What we can learn about tax deductions for Teachers?
Tax deductions for teachers can be industry specific and complex. This blog explores the specific deductions available to education professionals with relevant examples to help explain how the deductions can be applied. The ATO has issued an Interpretive Decision ID 95/13 which specifically deals with tax deductions for teachers which has been outlined below.
Car and Travel expenses
Professionals are able to claim the cost of travel undertake in the course of performing their duties as an employee.
Generally, the cost of normal trips between home and work are a private expense you can’t claim. However, there are certain situations where you may be able to claim deductions for travel between your home and workplace.
Transporting students or bulky equipment
You can claim the cost of using your car to travel between home and work if you transport either of the following:
- Students – for example, to a sporting venue
- Bulky equipment you need at work and for which there was no secure storage area at your workplace.
As part of his coaching duties, Jeremy collects several students and transports them from their homes to the sporting field on a Saturday. After the match, he returns the players and continues his journey home.
Jeremy can claim a deduction because he is transporting student to the sporting venue.
Ramona decides to take her students books home to mark. She can’t claim the travel costs for taking the books home because it was a personal choice to mark the books at home and not at school.
Travelling between separate workplaces
You can claim a deduction for the cost of travelling between workplaces on the same day. This includes travelling between:
- Different workplaces for the same employer, for example if you regularly work at many places each day before returning home
- Separate places of employment if neither workplace is your home, for example when you have a second job.
- Example: travelling between two jobs
April travels directly from the school where she is employed as a teacher to the TAFE College where she gives night lectures. She can claim a deduction for the travel expenses she incurs because she travels directly from one workplace to the other.
Travel to an alternative workplace
Work-related car expenses also include the cost of travel:
- From your normal workplace to an alternative workplace that is not a regular workplace while you are still on duty, and back to your normal workplace or directly home
- From your home to an alternative workplace that is not a regular workplace, and then to your normal workplace or directly home.
Example 1 – Travelling from work to an alternative workplace that is not a regular workplace then home.
Wayne travels from his normal school to a regional administrative centre for a meeting. After the meeting, he travels directly home. Wayne can claim a deduction for the expenses he incurs because he has travelled to alternative workplaces and then home.
Example 2 – Travelling from home to an alternative workplace that is not a regular workplace then to work.
John travels from home to a marking centre to mark exams. He then travels to his normal school. John can claim a deduction for the expenses he incurs to travel from home to the marking centre and then to his normal school. However, he can’t claim a deduction for the expenses he incurs to travel directly from his normal place of employment to home.”
Other travel expenses
You can claim the work-related cost of using vehicles other than cars, as well as parking fees and bridge and road tolls. You can also claim work-related costs associated with taxis or short-term car hire.
You can claim a deduction for the cost of using public transport for work travel – for example, from your school to a conference venue.
You can’t claim: minor tasks on the way to work or home, such as collecting mail, there was no public transport near where you worked so you used a car, you have to travel between your home and work more than once a day, you are on call and you work outside normal business hours.
Michael is a stand-by relief teacher who works at various schools. He is usually informed of which schools he’ll be working at on short notice. The schools are located varying distances from home. Each day, Michael travels to a single school and returns home each night. Even though Michael travels from home to the particular school in response to a phone call, his travel is still a private expense which he can’t claim.
Overnight Travel Expenses
You can claim a deduction for overnight travel expenses you pay if:
- Your employer requires you to do your work away from home.
- You have to sleep away from home overnight in the course of doing work.
- You are not living away from home.
Home office expenses
You may be able to claim a deduction for the cost of running your home office if you do some work from home, even if the room is not set aside solely for that purpose.
You may be able to claim:
- The decline in value (depreciation) of home office equipment, such as computers and telecommunications equipment – if your equipment costs less than $300, you can claim a full deduction for the work-related portion
- Work-related phone calls while you are away from your workplace
- Work-related internet access charges
- The cost of heating, cooling and lighting your home office that is over the amount you would ordinarily have to pay if you did not work from home
- The costs of repairs to your home office furniture and fittings
This includes rent or mortgage interest, council rates and house insurance premiums. You can only claim occupancy expenses where your home office is considered to be a place of business. If your only income is paid to you as an employee, you are generally not able to claim a deduction for your occupancy expenses.
Clothing and Laundry Expenses
You can claim a deduction for the costs you incur when you buy, rent, repair or clean your work clothing. Work clothing includes:
- Compulsory uniforms and corporate wardrobes
- Single items of distinctive clothing such as a jumper with the employer’s logo if it is compulsory for you to wear it at work
- A non-compulsory uniform your employer has registered with AusIndustry
- Protective clothing.
You cannot automatically claim a deduction just because you received a clothing, uniform, laundry or dry-cleaning allowance from your employer. If your employer purchased your clothing for you, or reimburses you, you can’t claim a deduction for the cost of the clothing.
You can claim a deduction for the cost of washing, drying and ironing your work clothing as laundry expenses. This also includes laundromat expenses and the actual cost of dry cleaning. However you can’t claim a deduction for the cost of purchasing or cleaning plain uniform or conventional clothing you wear to work, even if your employer tells you to wear them. This includes
- Sports clothes like tracksuits, swimming costumes, shorts and running shoes – even if you are a physical education teacher
- Clothing you wear for medical reasons, such as support stockings
- Conventional clothing such as jeans
- Everyday footwear such as casual or running shoes.
Self-education expenses are related to a prescribed course of education provided by a school, college, university or other place of education, and can include a formal course or attendance at a seminar. Self-education expenses can include textbooks, stationery, student union fees, course fees, certain travel expenses and the decline in value of equipment, to the extent they are used for self-education purposes.
For the course to sufficiently connect to your current work activities:
- It must maintain or improve the specific skills or knowledge you need in your current work activities.
- It will result in, or is likely to result in an increase in your income from your current work activities.
Self-education expenses are not deductible if your study is designed to get you:
- A job
- A new job
- Income from a new income-earning activity
Self-education expenses can include textbooks, stationery, student union fees, course fees, certain travel expenses and the decline in value of equipment, to the extent they are used for self-education purposes.
If your expenses relate to a course at a school, college or university, you may have to reduce your allowable self-education expense by $250. However, you may have other types of expenses (some of which are not deductible) that can be offset against the $250 before you have to reduce the amount you can claim
Trevor currently has a bachelor of education but is studying for his master’s qualification in education. Trevor uses the self-education expenses category table to determine the type of self-education expense he can claim. He can claim course fees, text books and travel costs but because they all fall into category A of self-education expense categories, Trevor must reduce these expenses by $250.
Self-Education Expenses you can’t claim
You can’t claim a deduction for your self-education expenses that do not have a sufficient connection to your current employment even though they:
- Might be generally related to it
- Enable you to get a new job.
For example, you can’t claim the cost of study to enable you to move from being a teacher’s aide to being a teacher.
If your employer pays for the course fees outright, or reimburses you upon completion of your course, you can’t claim a deduction for your course fees.
Excursions, school trips and camps
You can claim a deduction for costs incurred when taking students on excursions, educational and sporting trips and camps if these trips have an educational benefit related to the curriculum or extracurricular activities of the school. For example, a science teacher accompanying a group of students a camp to study the ecology of a rainforest.
First aid courses
Designated first aid officers can claim a deduction for the cost of first aid training if required to do the training to assist in emergency work situations.
You can claim the costs of hiring equipment used for work. However, if the equipment is also used for private purposes, you can’t claim a deduction for that part of the hire cost.
Phone and internet expenses
You can claim a deduction if you have to make phone calls, send texts for work or use your personal devices for work. If you also used your phone and internet for private purposes, you can only claim the portion of your phone rental costs, calls and internet costs that relate to your work. If you are reimbursed for part or all of your phone and internet expenses, or provided with a pre-paid SIM card by your employer, you can only claim a deduction for the work-related portion you have not been reimbursed for.
Seminars and conferences
You can claim a deduction for the cost of attending seminars and conferences if they relate to your work as a Teacher or education professional.
Sunglasses, sunhats and sunscreens
You can claim a deduction for the cost of sunglasses, sunhats and sunscreen lotions if you’re required to work in the sun and use these items to protect yourself while at work – for example, if you are a school sporting coach for track and field events, in addition to your teaching duties.
You can claim a deduction for the cost of teaching aids used for work. Teaching aids you buy must be used as part of your teaching job. If the aid you buy can be used for both work and another purpose you can only deduct the portion used for work.
Technical or professional publications
You can claim a deduction for the cost of journals, periodicals and magazines with content specifically related to your employment as a teacher.
Union and professional association fees
You can claim a deduction for these fees. If the amount you paid is shown on your payment summary, you can use it to prove your claim.
As always it is important to remember that where you claim a tax deduction for a work-related expense you must have spent the money and weren’t reimbursed. The expense must be directly related to earning income and you must have a record to prove it. This record of the expense may include tax invoices and electronic records as well or diary record and in some cases both.
You should also note that items disclosed at items D1 to D5 covering work related deductions are subject to more onerous record keeping requirements under the substantiation provisions. Should any uncertainty exist regarding what tax deductions are available to you or if you are not sure what the substantiation requirements are then contact your accountant.