Defence Force Tax Deductions

Allowances

You may be able to claim a deduction for expenses,

  • flying allowance
  • language proficiency allowance
  • special action forces allowance
  • uniform maintenance allowance
  • vehicle allowance.

The following allowances are commonly received by Defence Force members for work that may be considered special or dangerous, in recognition of holding special skills, or to compensate for working conditions. Income tax applies to these allowances but you cannot claim a deduction for:

  • arduous conditions allowance
  • clearance diving allowance
  • common duties allowance
  • district allowance
  • diving allowance
  • field allowance
  • flight duties allowance
  • hard-lying allowance
  • isolated establishment allowance
  • parachutist allowance
  • post allowance
  • seagoing allowance
  • service allowance
  • special Royal Navy allowance
  • submarine escape training facility allowance
  • submarine service allowance
  • trainee’s dependant allowance
  • trainee leaders allowance
  • unpredictable explosives allowance.

Daily travel expenses

Any travel expenses you claim must directly relate to your work as an employee. These expenses may include:

  • work-related car expenses
  • expenses for motorcycles and vehicles with a carrying capacity of one tonne or more, or nine or more passengers
  • actual expenses (such as petrol, oil and repair costs) if you travel in a car that is owned or leased by someone else
  • public transport, including taxi fares
  • bridge and road tolls
  • parking fees
  • short-term car hire expenses.

The cost of parking, tolls, taxis and public transport if you are required to travel to attend seminars, meetings and training courses off base (if you need to stay away overnight you can also claim for the cost of meal and accommodation unless you have been reimbursed by the Australian Defence Force

The cost of normal trips between home and work is a private expense that you cannot claim a tax deduction for. However, as an employee, there are certain situations where you may be able to claim deductions for travel between your home and workplace.

The cost of using your car or vehicle to travel between home and work if all of the following apply:

  • Transporting bulky tools and equipment
    •  you have to carry bulky tools and equipment you need to use for work
    • it is essential to transport them to and from work and it is not done as a matter of convenience or personal choice
    • there is no secure area for storing them at your workplace.
  • Travelling between workplaces
    • directly between two separate workplaces – for example, when you have a second job
    • from your normal workplace to an alternative workplace while you are still on duty, and back to your normal workplace or directly home
    • from your home to an alternative workplace, and then to your normal workplace or directly home.

Note: If the equipment is transported to and from work as a matter of convenience, the transport costs are private and you cannot claim a deduction.

Extra regimental duties

You can claim a deduction for expenses incurred to perform extra duties only if there is a link between the activity and deriving assessable income – You may be directed to perform extra duties – for example, as a member of the mess committee, coaching a sporting team, or organising a social function. If the duties undertaken involve travelling to or from your normal workplace, including travelling after hours, then you cannot claim a deduction.

Claiming car expenses

If the motor vehicle you drive is a car, and you can claim a deduction for your work-related car expenses, there are two methods you can use to work out the amount you can claim.

The methods are:

  • cents per kilometre
  • logbook

Cents per kilometre method

The cents per kilometre method is the method most commonly used by Defence Force members. If you are claiming a deduction under the cents per kilometre method, your claim is based on a set rate for each work kilometre depending on your car’s engine type and capacity.

You can only claim 5,000 work kilometres per car, per year using this method, even if you travelled more – for example, if you have travelled 5,085 work kilometres, you cannot claim the extra 85 kilometres.

When working out your deduction using the cents per kilometre method, you do not need receipts or other written evidence but you must be able to show how you worked out your estimate of work kilometres. For example, by:

  • keeping a diary of work-related travel
  • basing your costs on a regular pattern of travel.

The costs you incur when you buy, repair or clean your work clothing

Compulsory uniforms

Military service uniforms are compulsory uniforms, so you can claim a deduction for items such as:

  • military white, blue or khaki shirts with rank or other embellishments
  • standard matching trousers
  • regulation jumpers and jackets
  • official mess uniform
  • hats or caps with rank or other embellishments
  • service dress shoes
  • service handbags and clutch bags
  • socks and stockings
  • camouflage shirts and trousers.

This does not include items or accessories of a conventional nature – for example, underwear, ordinary fashion shoes, hair accessories, or t-shirts.

You may be able to claim shoes, socks and stockings where these items are an integral part of a compulsory and distinctive uniform. However, these items must be included the Defence Force uniform policy or guidelines. The policy or guidelines must stipulate the characteristics of the shoes, socks and stockings that qualify them as being distinctive and part of the compulsory uniform.The wearing of the uniform must also be consistently enforced, with breaches of the uniform policy giving rise to disciplinary action.

You can claim a deduction for some special items that are worn with or as part of a uniform that are unconventional in nature – for example:

  • the cost of a ceremonial sword used during parades
  • costs for medal mounting, such as swing and court mounting.

Non-compulsory uniforms

You can claim a deduction for expenses for a non-compulsory work uniform if your employer has registered the design with the AusIndustry – a work uniform is non-compulsory if your employer does not strictly enforce the wearing of this clothing at work. This usually means that you (not your employer) decide whether or not to wear the particular type of clothing.

You can only claim a deduction for maintenance costs of provided uniforms that bear your insignia logo or unit number, provided the uniform design has been registered such as physical training clothing.

You cannot claim a deduction for the costs of shoes, short socks or stockings worn as part of a non-compulsory uniform, because items cannot be registered.

Protective clothing

You can claim a deduction for the cost of protective clothing and footwear – protects you from the risk of illness or injury, or prevents damage to your conventional (everyday) clothes, caused by your work or work environment. Examples of protective clothing include:

  • fire-resistant clothing
  • sun-protection clothing
  • safety coloured vests
  • rubber boots
  • steel-capped boots, safety hats, safety goggles, gloves, overalls, heavy-duty shirts and trousers that are designed to protect you from risk of injury at work.

You can claim a deduction for items if the nature of the work creates dangerous environmental conditions that make it necessary for you to protect your person or clothing. For example, wet-weather gear worn when using chemicals or high-pressure water hoses.

You cannot claim a deduction for the cost of items that provide you with protection from the natural environment – for example, wet-weather gear and thermal underwear. However –

You can only claim a deduction for the cost of sunglasses, sunhats and sunscreen – because these items are not considered as protective items, unless both the following apply:

  • you have to work in the sun for all or part of the day
  • you use these items to protect yourself from the sun while at work.

You can claim a deduction for the cost of additional items you purchase, such as a Navy diver’s additional wetsuit not issued under a uniform code.

You cannot claim a deduction for the cost of protective clothing your employer provides.

Conventional clothes

You cannot claim a deduction for the cost of conventional footwear, such as running, sports and casual shoes. The cost of this footwear is a private expense.

You can claim a deduction for protective sports footwear worn by members who:

  • must maintain a very high level of fitness, well above the Australian Defence Force general standard
  • derive their income by performing a range of regular strenuous physical activity.
  • physical training instructors and those in special combat squads.

You cannot claim a deduction for the cost of purchasing, cleaning or repairing conventional clothing you wear to work, even if your employer tells you to wear it. This includes:

  • everyday footwear, such as dress, casual or running shoes
  • conventional hair accessories and earrings
  • clothing you wear for medical reasons, such as support stockings
  • conventional clothing that is damaged at work.

Physical training clothing

You cannot claim a deduction for the cost of sports attire worn when participating in physical training because these are considered to be conventional clothing.(Such as tracksuits, shorts, t-shirts and sports shoes)

You can claim a deduction If the clothing forms part of a compulsory uniform with an official monogram (such as a regimental crest), and easily identifies you as a member of the Australian Defence Force

You cannot claim a deduction if the clothing is not part of the traditional compulsory uniform, because it is considered to be conventional (even though it may display your unit’s logo or emblem and you are required to wear it).

You can claim a deduction for the cost of cleaning and maintaining clothing that meets the requirements of deductible clothing listed. This applies whether the clothing is purchased by you or supplied by your employer; and includes costs such as:

  • laundromat expenses
  • home laundry expenses
  • actual dry-cleaning costs
  • shoe maintenance expenses (shoe polish).

If you did washing, drying or ironing yourself, you can use a reasonable basis to work out the amount it cost you, such as $1 per load for work-related clothing, or 50 cents per load if other laundry items were included.

Records you must keep

If your claim for laundry expenses is more than $150 and your total claim for work-related expenses is more than $300 – not including car, meal allowance, award transport payment allowance and travel allowances expenses – the records you must keep include:

  • receipts, or other written evidence of your expenses
  • diary entries you make to record
    • your small expenses ($10 or less) totalling no more than $200 that you do not have a receipt for
    • expenses that you cannot get any kind of evidence for regardless of the amount – for example, a diary record of your laundromat costs.

If you are paid a uniform maintenance allowance to purchase, repair and maintain your uniform, you must include this on your tax return as income. You can claim a deduction for your expenses but you must be able to provide evidence of your claim.

You can claim and immediate deduction for the full cost of the item if it is $300 or less.

The cost of purchasing computers or laptops that you use for work – If you use your computer or laptop for private purposes, you can only claim the portion of the costs that related to your work use.

The cost of the work-related proportion of

  • the decline in value (depreciation) of a computer – of the laptop costs more than $300
  • any repair costs
  • the interest on money borrowed to buy the computer
  • internet access or internet café expenses.

You cannot claim any deduction for decline in value (depreciation) of items used in your employment if they were provided to you by your employer.

The cost of work-related phone calls you make, including calls from mobile or home phones.

The cost of your phone rental – if you can show you were on call or you had to call your employer or clients regularly while you were away from your workplace.

The cost of the work-related portion of your phone rental costs and calls – If you also used your phone for private purposes

You may be able to identify your work-related calls individually on your itemised phone account. If you do not receive itemised accounts, you can make a reasonable estimate of your call costs based on diary records you have kept for a minimum four-week period, together with your relevant phone accounts.

The cost of the work-related part of your compulsory mess subscriptions – You can obtain details of the amount paid for mess subscriptions from mess accounts provided by your mess committee.

You cannot claim a deduction for amounts paid for food, drink or entertainment.

You cannot claim a deduction for costs incurred in attending compulsory or non- compulsory mess functions. This includes functions such as dinners, dances and cocktail parties.

It is recognised that:

  • many of these functions are compulsory
  • behaviour at such functions may be taken into account for promotion
  • members learn mess function etiquette by attending functions.

Expenses such as food and drink in the mess and entertaining guests in an official or informal capacity are considered to be private and not sufficiently related to the production of income. The cost of travelling to and from the mess is also not deductible.

You cannot claim a deduction for expenses incurred in maintaining a standard of fitness– because these are generally private in nature. Such as fitness courses or gymnasium memberships, and other health-related items (protein shakes and supplements)

You can claim a deduction for expenses incurred in maintaining the level of fitness – if the members are required to maintain a very high level of fitness well above the general Australian Defence Force standard and derive their income by performing a range of duties designed to keep them physically and mentally prepared. This could include physical training instructors and those in special combat squads.If you can demonstrate that your job requires the maintenance of a very high level of fitness you may be able to claim a deduction. The strenuous physical activity must be an essential and regular element of your duties.

You cannot claim a deduction for the cost of purchasing and repairing an ordinary wristwatch, including waterproof watches. However, if your watch has special characteristics which you use for work,

You can claim a deduction for (depreciation) of a special watch that used for work such as a dedicated stopwatch

You can claim deductions for the cost of repairs, batteries and watchbands for special watches – but your claim must be apportioned between private and work-related use.

Renewing licenses and certificates – but not including normal driver license or the initial obtaining costs

Annual association membership fees – The Air Force Association or The Australian Defence Association membership fees

Magazine or professional publications, books or journals

Short training course, provided the course directly relates to current job

The cost of buying, insuring and repairing equipment used at work – including tools, electronic organizers, laptop computers and mobile phones

The cost of additional or more sophisticated weapon related equipment – rifles, ammunition and cleaning equipment – if you paid for these items in addition to the amounts provided by the ADF