Allowable Deductions – The Basics

As a taxpayer in Australia, unless you come under a very few exemptions, you will be required to submit a tax return each year. In many cases, these can lead to tax refunds for PAYG employed people, as deductions not taken into account by their employer through the course of the financial year can now be applied. This thereby reduces their assessable income and therefore their tax liability. It gets a bit more complex than that once you start bringing other factors such as investment properties into the equation but at its most basic it is that simple. This blog post is only intended to address that aspect of the tax return and does not take into account those additional factors.


To begin, the fundamental concept is that in order for a deduction to be allowable it must have been incurred in order to generate assessable income. You must be able to show a direct relationship between your income and the cost incurred. If you are unable to do so, the expenditure would be classed as private or domestic and not able to be claimed. For example, if I bought a power drill I would have difficulty in showing how is affects my ability to earn a living (I’m an accountant, obviously) but a Carpenter would more easily be able to show a correlation.


It is worth making a note of the following when determining whether you are able to claim a deduction:


Primary Non-deductable items


  • Travel expenses from home to your primary place of work such as train, bus or car expenses
  • Childminding costs to look after your children while you are at work
  • Self-education expenses if the course does not directly correlate to your CURRENT position or enable you to gain a promotion.


Common Types of Work-Related Expenses


  • Business travel such as travel between company worksite, interstate travel and overseas travel
  • Car and vehicle expenses that you have incurred directly for work purposes
  • Self-education costs that are directly attributable to your current position or a promotion that is in line with that position.
  • Sundry items such as laundry, PPE, certain types of work clothes, union subscriptions


The above are not exhaustive, and there are rules and restrictions around how they may be claimed and the calculations involved. Please speak with a tax accountant in order to determine your own specific circumstances.