Substantiation Requirements

Individual taxpayers are only able to claim up to $300 of work related expenses associated with earning assessable income if receipts are not maintained.  However, if receipts are maintained expenses related to earning taxable income are deductible.  Examples of possible expenses include (but are not limited to) the following:

• Travel expenses (such as airfares, accommodation and rental car costs) for work purposes, conferences or to inspect rental properties. Always ensure you record details of the number of nights travel and the destination of each trip.

• Mobile phone costs.

• Home internet usage.

• Uniform and associated laundry costs.

• Self-education costs.

• Subscriptions for business or professional journals, information services, newspapers and magazines.

• Union dues or professional association costs.

• Home office expenses – If you have a specific home work area, this can be calculated as a percentage of your total running costs.  Alternatively, you can claim a deduction based on the number of hours worked from home.

• Depreciation for capital items, such as computers, laptops, tablets, electric tools, furniture and tools costing more than $300.

This list is not exhaustive.  If you believe an expense incurred is associated with earning income, it is best to maintain records of the expenses incurred so they can be included as deductions if appropriate.  Alternatively, contact us to discuss whether the expected expense will be deductible.

However, please note that expenses reimbursed by your employer are not deductible.

Motor vehicle costs are subject to specific substantiation requirements, depending on the method in which you choose to calculate your deduction.  The different methods available for determining deductible motor vehicle expenses include:

1. Log book method – Requires the maintenance of a log book for a minimum 12 week period to establish a business percentage.  Once complete, the log book is valid for 5 years unless the use of the vehicle substantially changes or a new vehicle is purchased.
2. Statutory method – This method is available for employers who provide their employee with a vehicle for business purposes which is also available for personal use.  A percentage of the cost of the car is used to determine the cost of the private use to the employer.  It is noted that the government has announced that this method will be abolished.  However this announcement is not yet legislated.
3. 12% of the cost of the car – This method is only available to individuals claiming the deduction in their personal return.  It also requires that more than 5,000 business kilometres are travelled in the year.  A diary record substantiating the business use would be required.
4. Cents per kilometre – This method is also only available to individuals claiming deduction in their personal return if the business kilometres travelled for the year is less than 5,000.  Again, a diary record substantiating the business use would be required.

The Methods of calculating work-related motor vehicle deductions will be modernised from 1 July 2015, for more information on this please refer to our Budget newsletter.

There are other certain costs, not associated with earning taxable income, that are also deductible.  Be sure to maintain records of such expenses, including (but not limited to):

• Donations (of amounts in excess of $2).

• Income Protection Insurance premiums.