Tax time can be challenging, especially for Australian Defence Force (ADF) members with various work-related expenses. Understanding what you can and cannot claim is essential for maximising your tax refund. This guide outlines the key deductions available to ADF members, ensuring you don’t miss out on any potential tax benefits.
General Principles for Claiming Deductions
To claim a deduction for work-related expenses:
Self-Incurred Costs: You must have spent the money yourself and not been reimbursed.
Direct Relationship: The expense must directly relate to earning your income.
Record Keeping: You must keep records to prove your expenses.
You can only claim the work-related portion of an expense. You can’t claim a deduction for any part of an expense that does not directly relate to earning your income.
Car Expenses
Non-Deductible: Regular commutes between home and work, even if you live a long way from your usual workplace or work outside normal business hours, such as during a military exercise over the weekend.
Deductible:
Trips between separate jobs in one day.
Travel between different workplaces for the same employer on the same day, such as from the base to a meeting in the city.
In Limited Circumstances:
Trips between home and work where you carry bulky tools or equipment for work. You can claim a deduction if:
The tools or equipment are essential to perform your employment duties and you don’t carry them merely as a matter of choice.
The tools or equipment are bulky, meaning they are awkward to transport due to their size and weight and can only be transported conveniently by using a motor vehicle.
There is no secure storage for the items at the workplace.
If you claim car expenses, you can use the logbook method or the cents per kilometre method to calculate your deduction. If you use the logbook method, you need to keep a valid logbook to work out the percentage of work-related use along with written evidence of your car expenses.
If you use the cents per kilometre method, you need to be able to show how you calculated your work-related kilometres and that those kilometres were work-related. If you claim work-related car expenses using one of the above methods, you can’t claim any further deductions in the same tax return for the same car, such as petrol, servicing, and insurance costs.
Fitness Expenses
Non-Deductible: Fitness expenses, such as gym fees, to maintain your fitness.
In Very Limited Circumstances: Fitness expenses if your role requires you to maintain a fitness level well above the normal ADF general standard and strenuous physical activity is an essential and regular part of your work. For example, if you are a physical training instructor with the Australian Special Forces.
Working from Home Expenses
Deductible: Expenses incurred while working from home that relate directly to your work. You must:
Use one of the methods set out by the ATO to calculate your deduction.
Keep the correct records for the method you use.
Non-Deductible:
Coffee, tea, milk, and other general household items, even if your employer provides these at work.
Items your employer provides, such as a laptop or a phone.
Any items where your employer pays for or reimburses you for the expense.
Tools and Equipment Expenses
Deductible: The cost of tools and equipment you use for work, including repairs and insurance.
If a tool or equipment costs more than $300, claim a deduction for the cost over a number of years (decline in value).
If a tool or equipment costs $300 or less (and doesn’t form part of a set that costs more than $300), claim an immediate deduction for the whole cost.
You can’t claim tools and equipment that are supplied by your employer or another person.
If you also use the tools and equipment for private purposes, you can only claim the work-related portion. You also need to apportion the cost of insurance and repairs between private and work-related use.
Other Expenses
Deductible: The work-related portion of other expenses that relate to your employment, including:
Technical or professional publications.
Compulsory mess subscriptions.
Union and professional association fees.
Non-Deductible: Private expenses, such as:
Attending social functions, even though these may be compulsory.
Haircuts, grooming, weight loss programs or supplies, even though the ADF has specific regulations.
Self-education or study, if the course:
Doesn’t have a connection with your current employment.
Only relates in a general way to your current employment.
Enables you to get employment or change employment.
You can’t claim a deduction if the cost was met or reimbursed by your employer.
Keeping Track of Your Deductions
Using a tool like TaxFox can simplify keeping track of your expenses and receipts throughout the year. This ensures you claim every possible deduction and are prepared in case of an audit.
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By understanding and leveraging the specific deductions available to ADF members, you can significantly enhance your tax refund. Ensure you keep accurate records and only claim the work-related portion of your expenses. Always consult the ATO website for compliance. For more detailed information, visit ATO Defence Deductions.
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