Teachers’ tax deduction guide

Posted by Northadvisory on July 18, 2016

Continuing our series on tax deductions for employees in specific industries, the following are common deductions for teachers.

Car expenses

• You can claim deductions for your car expenses for travel directly from one work site to the next (i.e. travelling from one educational institution to another for work)

From 1st July 2015, the ATO will only allow for two methods for claiming motor vehicle car expenses.

1. Cents per kilometre method:

You can claim up to 5,000 business kilometres per vehicle at 66 cents/km without written evidence to show how many kilometres you have travelled.

2. Logbook method:

Under this method you can claim the running costs (e.g. fuel, repair and maintenance, insurance, rego and depreciation etc) of the car based on a business use percentage of the expenses of the car. To work out your business use percentage, you need keep a logbook which will cover at least 12 continuous weeks in order to record each journey, km’s travelled and indicate whether each journey was business or private during logbook period. The logbook must also include:

• the odometer readings at the start and end dates for the logbook period,
• the total number of kilometres the car travelled during the logbook period,
• the number of kilometres travelled for work during the logbook period based on the journeys recorded for the period
• the business use percentage of the period

Each logbook is valid for 5 years, after which a new logbook must be kept to work out your business use percentage.

Please note that if you decide to replace a vehicle, you will not be required to produce a new logbook provided your last logbook is valid within the 5 year period.

• Generally, the cost of normal trips between your home and work is a private expense which you cannot claim an income tax deduction for. However, as an employee teacher, there are certain situations where you may be able to claim a deduction from your home and workplace:

o Transporting students or bulky equipment:

You can claim the cost of using your car for travel between home and work if you had to transport either of the following:

 Students:

e.g. to a sporting venue

 Bulky equipment you needed to use at work and for which there was no secure storage area at your workplace:

e.g. drama teacher transporting props and costumes from home to workplace.

Travel expenses

 You can claim deductions for the cost of travel to work-related conferences and seminars (e.g. parking fees, tolls, taxis or short-term car hire). You may need to keep a travel diary where your travel is for six or more consecutive nights

Clothing expenses

You can claim a deduction for the cost of buying, hiring, repairing and cleaning certain work-related uniforms or protective clothing.

• Compulsory uniform:

Is a set of clothing that, when worn together, identifies you as an employee of an organisation having a strictly enforced policy that make it compulsory for you to wear the uniform whilst at work. Generally, clothing is distinctive if it has the employer’s logo permanently attached and the clothing is not available to the general public

• Protective clothing:

Protective clothing is clothing that you wear to protect yourself from the risk of illness or injury posed by your income-earning activities or the environment in which you are required to carry them out. You can also claim a deduction for the cost of clothing that you use at work to protect your ordinary clothes from soiling or damage, for example, laboratory coats and art smocks.

• Laundry and dry-cleaning:

You can claim a deduction for the cost of laundering and dry-cleaning work clothes that are eligible according to the relevant categories described above (i.e. compulsory uniform and protective clothing). You can claim laundry expenses for washing, drying or ironing such work clothes, including laundromat expenses. If your claim for laundry expenses is $150 or less, you do not need written evidence; you may use a reasonable basis to work out your claim.

Self-education expenses

Self-education expenses are expenses related to a prescribed course of education provided by a school, college, university or other place of education. The course must be undertaken to gain a formal qualification for use in carrying on a profession, business or trade or in the course of employment.

You are eligible to claim your self-education expenses as a work-related deduction if you can show that the study has a sufficient connection to your current employment; that is, the study:

• maintains or improves the specific skills or knowledge you require in your current employment, or
• results in, or is likely to result in, an increase in your income from your employment.

You cannot claim costs met by your employer or costs that are reimbursed.

Other deductions

• Capital allowances/Tools & Equipment: You can claim a deduction, called a capital allowance, for the decline in value of equipment used for work. If the equipment is also used for private purposes, you cannot claim a deduction for that part of the decline in value.

Equipment for which you may be able to claim capital allowance includes:
• calculators and electronic organisers
• computers and computer software
• answering machines, telephones, facsimile machines, mobile phones, pagers and other telecommunications equipment
• a professional library
• dedicated stopwatches (but not ordinary wristwatches).

• Excursions, school trips and camps:

You can claim a deduction for the costs (e.g. entrance fees and travel costs) you incur when you take students on excursions, educational and sporting trips and camps if these trips have an educational benefit and are related to the curriculum or extracurricular activities of the school.

• Fares:

You can claim a deduction for the cost of using public transport for work travel – for example, from your school to a conference venue.

• First aid courses:

You can claim a deduction for the cost of first aid training courses if you, as a designated first aid person, are required to undertake first aid training to assist in emergency work situations.

• Glasses and contact lenses:

You may claim the cost of protective sunglasses if you are required to work outdoors and, as a result, are exposed to risk of eye damage from sunlight.

• Hiring equipment:

You can claim the costs of hiring equipment used for work. However, if the equipment is also used for private purposes, you cannot claim a deduction for that part of the hire cost.

• Home office expenses:

You may be entitled to claim deductions for home office expenses:
o Running costs may be deductible.
o Occupancy expenses are generally not deductible for an employee.
o You must keep records.

• Interest costs:

You can claim the cost of interest on money borrowed to purchase work-related equipment. However, if the equipment was also used for private purposes, you cannot claim a deduction for that part of the interest.

• Overtime meals:

You may be able to claim a deduction for overtime meal expenses you incurred if you received an overtime meal allowance from your employer which was paid under an industrial law, award or agreement. You can only claim for overtime meal expenses incurred on those occasions when you worked overtime and you received an overtime meal allowance for that overtime.

• Seminars, conferences and training courses:

You can claim a deduction for the cost of attending seminars, conferences and training courses that are sufficiently connected to your work activities.

• Sunglasses, sunhats and sunscreens:

You can claim a deduction for the cost of sunglasses, sunhats and sunscreen lotions if the nature of your work requires you to work in the sun for all or part of the day and you use these items to protect yourself from the sun while at work – for example, if you are a school sporting coach for track and field events, in addition to your teaching duties.

• Teaching aids:

You can claim a deduction for the cost of teaching aids used for work.

• Technical or professional publications:

You can claim a deduction for the cost of journals, periodicals and magazines that have a content specifically related to your employment as a teacher.

• Telephone calls, telephone rental and connection costs:

You can claim a deduction for the cost of work-related telephone calls. You need to keep records for a 4-week representative period to determine your percentage of work use in each income year to claim a deduction of more than $50. These records may include diary entries, including electronic records, and bills. Evidence that your employer expects you to work at home or make some work-related calls will also help you demonstrate that you are entitled to a deduction.

• Repairs:

You can claim a deduction for the cost of repairing tools and equipment for work. However, if the tools or equipment were also used for private purposes, you cannot claim a deduction for that part of the repair cost.

• Union and professional association fees:

You can claim a deduction for these fees. If the amount you paid is shown on your payment summary, you can use it to prove your claim.

If you have any questions or other enquires, please contact:

Martin van der Saag
Director
T: 02 9984 7774
E: martinv@northadvisory.com.au

Norman Ruan
Accountant
T: 02 9984 7774
E: normanr@northadvisory.com.au