Deduction List, Summary & Guidance

1. Car Expenses

Summary: Employees may be able to claim car expenses when they use their own car for deductible work-related travel. A car is generally a motor vehicle designed to carry less than one tonne and fewer than nine passengers.

Can claim, where conditions are met:

• Business kilometres travelled between work sites or to visit clients.
• Travel from the regular workplace to an alternative workplace and back.
• Travel directly between two separate workplaces, provided one is not the employee’s home.
• Eligible car expenses using either the cents per kilometre method or the logbook method.

Cents per kilometre method - practical summary:

• The cents per kilometre method allows an employee to claim a set rate for each eligible work-related kilometre travelled in their own car.
• For the 2024-25 and 2025-26 income years, the ATO rate is 88 cents per work-related kilometre. The rate should be checked each year before lodging.
• The maximum claim under this method is 5,000 work-related kilometres per car, per income year.
• The rate covers running costs such as fuel, registration, insurance, servicing, repairs and decline in value, so those costs cannot be claimed separately for the same car under this method.
• Written receipts for every car expense are not required under this method, but the employee must be able to show how the work-related kilometres were calculated.
• Suitable records may include diary entries, rosters, job sheets, appointment records, client visit notes or a reasonable calculation showing dates, destinations and work purposes.
• Employees who travel more than 5,000 work-related kilometres, or who have high actual vehicle costs, should consider whether the logbook method produces a better result.
• Parking and tolls that relate to a deductible work journey.

Cannot claim or usually private:

• Normal travel between home and the regular workplace.
• Parking at or near the regular workplace.
• Speeding fines, parking fines and other penalties.
• Car expenses for a car owned or leased by someone else, unless the employee can prove they are effectively the owner or lessee.
• Running costs of a salary-sacrificed or novated lease vehicle where the employee does not own or lease the car personally.

Records and practical guidance:

• Keep diary records, job schedules or calendar entries showing work-related trips.
• For the cents per kilometre method, keep a reasonable calculation of kilometres, up to the applicable limit.
• For the logbook method, keep a valid logbook, odometer records and actual expense records.
• If use changes significantly, a new logbook or updated calculation may be required.

2. Transport Expenses

Summary: Transport expenses include flights, taxis, rideshare, public transport and other costs incurred while travelling in the course of employment duties.

Can claim, where conditions are met:

• Travel to work-related meetings away from the usual workplace.
• Travel between two separate places of employment.
• Travel from home to an alternative workplace where the travel is part of employment duties.
• Flights, taxis, trains, buses or rideshare for deductible work journeys.

Cannot claim or usually private:

• Home-to-work travel to the usual workplace.
• Travel caused by personal choice of where to live.
• Travel to a second job where the journey starts from home and goes to the regular workplace.
• Travel costs that are reimbursed by the employer.

Records and practical guidance:

• Keep receipts, booking confirmations and details of the work purpose.
• Record the start point, destination, date and reason for travel.
• Separate private travel from work travel.

3. Accommodation and Overnight Travel

Summary: Accommodation, meals and incidental expenses may be deductible when the employee is required to sleep away from home overnight for work for a short period.

Can claim, where conditions are met:

• Hotel or short-term accommodation for work travel.
• Meals while travelling overnight for work.
• Incidental expenses such as local transport, parking, internet or phone costs connected to the work trip.
• Flights and transport to the work destination where the dominant purpose is employment.

Cannot claim or usually private:

• Accommodation chosen to live closer to the usual workplace.
• Long-term accommodation where the employee is effectively living at the work location.
• Travel caused by living far away from work.
• Private holiday days added to a work trip.
• Accommodation and meals where family can accompany or visit as part of a living-away arrangement.

Records and practical guidance:

• Keep accommodation invoices, meal receipts, travel itinerary and employer requirements.
• Apportion costs if the trip has both work and private purposes.
• An allowance does not automatically make the expense deductible.

4. Working from Home, Internet and Phone

Summary: Employees who work from home or use telecommunications for work may be able to claim the work-related portion of additional running expenses and device costs.

Can claim, where conditions are met:

• Work-related phone calls, data and internet use.
• Additional internet costs connected to employment duties.
• Work-related use of a mobile phone, tablet or other device.
• Software subscriptions used for current employment
• Home office running costs where eligible under the applicable method.

ATO fixed rate method:

• The ATO fixed rate method allows eligible employees to claim a set rate for each hour they work from home instead of calculating each covered running expense separately.
• For the 2024-25 income year, the ATO fixed rate is 70 cents per work hour. The applicable rate should be checked each year before lodging.
• The fixed rate covers additional running expenses such as home and mobile internet or data, home and mobile phone usage, electricity and gas for heating, cooling and lighting, stationery, and computer consumables.
• Expenses covered by the fixed rate cannot be claimed again separately elsewhere in the tax return.
• Employees may still be able to claim separate deductions for items not covered by the fixed rate, such as the decline in value of office furniture, computers and other depreciating assets, if the normal deduction rules are satisfied.
• A dedicated home office is not necessarily required, but the employee must be working from home to perform employment duties, not just carrying out minimal tasks such as checking emails occasionally.

Cannot claim or usually private:

• Private use of phone, internet or devices.
• Initial installation or set-up costs.
• Silent number costs.
• Costs already reimbursed by the employer.
• General household costs that are not additional work-related expenses.
• A separate claim for phone, internet, electricity, stationery or computer consumables if those costs have already been included under the ATO fixed rate method.

Records and practical guidance:

• Keep bills and a representative usage record, such as a four-week diary.
• Calculate a reasonable work-related percentage.
• For devices over $300, consider decline in value rather than an immediate deduction.
• Keep evidence of work-from-home hours.
• For the fixed rate method, keep records of the actual hours worked from home for the entire income year, not merely an estimate or average pattern.
• Keep at least one bill or record for each type of covered running expense incurred, such as electricity, internet, phone, stationery or computer consumables.
• Choose either the fixed rate method or the actual cost method for the relevant expenses; do not double count the same expense under both methods.

5. Computers, Software and Digital Subscriptions

Summary: Technology costs can be deductible where the item is used in earning current employment income.

Can claim, where conditions are met:

• Computer decline in value for work use.
• Work-related software, apps and annual subscriptions.
• Anti-virus software and VPN costs used for work.
• Online technical resources or professional databases connected to employment duties.
• Repairs to work-related equipment, apportioned for work use.

Cannot claim or usually private:

• Private use of computers or subscriptions.
• Entertainment streaming services.
• General news services unless the content is sufficiently connected to specific duties.
• Employer-provided equipment or reimbursed purchases.

Records and practical guidance:

• Keep purchase receipts and subscription invoices.
• Apportion work and private use.
• Assets over $300 may need to be claimed over their effective life.
• Keep notes explaining why the software or subscription is needed for the employee’s current duties.

6. Bags, Cases, Luggage and Work Items

Summary: A bag or case may be deductible to the extent it is used to carry work items and is suitable for that purpose.

Can claim, where conditions are met:

• Laptop bags used to carry work laptops and client files.
• Briefcases or cases used for work documents and tools.
• Luggage used for overnight work travel.
• Immediate deduction may be available for low-cost work-only items, subject to the capital allowance rules.

Cannot claim or usually private:

• Bags used mainly for lunch, gym gear, personal tablets or private items.
• Handbags or general bags with no sufficient work connection.
• Private travel luggage or luggage used for holidays.

Records and practical guidance:

• Keep receipts and evidence of work-related use.
• Apportion if the bag or luggage is also used privately.
• Consider decline in value for higher-cost items.

7. Clothing, Uniforms and Protective Items

Summary: Clothing is usually private unless it meets a specific deductible category, such as protective clothing, compulsory uniforms, registered non-compulsory uniforms or occupation-specific clothing.

Can claim, where conditions are met:

• Compulsory uniforms that are distinctive to the employer.
• Registered non-compulsory uniforms.
• Occupation-specific clothing, such as chef’s traditional uniform or ceremonial professional clothing.
• Protective clothing that protects against real workplace risks.
• Safety boots, helmets, gloves, safety glasses, goggles, masks and other protective items.

Cannot claim or usually private:

• Ordinary suits, shirts, pants, jeans, socks and conventional shoes.
• Clothing required by an employer but not distinctive enough to be a uniform.
• General black pants or black shoes unless they form an integral and distinctive part of a compulsory uniform.
• Clothing worn for comfort rather than protection.
• Private grooming, cosmetics and haircuts.

Records and practical guidance:

• Keep receipts and employer uniform or safety policies.
• Identify the specific workplace risk for protective items.
• Apportion if the item is used privately as well as for work.
• Do not assume an item is deductible merely because it is worn at work.

8. Laundry, Repairs and Dry Cleaning

Summary: Laundry expenses are deductible only for clothing that is itself deductible, such as protective clothing, uniforms or occupation-specific clothing.

Can claim, where conditions are met:

• Washing, drying and ironing deductible uniforms or protective clothing.
• Dry cleaning deductible work clothing.
• Repairs to deductible work clothing.
• Laundry of employer-supplied uniforms, unless the employer launders or reimburses the cost.

Cannot claim or usually private:

• Laundry of ordinary work clothes.
• Cleaning conventional clothing, even if worn only at work.
• Laundry costs reimbursed or paid by the employer.

Records and practical guidance:

• Use a reasonable calculation method for small laundry claims.
• Keep dry-cleaning and repair receipts.
• Even where written evidence is not required for a small laundry amount, the calculation must still be explainable.

9. Meals, Overtime Meals and Entertainment

Summary: Meals are normally private. Limited exceptions apply for overnight work travel and certain overtime meal situations.

Can claim, where conditions are met:

• Meals while travelling overnight for work.
• Overtime meals where the employee receives a genuine overtime meal allowance under an industrial award or enterprise agreement and the allowance is included in assessable income.
• Work-related meal costs that meet the specific travel or overtime rules.

Cannot claim or usually private:

• Normal lunch, snacks and drinks at work.
• Meals between jobs
• Food bought after overtime is finished.
• Functions, dinners, cocktail parties, social events and entertainment, even if work is discussed.
• Lunch boxes, travel mugs, coolers and similar private items.

Records and practical guidance:

• Keep meal receipts or a record consistent with the relevant substantiation rules.
• Confirm whether an allowance is a genuine overtime meal allowance or merely folded into salary.
• Separate work travel meals from private meals.

10. Self-Education, Courses and Conferences

Summary: Self-education can be deductible where it maintains or improves skills required in the employee’s current job, or is likely to increase income from the current employment.

Can claim, where conditions are met:

• Course fees connected to current employment duties.
• Work-related conferences, seminars and training courses.
• Textbooks, academic journals, stationery and study materials.
• Travel to attend compulsory study components where the study is deductible.
• Accommodation and meals where overnight travel is required for deductible study.

Cannot claim or usually private:

• Courses to obtain a new job or change occupation.
• Study that relates only generally to employment.
• Initial qualification costs before employment begins.
• HECS-HELP repayments and other non-deductible student loan repayments.
• Children’s school fees, university fees or TAFE fees.

Records and practical guidance:

• Keep course outlines, invoices and evidence of the connection to current employment duties.
• Apportion travel and accommodation where there is a private component
• Claim deductible course fees when the debt is incurred, not necessarily when repaid.
• Keep study travel records and receipts.

11. Professional Memberships, Registrations and Agency Fees

Summary: Annual professional costs may be deductible where they relate to the current occupation or employment activity.

Can claim, where conditions are met:

• Annual practising certificate renewals needed to continue working.
• Professional memberships connected to the employee’s current field.
• Union, trade, business or professional association fees.
• Commission or agency fees incurred in earning employment income.
• Contract renegotiation costs where connected to existing employment income.

Cannot claim or usually private:

• Initial costs to obtain accreditation or registration before starting employment.
• Agency set-up or joining fees paid to get work.
• Memberships unrelated to current employment, except for limited subscription amounts where rules allow.
• Costs paid or reimbursed by the employer.

Records and practical guidance:

• Keep invoices, membership statements and renewal notices.
• Separate initial entry costs from annual renewal costs.
• Keep evidence showing how the fee relates to current employment.

12. Insurance and Interest

Summary: Some insurance and interest expenses are deductible where they are directly connected with earning employment income.

Can claim, where conditions are met:

• Income protection premiums to the extent they protect employment income.
• Professional indemnity insurance required for work-related purposes.
• Interest on money borrowed to pay deductible work-related expenses.
• Insurance for work tools and equipment to the extent of work use.

Cannot claim or usually private:

• Life insurance, trauma insurance or capital benefit components.
• Income protection premiums paid through superannuation contributions.
• Private insurance or employer-paid insurance.
• Interest relating to private purchases or non-deductible expenses.

Records and practical guidance:

• Keep policy schedules and premium breakdowns.
• Apportion mixed policies between deductible and non-deductible components.
• Keep loan records showing the borrowed funds were used for deductible work expenses.

13. Protective Health Items: Sunscreen, Sunglasses and COVID-19 Tests

Summary: Some health-related items may be deductible where they protect against a work-related risk or are required for work attendance.

Can claim, where conditions are met:

• Sunscreen where employment duties require prolonged outdoor work.
• Sunglasses, photochromatic or anti-glare glasses where they protect against workplace glare or sun exposure.
• COVID-19 tests used to determine whether the employee can attend or remain at work.
• Face masks, sanitiser or other protective items where connected to a real work-related risk.

Cannot claim or usually private:

• Prescription glasses or contact lenses for ordinary vision correction.
• Cosmetics with added sunblock protection.
• Sunscreen or sunglasses used privately.
• Private COVID-19 tests, free tests, reimbursed tests and travel costs to buy tests.

Records and practical guidance:

• Keep receipts and evidence of the work-related risk or requirement.
• Apportion where items are used for both work and private purposes.
• For sunscreen, products with appropriate therapeutic registration are generally preferred.

14. Stationery, Books, Journals and Information Services

Summary: Work resources may be deductible if they are sufficiently connected to the employee’s current duties.

Can claim, where conditions are met:

• Diaries, pens, logbooks and stationery used for employment duties.
• Professional journals and technical publications.
• Books and manuals directly related to the job
• Database subscriptions and digital information services used in the role.

Cannot claim or usually private:

• General newspapers or news subscriptions with only an incidental link to work.
• General interest reading
• Private stationery and resources used outside work.

Records and practical guidance:

• Keep receipts and notes describing how the resource supports current employment duties.
• Apportion if the resource has both private and work use.

15. Expenses That Are Usually Private

Summary: The following items are commonly misunderstood. They are usually private and should not be claimed unless there is a very specific work-related basis.

Can claim, where conditions are met:

• Very limited exceptions may apply for performers, extreme fitness occupations, or expenses with a strong and direct employment connection.
• A deductible portion may exist only where evidence clearly supports the connection and private use has been excluded.

Cannot claim or usually private:

• Child care and before/after school care.
• School fees, university fees and TAFE fees for children or other students.
• Driver’s licence acquisition or renewal, except additional special licences required for duties.
• Gym fees and fitness expenses for most employees
• Personal grooming, cosmetics, shaving products, haircuts and hairdressing.
• Lunch boxes, travel mugs, coolers and similar items.
• Pay television and streaming services.
• Removal and relocation expenses.
• Fines, penalties and infringements.
• Private meals, snacks and drinks.

Records and practical guidance:

• Treat these as high-risk claims
• Ask for professional advice before claiming any item that appears private.
• Keep written reasons and evidence if an exception is being considered.

• Expense paid by the employee: Yes / N
• Employer reimbursement received: Yes / No
• Connected to current employment duties: Yes / No
• Private use excluded or apportioned: Yes / No
• Receipt or invoice available: Yes / No
• Diary, logbook or calculation available: Yes / No
• Expense incurred before employment started: Yes / No
• Expense mainly private in nature: Yes / No
• Allowance received and declared correctly: Yes / No
• Claim reviewed before lodging: Yes / No

If you are unsure whether an expense may be claimable, you can ask our AI chat in the Ezy Tax Online Portal. The chat is designed to help clients understand common deduction categories, record-keeping requirements and practical next steps before completing their tax return.

What you can ask:

• “Can I claim this expense?”
• “What records do I need to keep?”
• “Is this a work-related expense or a private expense?”
• “Should I use the fixed rate method or actual cost method for working from home?”
• “Can I use the cents per kilometre method for my car claim?”
• “Do I need to apportion this expense for private use?”

Work-related deductions can vary significantly depending on your occupation, employment conditions, the type of expense and the records available. You can start by asking our AI chat in the Ezy Tax Online Portal for general guidance, and if you need personalised advice or a final review before lodging, contact Ezy Tax Online.