If you want to reduce your tax bill, you need to claim as many legitimate deductions as you can. While most people know about travel expenses and charitable donations, there are many additional deductions you might be able to claim. Some of these items may surprise you – from video game consoles and Netflix subscriptions to pet dogs and sex toys.
These tips come from H&R Block’s director of tax communications, Mark Chapman who has more than 20 years experience as a tax adviser, including seven years as a senior director for the ATO.
As you can see from the list below, there’s a wide variety of services and products that you are legally entitled to claim deductions for – virtually anything that is directly related to earning your income is tax deductible.
For a work expense to be claimable, you need to have spent the money yourself and not been reimbursed by your employer. Obviously, it must also relate to your job and you need to keep a record to prove it. Here are 16 examples of the types of things you might be able to claim.
“If you’re an outdoor worker, such as a tradie, construction worker or farmer, you can claim sunscreen that you purchase to protect you from the ravages of the sun. If its required, other outdoor related attire can be claimed, such as hats, gloves and waterproof clothing if you work in a wet climate.”
“This is quite a specific deduction. General make-up can’t be claimed (even if it has sun protection) unless you work outdoors. Some specific types of make-up (such as rehydrating moisturisers) can also be claimed by flight attendants.”
Handbags and backpacks
“You can claim handbags used to carry iPads, phones, calculators, stationery or anything else you need for work. Great care is required here. The handbag needs to be fit for work purposes and actually used for work purposes. You might struggle to claim that new Gucci bag but a more modest bag – genuinely used only for work purposes – should be claimable. For men, a work briefcase, satchel or backpack should also be claimable.”
“If you own a business where an ambience is necessary, claiming works of art could be possible and you might even be able to claim an instant deduction if you’re a small business (aggregate turnover less than $10 million) and the artwork costs less than $20,000. That can help you to tax effectively decorate public facing areas like office receptions, as well as meeting rooms, boardrooms and staff social rooms. Just don’t think you can claim a deduction if that work of art finds its way into your living room!”
“Self-education expenses can be a real tax minefield. The general rule is that if a course enhances your income earning capability within your current job, or enhances your skills and knowledge within your current job, you can claim a tax deduction – both for the course and associated costs like textbooks, travel, etc. But if the course is designed to progress your career into a new field of endeavour, it isn’t claimable. The dividing line between the two types of course can be quite vague so it pays to speak to your H&R Block tax consultant for guidance.”
“People in the performing arts (e.g. Actors, musicians, dancers, magicians, circus performers, etc.) can claim all sorts of unusual deductions that most of wouldn’t be able to claim. You can’t normally claim the cost of a musical instrument against your tax but you can if you’re a professional musician.
“Similarly, things like dance and acting classes can be claimable if you’re a professional dancer or actor. So, if you want to claim a tax deduction for a ceremonial sword, you’d better join the circus and become a professional sword swallower!”
“If you work from home as part of your job and maintain a home office, you can claim the appropriate proportion of some of your household bills as a work-related deduction. That could include electricity and other utility bills, as well as depreciation on office equipment and furniture and costs incurred in keeping your home office clean. You can either claim actual costs based on a diary kept for a representative four week period or claim a flat rate deduction of 45 cents per hour.”
“Although general footwear can’t be claimed, if you wear footwear which is specific to your occupation, or which provides an extra degree of protection from the elements or from dangerous materials, you can claim a deduction. Work boots worn by tradies or construction workers would be a classic example.”
Pool tables, ping pong tables, Xbox consoles and Tvs (for the office)
“Many offices have recreation areas for staff to frequent during breaks and lunch hours. So, although it might seem off that small businesses can claim for items like pool tables, ping pong tables, Xboxes and TV’s, you can typically make a claim if they are provided for staff use.
“You might even be able to claim an immediate deduction using the $20,000 instant asset write-off if you are a small business. TV’s can also be claimed if they reside in reception areas (for waiting customers to watch perhaps) or in meeting rooms, where they might be combined with video conferencing systems.”
“If you subscribe to publications and products that are relevant to your trade or profession, you can claim a tax deduction for the costs. This can include magazines, subscription TV and journals. You can also claim subscriptions to professional associations and trade unions.”
“There aren’t many circumstances where a dog is deductible but there are some. If you require a security dog to patrol your premises or if you use a dog in farming (rounding up sheep for instance), you’ll be able to claim a deduction for depreciation on the animal plus an immediate deduction for maintenance costs like food and vet bills.
“The animal needs to be appropriate for the purposes; if you try to argue that your pet poodle is deductible as a guard dog, the taxman might push back.”
“The basic rule is that if you use a tool or a piece of equipment as part of your trade or profession, it’s tax deductible, either straight away or over a few years. What constitutes a “tool of trade” varies depending on the profession of the claimant and sex toys are just as much a tool of the trade of a sex worker (erotic dancer or prostitute for instance) as a wrench or a spanner might be for a plumber.
“If the sex toy is for your own personal amusement however, a deduction isn’t available!”
Donations (to charity)
“Any donation over $2 is claimable as a tax deduction provided you have supporting documentation (such as a receipt) and it’s paid to a Deductible Gift Recipient (DGR). Most well-known charities are DGR’s.”
“Many people use their private phone to make and receive work-related calls, send and receive work texts and emails, and to surf the internet for work purposes. If so, you can claim the work-related proportion of your mobile phone bills (plus a proportion of the cost of the handset) against your tax.”
“If you work uniform is claimable, then typically the cost of cleaning (either by laundry or dry-cleaner) is also claimable.”
“If you use your car for work purposes, you can claim a deduction, either by claiming actual running costs incurred on work-related journeys (provable by keeping a log book) or by claiming a flat rate deduction of 66 cents per kilometre where you travel no more than 5000 kilometres per vehicle per year.
“Take care though; work-related travel does not include the journey to and from work, which is regarded as a private journey and not usually claimable. The only exception is if you are required to transport heavy work equipment from your home.”