian Government pension or allowanceyour and your spouse's income.

You can use the Beneficiary tax offset and seniors and pensioners tax offset

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calculator to help you determine your eligibility for this offset and calculate theamount of offset you can claim.

Eligibility for an Australian Government pension or allowance

You meet this condition if any of the following applied to you in 2019–20:

you received an Australian Government pension or allowance from Centrelinkyou received a pension, allowance or benefit from the Department of Veterans’Affairs (DVA)you satisfied the Centrelink age pension age requirement and were eligible foran Australian Government age pension during the income year, but didn'treceive it because you didn't make a claim or because of the application of theincome test or assets test and you satisfy one of the following

you have been an Australian resident for age-pension purposes for either10 continuous years or for more than 10 years of which five years werecontinuousyou have a qualifying residence exemption (because you arrived inAustralia as a refugee or under a special humanitarian program)you are a woman who was widowed in Australia (at a time when both youand your late partner were Australian residents), you have made a claimfor the age pension and you had two years residence immediately beforeyour claimyou received a widow B pension, widow allowance, or partner allowanceimmediately before turning age-pension ageyou would qualify under an international social security agreement

you satisfied the veteran pension age test and were eligible for a pension,allowance or benefit from Veterans’ Affairs during the income year, but didn'treceive it because you didn't make a claim or because of the application of theincome test or assets test and you satisfy either of the following

you were a veteran with eligible war serviceyou are a Commonwealth veteran, allied veteran or allied mariner withqualifying service.

Centrelink pension age testTo be eligible for an Australian Government age pension from Centrelink, you mustbe 66 years or older on 30 June 2020.

Veteran pension age testTo be eligible for a pension, allowance or benefit from Veterans' Affairs, you mustmeet the veteran pension age test and on 30 June 2020 be 60 years old or older.

You meet the veteran pension age test if one of the following applied to you andyou were eligible for a pension, allowance or benefit under the Veterans'Entitlements Act 1986:

you have eligible war service, that is, service in World War II or operationalservice as a member of the Australian Defence Force

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you're a Commonwealth or allied veteran who served in a conflict in which theAustralian Defence Force was engaged during a period of hostilities that is

World War IIKoreaMalaya, IndonesiaVietnam

you're an Australian or allied mariner who served during World War IIyou're the war widow or widower of a former member of the Australian DefenceForce.

Income

You meet this condition if any of the following applied to you in 2019–20:

you don't have a spouse and your rebate income was less than $50,119you have a spouse and the combined rebate income of you and your spousewas less than $83,580 (less than $41,790 income for each partner)at any time during the year you and your spouse had to live apart due to illnessor because one of you was in a nursing home, and the combined rebateincome of you and your spouse was less than $95,198.

The phrase 'had to live apart' due to illness, refers to situations where you and yourspouse don't live together because one or both of you have an indefinitelycontinuing illness or infirmity and as a result your combined living expenses wereincreased.

The combined rebate income is the total of all of the following:

your rebate incomeyour spouse’s rebate incomethe amount on which a trustee of a trust was liable to pay tax in respect of yourspouse because your spouse was under a legal disability, such as being anundischarged bankrupt or a person who was declared legally incapablebecause of a mental condition.

Next step:

Use the Beneficiary tax offset and seniors and pensioner tax offset calculatorto help you determine your eligibility and calculate the amount of offset you canclaim.

See also:

Seniors and pensioners (includes self-funded retirees)Rebate incomeTransferring the seniors and pensioners tax offset

Amount of seniors and pensioners tax offsetThe amount of SAPTO that you may be entitled to depends on:

the amount of your rebate income

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your marital status – if you are a member of a couple, whether you and yourspouse either

live togetherhad to live apart due to illness.

Had to live apart due to illness refers to situations where you and your spouse didnot live together because one or both of you have an indefinitely continuing illnessor infirmity and, as a result, your combined living expenses were increased.

Rates and thresholds for the seniors and pensioners tax offset

Rates and rebate income thresholds for SAPTO

Status Maximum taxoffset amount

Shading-outthreshold

Cut-outthreshold

Single $2,230 $32,279 $50,119

Each partner of a couple $1,602 $28,974 $41,790

Each partner of an illnessseparated couple

$2,040 $31,279 $47,599

If more than one item in the table above applies to you during the income year, youroffset amount will be based on the amount that gives you the greatest entitlement.

To be entitled to an amount of SAPTO, your rebate income must be less than therelevant cut-out threshold in the table above. If your rebate income is less than theshading-out threshold, you will be entitled to the maximum tax offset amount.

Example – Single with rebate income exceeding the cut-out threshold

Marko is single and is 67 years old. He qualifies for the Centrelink agepension but he does not make a claim for it. His rebate income is $85,690.

Although Marko qualifies for the Centrelink age pension but didn’t make aclaim for it, Marko is not eligible for SAPTO as his rebate income is morethan the cut-out threshold of $50,119.

Example – Single with rebate income below threshold

Simon is single and he receives the parenting payment (single) fromCentrelink. Simon has a rebate income of $32,178.

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As Simon’s rebate income is less than the cut-out threshold of $50,119 andhe receives an Australian Government pension or allowance, he is eligiblefor the tax offset.

Simon is entitled to the maximum SAPTO amount of $2,230 as his rebateincome is less than the shade-out threshold of $32,279.

Example – Couple living together and rebate income below threshold

Clare and Roy are married and live together. Both Clare and Roy receive anAge pension from Centrelink. Clare’s rebate income is $23,020 and Roy’s is$25,677.

Clare and Roy are each entitled to the maximum SAPTO amount of $1,602as each of their rebate income is below the shading-out threshold of$28,974.

Tax offset reductionThe tax offset reduces by $0.125 for every dollar by which your rebate incomeexceeds the relevant shading-out threshold amount.

Example – Single with rebate income above the threshold

José is single and he receives an Age pension. José has a rebate income of$39,000.

José is eligible for the tax as his rebate income is less than the cut-outthreshold of $50,119 and he receives an Australian Government pension.

As José’s rebate income exceeds the shading-out threshold of $32,279, histax offset is reduced as follows:

$39,000 − $32,279 = $6,721

$6,721 × 0.125 = $840.125

$2,230 − $840.125 = $1,389.875

This amount is to be rounded up to the nearest dollar. Therefore, José isentitled to a SAPTO amount of $1,390.

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Example – Couple with spouse not eligible and rebate income above thethreshold

Keith and Jean are a married couple living together. Keith receives an Agepension but Jean has not reached the Age pension age and does not qualifyfor the Centrelink Age pension.

Keith’s rebate income is $33,650 and Jean’s is nil. Their combined rebateincome is therefore, $33,650. For determining whether they satisfy the cut-out threshold, each is taken to have a rebate income of:

0.5 × $33,650 = $16,825.

Jean is not eligible for SAPTO as she has not reached the Age pension ageand is not eligible for an Age pension.

Keith is eligible for the tax offset as his determined amount of rebate income($16,825) is less than the cut-out threshold of $41,790, and Keith receivesthe Age pension. However, his actual rebate income is used in calculatingthe tax offset amount.

As Keith’s actual rebate income of $33,650 is more than the shade-outthreshold of $28,794, his tax offset is reduced as follows:

$33,650 − $28,974 = $4,676

$4,676 × 0.125 = $584.50

$1,602 − $584.50 = $1,017.50.

This amount is to be rounded up to the nearest dollar. Therefore, Keith isentitled to a SAPTO amount of $1,018.

In some circumstances, a person may be eligible for the tax offset but their incomeamount means the tax offset is reduced to zero.

Example – Couple with spouse eligible for SAPTO and rebate income abovethe threshold

Vanh and his spouse, Julie, live together. They both receive the Agepension.

Vanh has a rebate income of $32,590 and Julie's rebate income is $26,780.

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Their combined rebate income is $59,370. To determine if they satisfy thecut-out threshold, each is taken to have a rebate income of:

0.5 × $59,370 = $29,685.

Both Vanh and Julie are eligible for SAPTO as they both receive the Agepension and their determined amount of rebate income of $29,685 is lessthan the cut-out threshold of $41,790.

As Vanh’s actual rebate income of $32,590 is more than the shade-outthreshold of $28,794, his tax offset is reduced as follows:

$32,590 − $28,974 = $3,616

$3,616 × 0.125 = $452

$1,602 − $452 = $1,150

Vanh is entitled to a SAPTO amount of $1,150.

Julie is entitled to the maximum tax offset amount of $1,602 as her actualrebate income of $26,780 is below the shade-out threshold of $28,974.

Julie’s taxable income is also $26,780. The amount of tax payable on Julie’staxable income exceeds the maximum SAPTO amount of $1,602. Therefore,there is no unused portion of the tax offset to transfer to Vanh.

For information on how to work out transferring an unused portion of the taxoffset, see Transferring the seniors and pensioners tax offset.

Super-related tax offsets

https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Super-related-tax-offsets/Last modified: 15 Jun 2020QC 31976

There are two superannuation-related tax offsets that you may be eligible for:

Australian super income stream tax offsetTax offset for super contributions on behalf of your spouse

Australian super income stream tax offsetIf you receive income from an Australian super income stream, you may be eligible

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for a tax offset equal to:

15% of the taxed element10% of the untaxed element.

The tax offset amount available to you on your taxed element will be shown on yourpayment summary.

There is now a limit on the amount of tax offset you're entitled to on your untaxedelement. This is generally limited to $10,000 and will not be shown on your paymentsummary. Use the Defined benefit income cap tool to work out if you're entitled to atax offset on your untaxed element.

You're not entitled to a tax offset for the taxed element of any super income streamyou receive before you reach your preservation age, unless the super incomestream is either a:

disability super benefitdeath benefit income stream.

You're not entitled to a tax offset for the untaxed element of any super incomestream you receive before you turn 60 years old unless:

the super income stream is a death benefit income streamthe deceased died after they turned 60 years old.

Tax offset for super contributions on behalf of your spouseIf you make contributions to a complying super fund or a retirement savings account(RSA) on behalf of your spouse (married or de facto) who is earning a low incomeor not working, you may be able to claim a tax offset.

You will be entitled to a tax offset of up to $540 per year if you meet all of thefollowing conditions:

For income years prior to 2017–18 the sum of your spouse's assessableincome, total reportable fringe benefits amounts and reportable employer supercontributions was less than $13,800.For 2017–18 the sum of your spouse's assessable income, total reportablefringe benefits amounts and reportable employer super contributions was lessthan $40,000 and the contributions were not deductible to you.For 2018-19 and later income years, the sum of your spouse's assessableincome (disregarding your spouse's FHSS released amount for the incomeyear), total reportable fringe benefits amounts and reportable employersuperannuation contributions was less than $40,000 and the contributionswere not deductible to you.The contributions were made to a super fund that was a complying super fundfor the income year in which you made the contribution.Both you and your spouse were Australian residents when the contributionswere made.When making the contributions you and your spouse were not living separately

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and apart on a permanent basis.For 2017–18 and later income years your spouse had either:

not exceeded their non-concessional contributions cap for the relevantyeara total super balance equal to or exceeding the transfer balance capimmediately before the start of the financial year in which the contributionwas made (the general transfer balance cap for 2018–19 is $1.6 million).

Your spouse was under 70 years old when the contributions were made. From1 July 2020 your spouse was under 75 years old when the contributions weremade.

You can claim the maximum tax offset of $540 if:

you contribute to the eligible super fund of your spouse, whether married or defacto, andyour spouse's income is $37,000 or less.

The tax offset amount reduces when your spouse's income is greater than $37,000and completely phases out when your spouse’s income reaches $40,000.

The tax offset for eligible spouse contributions can't be claimed for supercontributions that you made to your own fund, then split to your spouse. That iscalled a rollover or transfer, not a contribution.

Examples

Example 1 – eligible for the tax offset for super contributions on behalf ofyour spouse

Robert and Judy are spouses. Robert earns $19,000 in 2018–19 and Judymakes a $3,500 contribution to Robert's super fund.

Robert and Judy meet the eligibility requirements. This means Judy canclaim a tax offset in her 2018–19 tax return for the contributions she paidinto Robert's fund.

The tax offset is calculated as 18% of the lesser of:

$3,000 minus the amount over $37,000 that Robert earned (in thiscase, nil)the value of the spouse contributions (in this case, $3,500).

Judy is entitled to a tax offset of $540, being 18% of $3,000.

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Example 2 – entitled to part of the tax offset for super contributions on behalfof your spouse

Carmel and Adam are married and living together. Carmel is 46 years oldand her income is $38,000 per year. Carmel has not exceeded her non-concessional contributions cap for the income year, and her total superbalance is under $1.6 million.

Adam wishes to make a super contribution of $3,000, on Carmel’s behalf, toher complying super fund.

Before 1 July 2017, Carmel’s income would be too high and therefore Adamwould not be eligible for a spouse tax offset for an eligible contribution.

From 1 July 2017, under the new arrangements, Carmel’s income is underthe threshold. Adam is eligible for a tax offset. As Carmel earns more than$37,000 per year, Adam will not receive the maximum tax offset of $540.Instead, Adam calculates his entitlement as 18% of the lesser of:

$3,000 reduced by every dollar over $37,000 that Carmel earnsthe value of spouse contributions.

Carmel earns $1,000 over the $37,000 income threshold. Adam’s tax offsetis $360. This is calculated as 18% of $2,000 ($3,000 reduced by the $1,000that Carmel earned over the $37,000 income threshold). This amount is lessthan the value of the spouse contributions ($3,000).

See also:

myTax instructions for Superannuation contributions on behalf of your spouseSuperannuation contributions on behalf of your spouseSuper

Zone and overseas forces

https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Zones-and-overseas-forces/Last modified: 28 Jul 2020QC 31995

If you live in a remote area or serve in forces overseas, you may be eligible for oneof the following tax offsets:

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Zone tax offsetOverseas forces tax offset.

If you qualify for both of the above tax offsets, you will be allowed to claim the onethat provides the greater offset.

Zone tax offsetA rebate of tax, known as the zone tax offset, is available to individuals who areresidents of specified remote or isolated area of Australia (known as a zone). Thisdoesn't include an offshore oil or gas rig.

Eligibility for the zone tax offset changed on 1 July 2015. Eligibility is based on yourusual place of residence. If your usual place of residence was not in a zone, you arenot eligible for the zone offset.

Remote areas are classed as either Zone A or Zone B. There are also special areaswithin these zones. If you don't know which zone your area is in, see Australianzone list.

Eligibility from 1 July 2015

From 1 July 2015, you can claim the zone tax offset if your usual place of residencewas in a remote or isolated area (known as a zone) for 183 days or more during theincome year.

If your usual place of residence was in a zone for less than 183 days in the incomeyear, you may still be able to claim the tax offset. This is as long as your usual placeof residence was in a zone for a continuous period of less than five years and:

you were unable to claim in the first year because you lived there less than183 daysthe total of the days you lived there in the first year and the current incomeyear is 183 or more, and the period you lived in a zone in the current incomeyear includes the first day of the income year.

Any discretion exercised by the Commissioner of Taxation for the zone tax offset willbe made with reference to your usual place of residence.

Example 1 – unable to claim the zone tax offset – no residence in aprescribed zone

Levi is an engineer who lives in Adelaide. He flies to Alice Springs for 12-day shifts at an engineering firm and then travels back to Adelaide for hisdays off (which vary between four and eight days in a row).

Levi doesn't have his usual place of residence within a prescribed zone,even though he is in Alice Springs for 183 days or more. This means he isunable to claim the zone tax offset.

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Example 2 – able to claim the zone tax offset

Jonte is an engineer who lives in Darwin (located in Zone A). He travels toKununurra in Western Australia (located in a Zone A special area), where heis employed in the mining industry. In his usual shift, Jonte drives toKununurra, works 14 days at the mine and drives back to Darwin where heremains for 16 days.

Jonte is eligible for the Zone A tax offset because his usual place ofresidence is in Darwin (Zone A).

Example 3 – unable to claim the zone tax offset – main residence outsideAustralia

Angela is a doctor who works in the Darwin Hospital emergency department.She flies into Darwin from Auckland, New Zealand and works on a regularrotational basis in Darwin Hospital.

Usually, Angela works for 10 days and then has a break of between eightand ten days. During her breaks, Angela travels back to Auckland to see herfriends and family. She stays in accommodation provided by the hospitalwhen she is in Darwin.

Angela is purchasing a house in Auckland. She also has a car which sheleaves at her Auckland home for use when she is there. Angela has billssent to her Auckland home and she is registered to vote in New Zealand.

Angela isn't eligible for the zone tax offset because her usual place ofresidence is in Auckland.

See also:

Australian zone listZone or overseas forces tax offset calculator

Eligibility prior to 1 July 2015

Prior to 1 July 2015, to qualify for the zone tax offset, you must have lived or workedin a remote area (not necessarily continuously) for either:

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183 days or more during the income year183 days or more in total during the current and previous income years – butless than 183 days in the current year and less than 183 days in the previousincome year – and you didn't claim a zone tax offset in your previous year's taxreturn.

See also:

Australian zone listZone or overseas forces tax offset calculator

Overseas forces tax offsetYou may be eligible for an overseas forces tax offset if the following apply:

you serve in a specified overseas localityyour income relating to that service is not specifically exempt from taxyou are a member of either

the Australian Defence Forcea United Nations armed force.

Periods of service for which your income was exempt foreign employment incomeare excluded in working out your eligibility for the tax offset.

To claim the full tax offset, you must have served in an overseas locality for183 days or more in the income year. If your overseas service was less than183 days, you may be able to claim part of the tax offset. Unlike the zone tax offset,you can't carry forward any unused days from previous years to make up 183 days.

See also:

Overseas tax offset – specified localitiesZone or overseas forces tax offset calculator

Lump sum payments in arrears tax offsets

https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Lump-sum-payments-in-arrears-tax-offsets/Last modified: 30 Sep 2020QC 63791

A lump sum payment in arrears (LSPIA) is a payment that relates to earlier incomeyears. If you receive LSPIA, the payment is taxable in the financial year you receiveit.

You may be eligible for a tax offset on LSPIA payments in certain conditions. Eligiblepayments usually relate to employment, compensation or welfare payments.

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On this page:

Reporting lump sum payments in arrearsImpact of receiving LPSIAPayments that qualify for the tax offsetsLSPIA tax offsetTax offset for Medicare levy surcharge (LSPIA)

Reporting lump sum payments in arrearsYou will need to include any LSPIA in arrears amounts you receive in your tax returnas LSPIA payments are taxed in the year you receive them.

Use the myTax help files or tax return instructions to work out where to show theamount in your return. You will also need to provide a breakdown of the paymentinto each financial year.

Impact of receiving LPSIAThe intent of the LPSIA tax offset is to ensure you don't overpay tax. You usuallypay more tax in the year you receive the lump sum than you would if tax waswithheld in the year you earned it. The tax offset reduces the tax you pay.

As the LSPIA is taxable in the year you receive it, it can impact your tax and non-taxentitlements such as:

student loanschild support and welfare payments.

You may find:

you are in a higher tax bracket and pay more tax than you would have if youreceived the amount when you earned ityou are in the same tax bracket and pay the same amount of tax as you wouldhave if you received the amount when you earned ityou are in a lower tax bracket and pay less tax than you would have if youreceived the amount when you earned ityou have a new or increased Medicare levy surcharge obligation, because thelump sum pushes you over a Medicare levy surcharge threshold.

Eligible tax offsets in relation to your LSPIA are:

lump sum payments in arrears tax offsetMedicare levy surcharge lump sum payments in arrears tax offset.

If you are eligible for these offsets, we will work out the offsets and apply them toyour tax return.

The intent of the Medicare levy surcharge (MLS) LSPIA tax offset is to reduce yourliability to pay the MLS. This applies where you become liable for MLS because thelump sum pushes you over a MLS threshold.

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We will work out the tax offsets for you based on the information you provide in yourtax return.

Payments that qualify for the tax offsetsTo qualify for one of the tax offset treatments, your LSPIA amounts must be either:

salary or wages (only applies to the extent the salary or wages were accruedduring the period earlier than 12 months before payment)a government education or training paymentsalary or wages paid to a person after reinstatement to duty following a periodof suspension (only to the extent the payment was for the period ofsuspension, even if that period was within the preceding 12 months)deferred payment of a retiring allowance, retirement pension or annuity (or apayment which is a supplement to any of those payments)compensation, sickness or accident pay for incapacity to work (the concessionis not available on payments made to the owner of an insurance policy underwhich the payment is made)Social Security and repatriation pensions, benefits and allowances paid bySocial Security or the department of Veterans' Affairs or similar payments madeunder a law of a foreign country, state or province, but not exempt income.

LSPIA tax offsetTo be eligible for the tax offset, a LSPIA must be 10% or more of your taxableincome in the year of receipt after you deduct any:

amounts that accrued in earlier years (that is, this payment)amounts received on termination of employment in lieu of annual or longservice leaveemployment termination payments (ETPs)income stream and lump sum superannuation paymentsnet capital gainsany taxable professional income that exceeds the average taxable professionalincome.

The calculation of this tax offset is complex, therefore, there is no online calculator.The myTax estimate also doesn't include this tax offset as part of the estimate.

Tax offset for Medicare levy surcharge (LSPIA)You, and in some cases your spouse, may be eligible to the tax offset for Medicarelevy surcharge (LSPIA). The tax offset is available for a MLS that exists or isincreased because you received an eligible lump sum payment in arrears.

Eligible lump sum payments in arrears for this tax offset consist of:

eligible income for the purposes of the LSPIA tax offset (listed above) receivedin the relevant income yearLSPIA of 'exempt foreign employment income' for the relevant year which you

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accrued for a period more than 12 months before the date it was paid.

Also consistent with the LSPIA tax offset, you will only be eligible for this tax offset ifthe lump sum represents 10% or more of your:

taxable income in the relevant yearexempt foreign employment income for the current yearamounts that would be included in assessable income if family trust distributionwas ignoredreportable employer superannuation contributions for the current yeartotal net investment loss for the current year.

Tax offset amount for Medicare levy surcharge

If you're eligible, the tax offset is equal to the amount of MLS liability payable on thelump sum.

The tax offset amount can only reduce your MLS liability to zero. It can't exceed thetotal liability.

The myTax estimate doesn't include this tax offset.

Tax offset for Medicare levy surcharge for spouses

MLS liability is determined for families by combining both spouse’s income. YourLSPIA may affect your spouse’s MLS liability. If your LSPIA results in a MLS liabilityfor your spouse, they will receive a tax offset equal to the MLS liability caused byyour LSPIA., if:

you are entitled to the tax offset for Medicare levy surcharge (lump sumpayments in arrears)you both were not already liable for the MLS because your other incomeexceeded the family threshold.

If you and your spouse were already liable for MLS (based on your incomeexcluding the LSPIA), only you will receive the tax offset if you meet the eligibilitycriteria.

See also:

Income thresholds and rates for the Medicare levy surcharge

Records you need to keep

https://www.ato.gov.au/Individuals/Income-and-deductions/Records-you-need-to-keep/Last modified: 15 Jun 2020

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QC 31973

During the financial year you'll receive documents that are important for doing yourtax, such as income statements, payment summaries receipts, invoices andcontracts.

For employees working from home due COVID-19, we have specific informationavailable about home office expenses and recording keeping.

For a summary of this information in poster format, see Records you need to keep –set the record straight (PDF, 293KB) .

On this page:

Keeping your recordsmyDeductionsRecord keeping exceptionsRecord keeping rules for work-related expenses

Keeping your recordsIf you claim a deduction, you must have records to show how you calculated yourclaims. Records are usually a receipt from the supplier of the goods or services. Areceipt must show the:

name of the supplieramount of the expensenature of the goods or servicesdate the expense was paiddate of the document.

You need to keep these for five years from when you lodge your tax return in casewe ask you to substantiate your claims.

Records you need to keep include:

income statements or payment summaries, including your employer andServices Australiastatements from your bank and other financial institution showing the interestyou've earneddividend statementssummaries from managed investment fundsreceipts or invoices for equipment or asset purchases and salesreceipts or invoices for expense claims and repairscontractstenant and rental records.

If your total claim for work-related expenses is more than $300, you must havewritten evidence to prove your claims.

If you acquire a capital asset – such as an investment property, shares or managedfund investment – start keeping records immediately because you may have to pay

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capital gains tax if you sell the asset in the future. Keeping records from the start willensure you don't pay more tax than necessary.

If you are claiming the cost of a depreciating asset you have used for work, such asa laptop. You must keep records for five years following your final claim, includingeither:

purchase receipts and a depreciation scheduledetails of how you calculated your claim for decline in value.

We may ask that you show us your records during the five years, it is important thatyou have sufficient evidence to support your claims.

Your documents must be in English unless you incurred the expense outsideAustralia.

myDeductionsRecords you keep don't have to be in paper form. myDeductions is a record-keeping tool that makes it easier for you to keep track of your records digitally.

Records made and stored electronically are recognised as documents, this includesphotos of your receipts.

Sole traders with simple affairs can also use it to help keep track of their businessincome and expenses.

You can upload your completed records from the myDeductions tool and pre-fillyour myTax return. If you use a registered tax agent, you can email your recordsdirectly to them.

The myDeductions tool allows you to keep your records digitally in one place duringthe income year for:

all work-related expenses (including car trips)interest and dividend deductionsgifts or donationscosts of managing tax affairssole trader expenses and business incomeother deductions.

Watch:

This video shows how easy it is to keep your records using myDeductions.

See also:

Keeping travel expense records

Media: [A quick demonstration of myDeductions]http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubgosm84 (Duration: 1:22)

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Keeping your tax recordsmyDeductions – record-keeping in the ATO appTravel diary

Record keeping exceptionsRecord keeping exceptions are available to make things simpler – they don’t allowyou to claim an automatic deduction.

In some circumstances you may not need receipts, but you will still need to be ableto show you spent the money and how you calculated the claim.

If you are unable to obtain a receipt from a supplier, you can still claim a deduction ifwe are satisfied that the nature and quality of the evidence shows you spent themoney and are entitled to claim a deduction. Evidence of your expenses can includea bank or credit card statement that shows the amount that was paid, when andwho it was paid to as well as other documents that outline the nature of the goodsor services provided.

If you pay cash to a supplier and have no other documentation to support yourclaim, you will not have sufficient evidence to claim a deduction.

Record keeping rules for work-related expensesAs an employee, if you claim a deduction for work-related expenses you must have:

spent the money yourself and weren't reimbursedexpenses directly related to earning you incomerecords to prove it or be able to show how you calculated your claims.

You can only claim the work-related part of expenses. If an expense relates to bothwork and personal use, you must apportion your use and only claim the work-related part.

Specific record keeping rules apply for certain work-related expenses. Theseexpenses include:

Car expense recordsTravel expense recordsClothing, laundry and dry-cleaning expense recordsPhone and internet expense recordsWorking from home expense recordsSelf-education expense recordsDepreciating assets.

Car expense records

The records you need to keep depend on the method you use to calculate yourclaim.

If you use the cents per kilometre method, you don't need receipts however you doneed to be able to show how you worked out your business kilometres.

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If you use the cents per kilometre method, your claim is based on a set rate for eachbusiness kilometre travelled. You can claim a maximum of 5,000 kilometres per car.

If you use the logbook method, your claim must be based on the percentage of workuse of your car.

Your logbook must:

cover a minimum continuous period of 12 weeks and be broadly representativeof your travel throughout the yearinclude the purpose of every journey, odometer reading at the start and end ofeach journey and total kilometres travelled during the periodinclude odometer readings at the start and end of each income year.

You must also keep:

original receipts for all other expenses for the cardetails of how you calculated your claim for the decline in value of your car,including the effective life and method used.

If your claim relates to the transport of bulky tools and equipment, you will need tokeep a record of:

all work items carriedthe size and weight of all work itemsevidence that the items carried are essential to your workevidence that your employer provided no secure storage at the workplace.

Your logbook is valid for five years, but you can start a new logbook at any time. Ifthe work use of your car changes, you need to complete a new log book.

If you borrowed a car or used a vehicle other than a car (for example, a motor cycleor a vehicle with a carrying capacity over one tonne, such as a utility truck or van),you can't claim your expenses using either of these two methods.

Instead, you can claim fuel and oil costs based on your actual receipts, or you canestimate the expenses based on odometer readings from the start and the end ofthe period in which you used the car during the year.

See also:

Car expenses

Travel expense records

The records you need to keep for work-related travel expenses depend on:

whether your travel allowance is shown on your income statement or paymentsummarywhether your travel was domestic or overseasthe length of your travel and occupation.

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Travel records you should keep include:

a travel diary or itinerary, if your travel was for six nights or morereceipts for all meals, airfares, accommodation, parking and tollsan explanation of how the travel was work-related, the number of nights youslept away from home and the location.

If your travel allowance is shown on your income statement or payment summaryand you want to make a claim against it, you must have written evidence for thewhole amount, not just the excess over the reasonable amount.

See also:

Other travel expenses

Clothing, laundry and dry-cleaning expense records

You need to keep receipts to claim for the purchase of occupation-specific clothing,protective clothing, or unique and distinctive uniforms.

To claim a deduction for laundering occupation-specific clothing, protective clothingor unique and distinctive uniforms, you must keep details of how you calculatedyour claim.

If you use a dry-cleaning service for the clothes, you need to keep receipts.

You don't need to keep receipts if your laundry claim is under $150. However, youwill still need to be able to show how you calculated your claim.

See also:

Clothing, laundry and dry-cleaning expenses

Phone and internet expense records

To claim a deduction of more than $50 you must:

keep all your phone and internet bills for the yearshow how much is related to work.

Highlight all your work-related calls in a representative four-week period which canthen be applied to the full period.

Unless you only use your phone and internet for work, you will have to determinethe work-related portion of your expenses. Keep a record of the calculation and onlyclaim that amount.

If you have a bundled plan, you can keep a diary covering a representative four-week period showing how often you use each service for work. This pattern of workuse can then be applied to the full working period.

To determine your work use, you can record your:

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internet use – as the time you spent, or data used for work purposes comparedto your private usage and that of all members of your householdphone use – the number of work calls made as a percentage of total calls orthe amount of time spent on work calls as a percentage of your total calls.

If your usual pattern of work use changes during the year, you may need tocomplete a new record. For example, if you change job and the work use of yourinternet changes you need to complete a new diary.

See also:

Claiming phone and internet expenses

Working from home expense records

When claiming for your home office running expenses (such as heating, cooling,lighting, cleaning and the decline in value of furniture), the types of records youneed to keep depend on the method you use to work out your claim.

If you are using the fixed rate method (52c per hour from 1 July 2018), you need toeither keep:

records of your actual hours spent working at home for the yeara diary for a representative four-week period to show your usual pattern ofworking at home.

If you use the four-week representative period to calculate your usage over theincome year and your usual pattern of work changes, you will need to complete anew record or keep separate records to show your usage during the period thepattern changes.

You still need to have documents to show your other expenses, such as phoneexpenses, internet expenses and computer supplies.

If you are claiming the actual costs you have incurred, keep your receipts for itemsyou will claim outright (for example, stationery or statements for electricity and gas).

If you are only working from home due to COVID-19, and are using the shortcutmethod (80c per hour from 1 March 2020), you only need to keep a record of thehours you worked at home (for example, timesheets or diary notes).

See also:

Home office expensesEmployees working from home – information for employees working from dueto COVID-19Phone and internet expense records

Self-education expense records

You must keep receipts for all self-education expenses, including course fees, textbooks, stationery and travel expenses.

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You must also be able to explain how the course directly related to youremployment at the time of study.

If you are claiming the portion of a depreciating asset that you have used for self-education, for example a laptop, you must keep:

receipts and a depreciation scheduledetails of how you calculated your claim for decline in value.

See also:

Education and study

Records required for depreciating assets

Some items, like a computer or car, have a limited life expectancy (effective life) andare expected to depreciate over time or decline in value.

You must keep receipts and you also need to be able to show:

the date you first started using the asset for work-related purposesthe effective life of the asset (how long an asset can be used for). If you havenot adopted the effective life determined by us, you will need to show how youworked out the effective lifethe method used to work out the decline in valuehow you have calculated the percentage of work use.

See also:

Tools, equipment and other assetsDepreciation and capital allowances tool

Income tests

https://www.ato.gov.au/Individuals/Income-and-deductions/Income-tests/Last modified: 15 Jun 2020QC 27221

Income tests are used to work out your eligibility for a number of tax offsets andbenefits, which can reduce the amount of tax you have to pay.

We use a number of items from your tax return when applying income tests. Youshould ensure that you complete all items that apply to you in the income testssection of your tax return.

A number of offsets, benefits and obligations are assessed using a family incomethreshold. If you have a spouse, you should include your spouse's income in the

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relevant section of your tax return.

From 1 July 2017, there are changes to the treatment of fringe benefits under theincome tests. For information on the changes, see Adjusted taxable income (ATI).

Depending on your circumstances, any of the following tests may be used to assessyour entitlements:

Adjusted taxable income (ATI)Rebate incomeIncome for Medicare levy surcharge purposesStudy and training support loan repayment incomeSuper income tests

We use income tests to assess the following tax offsets and other items in your taxreturn.

Tax offsets include:

invalid and invalid carer tax offsetseniors and pensioners tax offsetMedicare levy surcharge (lump sum payment in arrears) tax offsetspouse super contributions tax offset.

See also:

Offsets and rebates

Other items include:

private health insurance rebateMedicare levy surcharge threshold calculationgovernment super co-contributiona deduction for your personal super contributionsa deduction for your business losses (non-commercial losses)income tax concessions available to participants in certain employee shareschemesstudy and training support loan repayments.

See also:

Employee share schemes – Employees

Adjusted taxable incomeYour adjusted taxable income (ATI) affects your entitlement to any dependant taxoffset.

ATI is the sum of the following amounts:

taxable income (your assessable income minus deductions), disregarding anyassessable First Home Super Saver (FHSS) released amountadjusted fringe benefits total, that is the sum of

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reportable fringe benefits amounts received from employers exempt fromfringe benefits tax under section 57A of the Fringe Benefits TaxAssessment Act 1986 multiplied by 0.53, andreportable fringe benefits amounts from employers not exempt from fringebenefits tax under section 57A of the Fringe Benefits Tax Assessment Act1986

target foreign income (includes any income earned from overseas that is notalready included in your taxable income or received in the form of a fringebenefit)total net investment loss (includes both net financial investment loss and netrental property loss)tax-free government pensions or benefits (includes disability pensions, carerpayments and defence pensions)reportable super contributions (includes both reportable employer supercontributions and deductible personal super contributions)

less

any child support you paid.

See also:

Income tests calculatorReportable fringe benefits – facts for employeesEmployer guide for reportable employer super contributions – contributionsadditional to the compulsory contributionsGuide for employees and self-employed – reportable superannuationcontributionsTax-free government pensions or benefits

Rebate incomeWe work out what we call 'rebate income' to determine whether you are eligible forthe seniors and pensioners tax offset.

Your rebate income is the total amount of your taxable income (disregarding yourassessable First home super saver released amount) plus the following amounts ifthey apply to you:

reportable super contributions (includes both reportable employer supercontributions and deductible personal super contributions)total net investment loss (includes both net financial investment loss and netrental property loss)adjusted fringe benefits total, that is the sum of

reportable fringe benefits amounts you received from employers exemptfrom fringe benefits tax under section 57A of the Fringe Benefits TaxAssessment Act 1986 multiplied by 0.53, andreportable fringe benefits amounts from employers not exempt from fringebenefits tax under section 57A of the Fringe Benefits Tax Assessment Act

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1986.

See also:

Income tests calculatorReportable fringe benefits – facts for employeesEmployer guide for reportable employer super contributions – contributionsadditional to the compulsory contributionsGuide for employees and self-employed – reportable superannuationcontributions

Income for Medicare levy surcharge purposesWe use your income for surcharge purposes to work out if you have exceeded theMedicare levy surcharge threshold that applies to you. We do this to determine:

if you are entitled to the private health insurance rebateif you do not hold an appropriate level of private health insurance, your liabilityto pay the Medicare levy surcharge.

Private health insurance rebate

To assess your private health insurance (PHI) rebate entitlement, generally yourincome for surcharge purposes is your:

taxable income (your assessable income minus deductions), disregarding anyassessable FHSS released amountreportable fringe benefits amount, as reported on your income statement orpayment summaryreportable super contributions (includes both reportable employer supercontributions and deductible personal super contributions)total net investment loss (includes both net financial investment loss and netrental property loss)the amount on which family trust distribution tax has been paid.

If you are between your preservation age and 59 years old and received a superlump sum, you may be able to reduce your income for surcharge purposes. Yourincome is reduced by any taxed element of the lump sum, other than a deathbenefit, that does not exceed your low rate cap.

Medicare levy surcharge

You may have to pay Medicare levy surcharge (MLS) if you or your dependants(including your spouse, even if they had their own income) did not have anappropriate level of private patient hospital cover for the whole financial year andyour income was above a certain amount.

See also:

Income tests calculatorMedicare levy

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Employer guide for reportable employer super contributions – contributionsadditional to the compulsory contributionsGuide for employees and self-employed – reportable superannuationcontributions

Study and training support loan repayment incomeThe Higher Education Loan Program (HELP), Student Start-up Loan (SSL),ABSTUDY Student Start-up Loan (ABSTUDY SSL), VET Student Loan (VSL),Trade Support Loan (TSL) and Student Financial Supplement Scheme (SFSS)repayment income includes your:

taxable income (your assessable income minus deductions), disregarding anyassessable FHSS released amounttotal net investment loss (includes both net financial investment loss and netrental property loss)reportable fringe benefits amount, as reported on your income statement orpayment summaryreportable super contributions (includes both reportable employer supercontributions and deductible personal super contributions).

See also:

Study and training support loansReportable fringe benefits – facts for employeesEmployer guide for reportable employer super contributions – contributionsadditional to the compulsory contributionsGuide for employees and self-employed – reportable superannuationcontributions

Super income testsReportable employer super contributions are included in the income tests for thefollowing:

spouse super contributions tax offsetgovernment super co-contributiondeduction for personal super contributions.

See also:

Super related tax offsetsGovernment super contributionsEmployer guide for reportable employer super contributions – contributionsadditional to the compulsory contributionsGuide for employees and self-employed – reportable superannuationcontributionsServices Australia for information on Centrelink and Child Support Agency(CSA) income tests.

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Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understandyour rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake asa result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Makesure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies toyou, contact us or seek professional advice.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any waythat suggests the ATO or the Commonwealth endorses you or any of your services or products).

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