What are tax deductions?
Tax deductions are expenses you deduct from your taxable income to lower the amount of tax you have to pay. They’re sometimes known as tax write-offs or as tax deductible expenses. Typical expenses you can claim as deductions are usually related to how you earn your income. However you can also claim some non-income related expenses as deductions, such as charitable donations.
What is tax deductible?
You may be able to claim several expenses as tax deductions including working from home expenses; education and training costs; car and travel expenses; and gifts and donations. You can find out what is tax deductible on the Australian Taxation Office’s (ATO) website, opens in new window.
Working from home tax deductions
As most Australian companies continue with hybrid work, hybrid workers may be able to claim home office expenses. These expenses may include laptops, internet services, office furniture and a range of other items, opens in new window. To claim working from home expenses, you must:
Where you incur running expenses (such as gas or electricity) that cover both private and work purposes, you can only claim the work-related portion as a deduction.
The ATO’s list of additional running expenses, opens in new window, which you can claim as a tax deduction, include:
- electricity or gas
- home or mobile internet
- stationery and office supplies.
Car and travel tax deductions
Generally speaking, you can’t claim expenses for commuting to and from your workplace, however you may be able to claim a travel tax deduction for certain work-related trips, such as travelling from your workplace to meet a client or attending a conference or meeting away from your regular workplace. When it comes to claiming travel expenses, you must have spent the money yourself and have a record of the expenses, such as a physical (paper receipt) or digital receipt.
Education tax dedications
You may be able to claim for self-education expenses if the education relates to how you earn your income (your employment). Examples of self-education expenses include:
- courses undertaken at an educational institution
- work-related conferences or seminars
- study tours (in Australia and/or overseas).
You should also keep in mind the education expenses you can’t claim, opens in new window, which include tuition fees paid by another party, and any fees you pay with the assistance of a HECS-HELP loan.
Clothing tax deductions
You may be able to claim a clothing deduction, opens in new window if you have to wear a compulsory work uniform, occupation-specific clothing (e.g. a chef’s chequered trousers) or protective clothing (e.g. high-vis vests and protective boots). You may also be able to claim for the cost of cleaning these clothing items.
Other tax-deductible options
In addition to expenses related to how you earn your income, you may be able to claim tax deductions on gifts and donations to a deductible gift recipient, opens in new window (DGR). It’s important to keep in mind that many but not all charities are DGRs.
Other expenses that are tax-deductible include investment expenses, income protection insurance, personal super contributions and foreign pensions. If you’ve any doubts as to what’s deductible and what’s not, please visit the ATO’s website, opens in new window.
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The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB is not a registered tax financial adviser under the Tax Agent Services Act 2009. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.
Target Market Determinations for these products are available at nab.com.au/TMD.
The information in this article is based on current taxation laws that are subject to change. NAB recommends you check the ATO website, your accountant or financial adviser.
Please ensure you’ve confirmed through the ATO website, your accountant or financial adviser that you can claim an expense before including it in your tax return. NAB recommends that you seek independent financial and taxation advice.
Please note the Australian income year ends on the 30 June and you have until the 31 October to lodge your tax return for the previous year.