With tax season fast approaching, we thought it would be an appropriate time to revisit some of the most common areas around deductibility of work-related expenses.
The ATO has some handy free industry specific tips on this subject and a tax time toolkit (see ato.gov.au/truck).
But we also reached out to accountant Trevor Stanton of Stanton Advisory who has immense experience in the trucking industry, being a part-time truckie himself in the family business while running his accounting firm.
With that experience, he has been able to help a large number of truckies meet their tax compliance duties in recent years.
Here, Stanton shares with you a little about some of the more common deductions seen amongst truckies, before talking through some common misconceptions.
Motor vehicle expenses
This basically refers to any work-related travel made in your personal vehicle. A common misunderstanding amongst truckies is that any costs for travelling between home and work can be deducted.
Bar a few exceptions (such as if you’re carrying heavy tools to and from work each morning), this is not the case. However, truckies are generally allowed to claim a deduction for using their personal car when travelling directly between two places of employment or between alternate workplaces for the same employer (e.g depot to depot).
Now to calculating how much to claim. There are two options we can use when claiming motor vehicle deductions.
The first is the “logbook” method which involves keeping a logbook for all travel (personal and work-related) for a continuous period of at least 12 weeks.
This is then used to obtain a work-related use percentage of the car which in turn is used to calculate the work portion of actual expenses incurred.
The second method is the “cents per kilometre” method, which simply involves the claiming of a deduction using the ATO’s predetermined rate (72 cents per kilometre for 2021-22) for the total number of business kilometres driven (noting this is maxed at 5000km).
Travel expenses incurred for overnight stays in undertaking your employment duties can be claimed as a deduction.
A very common example we see of this is where truckies are required to personally pay for accommodation to satisfy the mandatory rest break period.
These can be claimed as a deduction on the assumption the costs are not reimbursed by your employer.
Clothing and laundry expenses
These are another common area many taxpayers often become mistaken on what they can actually claim.
You simply cannot claim a deduction for buying any clothing you wear to work. You can however deduct compulsory uniforms (i.e your employer makes certain workwear mandatory and consistently governs the wearing of it) or if the clothing is protective in nature (e.g hard hats, masks, safety glasses and sunglasses).
Contrary to what many truckies believe, you generally cannot claim the cost of a driver’s licence as in the ATO’s eyes, it is considered a personal expense. Music subscriptions is another one we see, which are rarely allowed deductions.
As can be seen, deductibility around work-related expenses can be a complex area to fully comprehend.
For tax questions and answers specific to your situation, we suggest talking to your accountant, or feel free to get in touch with Trevor Stanton, of Stanton Advisory.
Note: The comments in this article are general in nature and do not constitute any form of tax advice.