Australian tax deductions you should know about in 2023

A man doing his tax return from his home office

Tax time is here again, and it's important to be on top of what you can claim as a tax deduction in Australia. 

Whether you’re doing it yourself or you’re using a tax agent, it’s good to know how you could squeeze a little extra cash back from tax deductions to line your pockets with when tax time rolls around.

There are actually a few surprising ones, which most people don’t realise they are allowed to claim as a deduction. Read on to find out which deductions you could use to secure a bigger bag come tax time.

What are tax deductions?

In Australia, tax deductions allow you to lower the total amount of your taxable income by offsetting it with any necessary out-of-pocket expenses you have made during the financial year. The idea is that you may be able to claim enough deductions to reduce your taxable income, hence securing a bigger tax refund. 

However, this doesn’t work for any old expenses, like a ham and cheese sandwich. 

The criteria for tax deductions are as follows: 

  • The expense must be directly related to your work or income-generating activity
  • You can not have had the expense already reimbursed by your employer
  • You will need the correct receipt or bank statement as evidence. 

But for expenses which fall into a grey-area category, like home internet which is used for both personal and work-from-home purposes, you’ll need to work out how much of that expense relates to your income-generating activity.

What can you claim as a tax deduction in Australia?

Some of the following deductions won’t apply to everyone, as they may be industry-specific or have criteria that need to be met. It’s also vital that you have the applicable receipts to back these deductions up. 

In fact, the ATO actually lists a whole range of industry-specific deductions on their website. It’s worth reading this information for more detail relating to deductions for your occupation or industry. 

Your bag

If you use your bag for work purposes, such as to carry phones, stationery, or a laptop which you use at the office, you may be able to deduct the cost from your taxable income. This applies whether it's a handbag, satchel or backpack. 

Note that it has to be fit for work purposes – so a luxury handbag may raise eyebrows at the tax office. 

COVID-19 test expenses

COVID-19 expenses may still be claimable in the 2023 tax season, under very specific conditions.

This applies to people who required negative RATs, PCRs and masks to attend their workplace during a portion of the 2022-2023 financial year, such as medical practitioners, cleaners, retail and hospitality workers, hairdressers, beauticians, and some office workers. 

You will of course need to show proof of purchase for these items, but so long as you have that you may be able to claim back some of the money you spent protecting yourself and your workplace at the pharmacy.

With the ending of mandatory isolation periods, these expenses may only be claimable for the period of the financial year where testing was mandated. Check back here closer to tax time to find out if the ATO have made any updates.

Income protection insurance

You might be surprised to know that if you pay for income protection insurance, your premiums may be deductible at tax time. This doesn’t include life insurance, critical care insurance, or trauma insurance however, nor does it include policies paid for out of your super contributions. 

Professional memberships and subscriptions (including union fees)

For those who pay a subscription or membership fee to a professional or trade association, or even a trade union, you may be able to claim your membership as a deduction from your taxable income. 

Education or courses

Self-education expenses, where the course directly relates to your work, may also fall into the category of tax deductible expenses. However, it needs to lead to a formal qualification that meets the following criteria, in order to be eligible:

  • The course must improve or maintain skills or knowledge which is required for the undertaking of your work.
  • The resulting qualification must result in, or be likely to lead to, an increase in your income.

  • There are actually lots of ways you can factor in education expenses as tax deductible. These include:

    • Accommodation and meals (if you’re away from home overnight)
    • Course or tuition fees 
    • Purchasing of equipment less than $300 
    • Equipment repairs
    • Travel expenses related to getting to and from your course
    • Internet usage (excluding connection fees)
    • Parking fees 
    • Stationery
    • Student union fees
    • Student services and amenities fees
    • Textbooks

    Work tools and equipment

    For some industries, you may be able to claim the cost of tools and equipment, including the cost of repair or maintenance, as a tax deduction. 

    For example, a cleaner may be able to deduct the cost of a steam cleaner or vacuum, so long as it is not supplied by your employer. There are of course terms and conditions which apply to these deductions, so make sure you head over to the ATO’s website to find industry and occupation-specific criteria.

    Home office expenses

    Since the lockdowns, more people have had to set up a home office than ever before. If you’ve been working from home and paid for things like computers, phones, or other types of work-related devices, then you may be entitled to tax deductions for these expenses. 

    Generally, home office equipment like computers can be claimed for up to $300. 

    Clothing, laundry and dry-cleaning

    If you are required to wear a suit to work, if you paid for your staff uniform, or if you need to purchase and wear the clothing which is sold by your employer, then the expenses related to adhering to your employer’s dress code may be tax deductible. 

    Performing arts equipment and courses 

    For those who work in the performing arts industry (for example, actors, musicians, dancers, magicians, and even circus performers), there are a whole host of surprising deductions which you may be able to claim. 

    Magicians may be able to claim tax deductions for new equipment, actors looking to fine-tune their skills may be able to claim on specialist acting lessons, musicians may be able to claim deductions on new instruments or gear that relate to their work. 

    Essentially, so long as you can prove that your expense relates to the performance of your work, you could be able to claim a deduction.

    When are Australian tax returns due in 2023?

    Australian tax returns are due by 31 October 2023. You could start filing your tax return on 1 July 2023, but if you haven't yet, you've still got plenty of time. 

    The ATO claim that most returns are received within 2 weeks of lodging. 

    Coming up on the tax due date but haven't submitted yet? We've got you covered

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