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Income tax deductions Yesterday we gave you our Top 5 Superannuation Strategies that can help you to save tax and boost your overall financial position. Today in Part 2 we’re recommending that you review your potential tax-deductible expenses now, to maximise your claims.

TAX STRATEGIES PART 2: Review your Tax Deductible Expenses for 30 June 2020

Here are some of the common tax deductions you can claim, and what to look out for. The major issue for clients is that to receive a tax deduction, you must have spent the money before 30 June 2020, and show that you have made the payment for the expense.

MOTOR VEHICLE EXPENSES If your work-related travel is less than 5,000 km in the tax year, you can claim at a rate of 68 cents per kilometre. Note, you must be able to substantiate your claim (e.g. having records of travel for meetings etc.). If your work-related travel is more than 5,000 km, you can use the logbook method which allows you to claim the business portion of all running expenses (e.g. fuel, depreciation, interest etc.) provided the expenses have not been reimbursed by your employer. You must have a valid logbook to claim motor vehicle expenses using the logbook method. Make sure you keep your receipts for fuel, servicing, and insurance. CLIENT SERVICES
TRAVEL EXPENSES If you have travelled for work purposes and would like to claim the costs associated with the travel, ensure you have maintained a travel diary if you have travelled away from home for six or more nights in a row. If you are thinking to claim for travel to a rental property, please refer to this link to the ATO website to check your eligibility. CLIENT SERVICES
DEDUCTIBLE DONATIONS Make your donations to charities that have Deductible Gift Recipients (DGR). Ensure, wherever possible, that you get your receipt in the higher-earning spouse’s name. CLIENT SERVICES
MOBILE PHONE AND INTERNET PLANS Calculate out how much you use your mobile phone and the internet for work. CLIENT SERVICES
LAUNDRY EXPENSES Consider your laundry expenses, and check if you are eligible to make a claim. CLIENT SERVICES
SUN PROTECTION EXPENSES Ensure that you have purchased all applicable sun protection items before 30 June 2020 and keep your receipts. This includes sunglasses, long sleeve clothing, hats, and sunscreen. You need to link the sun protection expenses to your work and show the relationship to the income you earn, to be able to justify a claim. CLIENT SERVICES
HOME OFFICE EXPENSES Review and calculate the hours that you spend using your home office and how it relates to your job. CLIENT SERVICES
COVID-19 WORK RELATED DEDUCTION FOR HOME OFFICE With working from home increasing over the last few months, the following methods can be used to claim home office expenses

  • Fixed-rate – A fixed rate of 52 cents per hour can be claimed for each hour worked from home and represents running expenses. This method is simple and more commonly used as it does not require full substantiation of actual expenses. You can also claim the work-related portion of home internet, home phone, and mobile phones in addition to the 52 cents per hour.
  • Actual running expenses – To calculate the claim for running costs, as an alternative to the fixed rate method, employees can use the actual running expenses method. This method is more complex, requiring more detailed records, but may result in a larger claim. You can claim the work-related portion of home internet, home phone, and mobile phones in addition to the running costs.
  • Shortcut method – Given the volume of people required to work from home due to COVID-19, the ATO has provided a shortcut method to claim tax deductions at a flat rate of 80 cents per hour. This method is only available for hours worked from home from 1 March 2020 and unless extended, will apply to 30 December 2020. Claims before 1 March 2020 will need to be calculated using the above-mentioned methods. This method covers all running costs (including depreciation, phone and internet costs).
PREPAY INCOME PROTECTION INSURANCE PREMIUMS Depending on your situation, you may want to consider pre-paying your Income Protection insurance. Income Protection insurance premiums are generally tax-deductible as they are protecting your income for the future. You may want to pay your premiums for your Income Protection insurance for 12 months in advance, so you can:

  • Bring forward your tax deduction; and
  • Payless income tax this financial year.

Read AAG Tax Planning Strategies for Individuals for 30 June 2020 – Part 3

Please email us at if you have any queries. We will be in touch again in the new financial year to discuss your specific requirements for your tax return and to help you to maximise your claims. We look forward to assisting you with your tax returns.

AAG AustAsia

AAG AustAsia

AAG is a family-owned group providing Tax planning, management accounting, wealth management, and more. Established in 1979, AAG acts entirely in their clients' best interest by providing financial expertise and upholds a reputation of nurturing long-lasting relationships with clients to assist them with all their personal and business financial issues.