Building and Construction Employees – Navigating Tax Deductions Part 1

tax deductions accountants

By Katrina Brennan

As an employee in the building and construction industry, it is often confusing as to what tax deductions are available to you. To make life easier, Vincents has summarised the rules in a two part article.  The first part deals with claiming deductions. The second part deals with how allowances expand the claims available to construction workers.  All taxpayers are entitled to claim deductions for the expenses they incurred whilst doing their job, as long as the expenses are not personal and receipts or written evidence are kept.

Motor Vehicle expenses:

Australian taxation law sets out that travelling from home to work and vice-versa is not considered to be work-related travel, therefore cannot usually be claimed as a deduction. However, you may be able to claim the cost of using your car to travel between home and work if:

  • you have to carry bulky tools and equipment to use at work; and
  • transporting the equipment to and from work is essential, and is not done as a matter of convenience or personal choice; and
  • there is no secure storage area at your workplace.

Additionally, taxpayers can claim the cost of travelling:

  • directly between two separate workplaces;
  • from their normal workplace to an alternative workplace and back to your normal workplace or directly home (while you are still on duty); or
  • from your home to an alternative workplace, and then to your normal workplace or directly home.

Taxpayers can claim these motor vehicle expenses using either the cents per kilometre or logbook methods. Please note that you cannot claim a deduction for car expenses if your employer or any other person provides a car for you and you do not pay for any of the running costs.

Overnight travel:

Employees can claim a deduction for the full amount of travel expenses where your employer requires you to travel to a worksite for a short period to perform work and you are required to sleep away from home for one or more nights. These expenses include meals, accommodation, incidental expenses, airfares, public transport fares or taxis. You cannot claim these expenses if your employer reimburses you.

Clothing, laundry and dry cleaning:

Building and construction employees may be able to claim a deduction for the costs of buying, renting, repairing or cleaning work clothing. Deductible work clothing includes:

  • compulsory uniforms;
  • an item of distinctive clothing such as jumper or shirt with the employer’s logo (if it is compulsory for you to wear it);
  • a non-compulsory corporate uniform if your employer has registered the design with AusIndustry; or
  • protective clothing (e.g. vests, steal capped boots).

You can claim a deduction for the cost of washing, drying and ironing your deductible work clothing as laundry expenses. This also includes laundromat expenses and the actual cost of dry-cleaning.

Other deductions:

In addition, a building and construction employee may be eligible to claim the following expenses as deductions (provided they are sufficiently connected to your work activities):

  • Tools and equipment (immediate deduction for tools and equipment costing $300 or less).
  • Decline in value of tools and equipment (for tools and equipment costing $301 or more).
  • Union and professional association fees.
  • Sunglasses, sunhats and sunscreen (if the nature of your work requires you to be in the sun).
  • Personal protective gear (immediate deduction for gear that costs $300 or less).
  • Phone expenses (if your phone is also used for personal use, you can claim a deduction for the percentage that is work-related).
  • Self-education expenses to maintain or improve skills or knowledge you need in your current employment or the self-education is likely to result in an increase in current income (e.g. example, textbooks, internet access and course fees).
  • Renewing licenses (other than driver’s licences).
  • Insurance on tools and equipment.
  • Interest costs in purchasing tools and other equipment.
  • Seminars, conferences and training courses (including first aid courses).
  • Stationery used for work.

Please note you cannot claim a deduction for expenses you incur if those expenses are reimbursed to you by your employer.

Stay tuned for Part 2 of our series that deals with how allowances expand the claims available to construction workers.

Want to know more?

If you would like to know more about the issues raised in this article, please contact Katrina Brennan our Business Advisory Director for assistance.

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.



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