Maximising Your Tax Deductions: A Guide for Australian Defence Force Members

Tax time can often feel overwhelming, but for members of the Australian Defence Force (ADF), understanding what deductions you can claim can make a significant difference to your tax return. Whether you're a seasoned serviceman or just starting your military career, knowing the ins and outs of tax deductions can help you save money. Here’s a comprehensive guide to help you navigate your way through the ATO’s regulations and claim what’s rightfully yours.

Understanding the Basics

First and foremost, to claim a deduction for work-related expenses, you must ensure that:

• You spent the money yourself and were not reimbursed.

• The expense directly relates to earning your income.

• You have a record to prove it.

You can only claim the work-related portion of an expense. Any part that doesn’t directly relate to earning your income isn’t deductible. Now, let’s dive into some specific categories of deductions available to ADF members.

Car Expenses

For ADF members, the rules around car expenses are quite specific. You can’t claim the cost of normal trips between home and work, even if you live far from your workplace or work outside normal business hours (e.g., weekend military exercises). However, you can claim the cost of using a car you own when you drive:

• Between separate jobs on the same day.

• To and from an alternate workplace for the same employer on the same day (e.g., from your base to a meeting in the city).

In limited circumstances, you can claim the cost of trips between home and work if you carry bulky tools or equipment essential for your employment duties, there’s no secure storage at your workplace, and the items are so bulky that they can only be transported conveniently by a vehicle.

To claim car expenses, you can use either the logbook method or the cents per kilometre method. If you choose the logbook method, keep a valid logbook to determine the percentage of work-related use, along with written evidence of your car expenses. The cents per kilometre method requires you to show how you calculated your work-related kilometres and prove those kilometres were work-related.

Fitness Expenses

ADF members often maintain a high level of fitness, but claiming deductions for fitness expenses such as gym fees is generally not allowed. However, if your role requires a fitness level well above the ADF general standard and strenuous physical activity is a regular part of your work (e.g., physical training instructors with the Australian Special Forces), you may claim these expenses in very limited circumstances.

Working From Home Expenses

If you work from home, you can claim a deduction for expenses that directly relate to your work. You must use one of the methods set out by the ATO to calculate your deduction and keep the correct records for the method you use. It's important to note that you cannot claim the cost of coffee, tea, milk, and other household items, even if your employer provides these at work. Additionally, items your employer provides, or pays for, such as a laptop or phone, are not deductible.

Tools and Equipment Expenses

You can claim the cost of tools and equipment used for work, including repairs and insurance. If a tool or equipment costs more than $300, you must claim a deduction for the cost over several years (decline in value). For items costing $300 or less (and not part of a set that costs more than $300), you can claim an immediate deduction for the whole cost.

Ensure that you only claim the work-related portion of the expense if the tools and equipment are also used for private purposes. Apportion the cost of insurance and repairs between private and work-related use accordingly. Remember, you cannot claim tools and equipment supplied by your employer or another person.

Other Work-Related Expenses

You may also claim the work-related portion of other expenses that relate to your employment, such as:

• Technical or professional publications.

• Compulsory mess subscriptions.

• Union and professional association fees.

However, private expenses such as attending social functions, haircuts, grooming, weight loss programs or supplies, and self-education or study that doesn’t directly relate to your current employment are not deductible. Also, if the cost was met or reimbursed by your employer, you cannot claim a deduction.

Record Keeping and Tools

Keeping accurate records is crucial for claiming deductions. The ATO provides tools like the myDeductions tool in the ATO app to help track your expenses and receipts throughout the year. Ensure you have a system in place to keep track of all relevant expenses and maintain detailed records.

Final Thoughts

Navigating tax deductions can be daunting, but taking the time to understand what you can claim as an ADF member can lead to significant savings. Keep meticulous records, stay informed about what’s deductible, and don’t hesitate to seek advice from a registered tax professional if you need assistance. Remember, every little bit helps, and maximising your deductions can make a noticeable difference come tax time.

For more detailed information get in touch with us.

By staying informed and proactive, you can ensure you’re not leaving any money on the table and making the most of your entitlements.