Section 8-1 of Income Tax A (ITAA 1997) Assessment Act 1997 categorises deductions into general deductions and specific deductions. Generally a deduction is allowed if
- the expenses has been incurred in earning the person’s assessable income, or incurred in carrying on a business for the purpose of earning assessable income, and
- it is not private (domestic), or
- it is not capital in nature, and
- the person holds the relevant written evidence for the deduction claimed.
If the person claims more than $300 for work-related expenses, he or she must keep written evidence. The $300 does not include claims for car, award transport payment allowance, meal allowance and travel allowance expenses.
Written records include:
- paper or electronic copies of documents, such as invoices, receipts or delivery notes
- statements from bank statements or credit cards
- BPAY receipt numbers
- Pay As You Go (PAYG) payment summaries.
- warranty documents.
Employees are not required to show records for the following:
- total employment related expense is less than $300
- laundry expenses, up to $150 (form part of $300 limit) (TR98/5) http://law.ato.gov.au/atolaw/view.htm?DocID=TXR/TR985/NAT/ATO/00001
- taxi fares, depreciation of property owned or used
- overtime meal claims up to $27.10 in 2013-14 (TD2013/16) http://law.ato.gov.au/atolaw/view.htm?docid=TXD/TD201316/NAT/ATO/00001
- reasonable travel claims where a travel allowance has been received
- sun protections: sunscreens, hats, sunglasses (see Federal Court decision in Morris Ors v FC of C (2002) ATC 4004.
- some car expenses (cents/per km method) if all the above-mentioned costs including the car expense is less than $300 in total.
Phone, computer & Internet expenses
Employees may be able to claim some of their home telephone, computer and internet expenses provided the claims are directly related to their employment.
The cost of installing a home phone or maintaining a silent line is not deductible.
The cost of work-related calls is deductible if they can be identified for the itemised account. Receipts or other documentary evidence of the total cost of calls must be maintained.
Claims for depreciation of computer, equipment (printers, scanners or modems) and software should be based on reasonable estimate of their business or work-related usage.
The tax office will accept evidences like diary report stating the business/or work usage as oppose to the private usage. The tax office also accepts a reasonable estimation based on the diary record. The taxpayer must keep receipts and evidence.