Tax time can be challenging, especially for construction workers with various work-related expenses. Understanding what you can and cannot claim is essential for maximising your tax refund. This guide outlines the key deductions available to construction workers, ensuring you don’t miss out on any potential tax benefits.
General Principles for Claiming Deductions
To claim a deduction for work-related expenses:
Self-Incurred Costs: You must have spent the money yourself and not been reimbursed.
Direct Relationship: The expense must directly relate to earning your income.
Record Keeping: You must keep records to prove your expenses.
Only the work-related portion of an expense can be claimed. Personal expenses or portions of expenses unrelated to your job cannot be deducted.
Car Expenses
Non-Deductible: Regular commutes between home and work, even if you live a long way from your usual workplace or have to work outside normal business hours, are not deductible.
Deductible:
Trips between separate jobs in one day.
Travel between different workplaces for the same employer on the same day.
In Limited Circumstances:
Trips between home and work where you have shifting places of employment or carry bulky tools or equipment necessary for your job.
Methods for Claiming:
Logbook Method: Keep a logbook to calculate the percentage of work-related use, along with written evidence of expenses.
Cents per Kilometre Method: Show how you calculated your work-related kilometres and ensure they were work-related.
If you claim using one of these methods, further deductions for the same car, such as servicing and insurance, cannot be claimed separately. If your vehicle has a carrying capacity of one tonne or more, such as a ute or panel van, you cannot use the cents per kilometre method or the logbook method to calculate your claim. Instead, you can claim the actual costs you incur for the work-related use of your vehicle.
Travel Expenses
Deductible: Travel expenses incurred while travelling away from home overnight in the course of performing your employment duties. This includes meals, accommodation, fares, and incidental expenses.
Non-Deductible: Travel expenses paid for or reimbursed by your employer.
Receiving a travel allowance from your employer does not automatically entitle you to a deduction. You must still show that you were away overnight, spent the money, and the travel directly relates to earning your employment income.
Clothing and Laundry Expenses
Non-Deductible: Conventional clothing (e.g., jeans or drill shorts and shirts), even if required by your employer.
Deductible:
Protective clothing with features or functions to protect you from specific risks of injury or illness at work, such as high-vis vests or steel-capped boots .
Expenses must not be reimbursed by your employer to claim a deduction.
Tools and Equipment Expenses
Deductible: The cost of tools and equipment you use for work, including repairs and insurance. For example, a circular saw, concrete mixer, or screwdriver set.
If the tool or equipment costs more than $300: Claim a deduction for the cost over a number of years (decline in value).
If the tool or equipment costs $300 or less (and does not form part of a set that costs more than $300): Claim an immediate deduction for the whole cost.
Expenses must not be reimbursed by your employer to claim a deduction.
Other Expenses
Deductible:
Work-related portion of expenses such as sunscreen, sunhats, and sunglasses where your duties require you to spend prolonged periods working outdoors.
Renewal fees for licences, regulatory permits, certificates, or ‘cards’ that relate to your work (but not the cost of getting your initial licence to gain employment).
Safety equipment such as harnesses, goggles, and breathing masks.
Phone and internet costs, with records showing your work-related use.
Union fees.
Non-Deductible: Private expenses such as gym fees, fines, or your driver’s licence, even if it is a condition of your employment. Expenses must not be reimbursed by your employer to claim a deduction.
Keeping Track of Your Deductions
Using a tool like TaxFox can simplify keeping track of your expenses and receipts throughout the year. This ensures you claim every possible deduction and are prepared in case of an audit.
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By understanding and leveraging the specific deductions available to construction workers, you can significantly enhance your tax refund. Ensure you keep accurate records and only claim the work-related portion of your expenses. Always consult the ATO website for compliance. For more detailed information, visit ATO Construction Worker Deductions.
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For a more streamlined tax experience, consider using TaxFox, an innovative tax app designed to help Australian taxpayers boost their refunds effortlessly. With features like a digital logbook, receipt storage, and real-time tax refund tracking, TaxFox ensures you never miss a deduction. Download the app today on Android or iOS and take control of your tax returns.
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