By Mark Chapman
With the end of the financial year rapidly approaching, it won’t be long before it’s time to lodge your income tax return for 2020/21. To get the best possible tax outcome, it’s essential that you understand what you can – and what you can’t – claim against your taxes, so here’s my checklist of the deductions all workers in the security industry should consider claiming this tax year.
Remember, this list isn’t exhaustive, and not all the deductions will apply to everyone. Similarly, you may be entitled to some deductions that aren’t listed here. Make sure you get professional help from a tax agent like H&R Block to ensure that you’re getting your return right!
Claim tools and equipment
You probably use a variety of tools and equipment every day, and the rule is that if you’ve paid for them and you use them as part of your job or business, you can claim them as a deduction against your tax. Exactly how you do that depends on whether you run your own business, or work for someone else.
If you run your own security business, you can claim a deduction straight away for the cost of all tools costing less than $150,000 (if acquired from 12 March 2020, before that the cost limit was $30,000). For most self-employed security staff, that means pretty much all your equipment can be written off straight away against your taxable income.
If you’re employed by someone else, the rules are less generous. You can claim a deduction straight away for tools and equipment costing $300 or less but, if the cost is more than $300, you’ll need to write off the cost over the life of the item, which could be several years. Take care if you purchase a set of tools. You can’t claim each tool individually, so unless the cost of the set is less than $300, you’re looking at writing off the cost over a few years.
It’s not just tools you claim either – the same rules apply to items of equipment for the office – e.g. computers, phones, printers, mobile phones, and tablets.
Just remember to only claim the work or business use part of the cost. If you use the tools or equipment for private use, you’ll need to apportion the cost.
You can also claim the cost of a vehicle that you use in your business, or for your job, provided you paid for the vehicle (so there’s no deduction for work-provided vehicles).
If you run a business, you can use the same instant write-off tax break outlined above, although the maximum claim for most motor vehicles is capped at $57,581.
If you’re an employee, you can claim depreciation on the vehicle over its life, but only if you keep a logbook of your work/private use. Your logbook can also be used to work out your various other work-related vehicle deductions, such as the cost of fuel, servicing, etc.
Travel and meals
You can’t normally claim the cost of the daily commute to and from work. The only exception to that rule is if you have to carry bulky tools or equipment to and from work, and there is no secure place of storage for them at your work. Travel between home and work does not become deductible just because you may be on call at inconvenient hours, or work shifts.
You can claim the cost of travelling between two different work sites for one employer, or between two different employers.
If you plan to use your own car for work purposes, you can either claim a set rate of 68 cents per kilometre for all work journeys, or you can claim the actual expenses incurred. If you choose the latter, you’ll need to keep receipts for all costs and also keep a logbook of all your journeys for a 12-week period.
If you are required to stay away from home overnight because of your job – e.g. you are hired to provide security at an event staged interstate – you can claim a deduction for the costs of travel, accommodation, and incidental costs.
You can also claim overtime meal expenses, as long as you receive a genuine overtime meal allowance from your employer and you aren’t reimbursed by your employer.
You can claim a deduction for buying and laundering any clothing that you’re required to wear as a uniform to work.
Unfortunately, you can’t claim a deduction for the cost of purchasing or cleaning a plain uniform (such as a pair of black pants and a white shirt), or other items of conventional clothing you wear to work, even if your employer tells you to wear them and even if the clothing is oversized and used to conceal protective vests or weapons.
If you work outdoors, you can claim the cost of sun protection gear such as sunglasses, hats and sunscreen.
You can claim a deduction for any items of clothing you wear to protect yourself from the risk of illness or injury in your job.
You can claim expenses for university or TAFE fees to the extent that the course relates to you current employment and you’re not being reimbursed. You can also claim associated costs such as textbooks, travel to the educational institution, and stationary.
You can’t claim a deduction for a pre-vocational course, such as training to become a licensed security officer.
If you are required by your employer to provide your own guard dog, you can claim a deduction for any associated costs, such as food and vet bills. It should go without saying that the dog needs to be suitable for the task, and should not be the family pet! The actual cost of the dog itself, as well as any training expenses, can be depreciated over the expected life of the animal.
They may not be as significant in dollar terms as some of the items listed above, but make sure you claim the following:
- Any work-related subscriptions or membership fees.
- Magazines, journals, books, apps or websites which are related to your work.
- The cost of using your personal mobile phone for work-related purposes.
- Equipment hire.
You can’t claim the cost of obtaining a security license, but you can claim any costs associated with renewing this license.
Your job might require you to be in peak physical health but, sadly, that doesn’t mean you can claim the cost of a gym membership or other fitness activities. The ATO takes a hard line on gym memberships, saying that they are only claimable where the person claiming them needs to have a level of fitness well above normal. Professional sportspeople and some defence force members (such as members of the SAS) are quoted by the ATO as an example of who can make a claim. Security employees sadly don’t qualify.
Remember to keep records!
Even if you’ve incurred any of the above expenses, the golden rule is that you can’t make a claim unless you can prove you spent the money (and also that you weren’t reimbursed by your employer). So, make sure you keep all relevant receipts, invoices, bank statements and credit card statements. If you’re not sure if you can make a claim, keep the receipt anyway and discuss it with your tax agent.
Mark Chapman is H&R Block’s Director of Tax Communications