Tax Deductions ATO Golden Rules

Can I Deduct it…? ATOs Golden Tax Deduction Rules

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As we turned the corner with the beginnings of a new financial year, we’re deep in tax time and it’s important to understand what can and can’t be deducted.

With an incentive to reduce taxable income to increase a potential tax refund, sometimes we can sometimes be too optimistic with what classifies  as a work-related expense, with our tax agents and accountants often having to play ‘goalie’ to ensure that any non-deductible expenses do not slip through. It’s important for our accountant to understand our work environment to determine what is eligible and help us get the best tax outcome.

ATO’s Golden Rules

The ATO has three ‘golden rules’ of work-related expense deductibility. In order to claim a deduction for a work-related expense, the taxpayer needs to:

  • have spent the money themselves and have not been reimbursed — i.e. the expense has been incurred by the taxpayer
  • show the expenditure directly relates to earning income — i.e. there is a direct connection between the expenditure and the assessable income
  • have a record to prove the expense was incurred — i.e. substantiation, or a receipt.

For further clarification on tax deductions that relate to you, get in touch with our team.