The three golden rules
To work out if you can claim a deduction for work-related expenses (WRE) you need to be aware of the three golden rules:
• you must have spent the money yourself and you weren’t reimbursed
• it must be directly related to earning your income
• you must have a record to prove it (you can use the ATO app’s myDeductions tool to keep track of your expenses).
Also – you need to remember to only claim the work-related portion of your expenses.
Whether you can claim a deduction for WRE depends on your individual work situation. In this article we highlight some deductions housing industry workers may be able to claim, by taking a look at an average work day of two tradies – Craig the carpenter and Paul the plumber.
Paul the plumber
Paul is a keen surfer who has chosen to live in a coastal town, which is 100kms from where he performs most of his work. Every work day he travels the 100kms to the building site. Paul does not have to transport his tools, because they are kept overnight in a secure work shed. In the afternoon, Paul drives to a second construction site and works there. Paul then drives the 100kms home.
Paul is required to wear hi-vis shirts and steel-capped boots when onsite at work. The rest of his clothing is conventional (e.g. jeans) and not company-specific.
Craig the carpenter
Craig has long-term work in a retirement village where his employer, a construction company, is building several units. Craig drives his sedan to the site every day. His employer requires Craig to provide his own tools which he stores in the boot of his car. His toolbox is large, weighs 30kg, and there is no safe place on the construction site where he can leave it.
Craig also uses his tools for private purposes, including on the weekend to build the deck he has always dreamed about. This accounts for 25 per cent of the tools’ use.
Craig is a senior manager so about once a month he must also travel interstate to Sydney to attend management meetings. Craig stays overnight and keeps receipts for all his expenses, such as meals and accommodation.
Craig is required to wear hi-vis shirts and steel-capped boots when onsite at work. The rest of his clothing is conventional (e.g. jeans) and not company-specific.
So, what deductions are Paul and Craig entitled to? Let’s take a look at car, clothing, tools and equipment, and travel expenses.