Claiming ADF related deductions in your return

General Guidance

As an ADF member, you incur various expenses in the course of your work. The ATO allows deductions to be claimed in your income tax return for some but not all of these costs. However, the expense must be incurred in earning assessable income (i.e. related to your work). If it is capital, private or domestic in nature, you can’t claim a deduction - sorry!

As a general rule, expenses that are reimbursed or paid by the ADF cannot be claimed as a deduction in your return. In some instances, you will have received an allowance to cover certain work related expenses. This allowance should be reported as income in your return, but a corresponding deduction may also be allowed (see details below).

You will also need to make sure that where your total work related deductions exceed $300, you are able to substantiate your claim (receipts, written evidence of calculations etc). This documentation is kept for up to five years (in case the ATO come knocking).

Airtax deals with deductions in the following areas and this article provides some ADF specific guidance based on common situations:

• Car/Vehicle Expenses from Work Related Activities.
• Travel Expenses.
• Clothing & Dry Cleaning.
• Education.
• Other Work Expenses.

Car/Vehicle Expenses from Work Related Activities

Where you are required to travel for work (domestic and interstate) you are able to claim a deduction for the unreimbursed expenses where they are not private and domestic in nature.

If you use your car to perform duties, you are entitled to claim a deduction for expenses associated with operating the car. Be aware that there are specific methods for calculating the amount of the deduction. You may wish to consider which method will give you the most favourable outcome (i.e. the greatest deduction).

There are two methods for calculating your deductions for work-related car expenses:

(a) the cents per kilometre method; and
(b) the logbook method.

The cents per kilometre method:
For the 2022-23 income year, you can claim a deduction for 78 cents per kilometre of work related travel  and you can claim up to a maximum of 5,000 kilometres per car.

The cents per kilometre method will allow you to claim a deduction that incorporates costs of running the car such as fuel and maintenance as well as insurance and depreciation.

Where you are using the cents per kilometre method, you cannot also claim under the logbook method.

The cents per kilometre method may be the easiest method to apply, however it will not always give you the most favourable outcome. You should consider if this is the best option for your circumstances.

The logbook method:
Under the logbook method your deduction is the ‘taxable purpose proportion’ of the expenses for the car. This amount will be a percentage (i.e. the ‘taxable purpose proportion’) of running costs - e.g. maintenance, petrol.

To work out the ‘taxable purpose proportion’ under this method, you will need to keep a logbook and odometer readings for a minimum continuous period of 12 weeks.

Where you are claiming a deduction for your expenses worked out under the logbook method, you will also be able to claim for depreciation using standard depreciation or simplified depreciation (in some cases, depending on the cost price of the car).

Examples of work related travel:

• Travel between bases
• Travel on base (must be in the ADF members own vehicle)
• Travel from the base to another location which is required for work

You can only claim the cost of home-to-work or work-to-home travel if you have to carry bulky tools and this equipment that is required for work and is essential to be transported to and from work (i.e. this is not done as a matter of convenience or personal choice).

Some ADF may be paid a travel/vehicle allowance. You will not be able to claim an automatic deduction for the allowance paid, you will need to claim the actual expenses incurred (please note, your expenses may exceed your allowance amount and visa-versa).

FAQs

I live on base, can I claim anything?
If you live on base but your regular place of work is not on base, you cannot claim the cost of travel from the base to your regular place of work (ie home to work travel).

However, if during the day working on base you are required to travel to another base/location which is not your regular place of work, you will be able to claim a deduction for this travel.

In this scenario the deduction is allowed for travel between one place of work to another, but would not allowed when you travel directly from your home on base to the other location. It’s a little complicated, but generally if your trip starts or ends at home (and contains only incidental stops or tasks along the way) it's unlikely to be deductible (even when your home is on base).

Travel Expenses

ADF members can claim a deduction for travel costs (other than car costs) for work related travel (refer to discussion above) that are not reimbursed. This may include expenses for bus, train or air tickets, taxi/uber fares, parking, tolls and/or car hire.

ADF members may also claim a deduction for unreimbursed meals, accommodation and other incidental expenses incurred whilst travelling for work (ie attending a course, conference or meeting).

Where you receive a travel allowance to cover meals, accommodation and other incidental costs, only the amount you spend that exceeds this allowance and can be substantiated may be claimed as a deduction.

Clothing and Dry Cleaning

ADF members are often provided with a uniform allowance. This should be included as income in your tax return and you are able to claim a corresponding deduction for the purchase, repair, maintenance and laundry of military uniform. You will not be able to claim an automatic deduction for the uniform allowance amount, instead you will need to claim the actual expenses incurred (please note, your expenses may exceed your allowance amount or visa-versa).

The ATO considers a military uniform to include such items 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; and camouflage shirts and trousers. However, it does not include items or accessories of a conventional nature, e.g., underwear, ordinary fashion shoes, hair accessories or T-shirts.

Protective Clothing
You can claim for clothing and footwear that you wear to protect yourself, as well as the uniform you wear to reduce the risk of illness or injury posed by your income-earning activities, or the environment in which you are required to carry them out which are unreimbursed or not provided to you by the ADF. To be considered protective, the items must provide a sufficient degree of protection against that risk.

Protective clothing includes:

• Fire-resistant and sun-protection clothing.
• Steel-capped boots, gloves, overalls, and heavy-duty shirts and trousers.
• Overalls, smocks and aprons you wear to avoid damage or soiling to your ordinary clothes during your income-earning activities.
• ADF members such as physical training instructors and those in special combat squads who derive their income by performing a range of regular strenuous physical activity will be able to claim the cost of protective sports footwear worn.

Special items
Some special items worn with or as part of a uniform are unconventional in nature, and are allowable deductions. For example, you could claim a deduction for a ceremonial sword worn during parades (note: if the item costs more than $300 it would have to be depreciated for its useful life).

Cleaning of uniform/clothing 
You can claim the costs of washing, drying and ironing eligible work clothes, or having them dry-cleaned.

You must have written evidence, such as diary entries and receipts, for your laundry expenses if both:

• The amount of your claim is greater than $150.
• Your total claim for work-related expenses exceeds $300 - not including car, meal allowance, award transport payments allowance and travel allowance expenses.

If you don't need to provide written evidence for your laundry expenses, you may use a reasonable basis to work out your claim. For the washing, drying and ironing that you do yourself, the ATO considers that a reasonable basis for working out your laundry claim is:

• $1 per load - this includes washing, drying and ironing - if the load is made up only of work-related clothing.
• 50 cents per load if other laundry items are included.

If you choose a different basis to work out your claim, the ATO may ask you to explain that basis.

Dry cleaning expenses 
You can claim the cost of dry-cleaning work-related clothing. If your total claim for work-related expenses exceeds $300 - not including car, meal allowance, award transport payments allowance and travel allowance expenses - you must have written evidence to substantiate your claim.

Education

A deduction is allowable for the cost of self-education if there is a direct connection between the self education and the ADF member's current income-earning activities. Self-education costs can include fees, travel, books and equipment

Common self-education expenses include:

• Course expenses taken at an educational institution (note this does not need to lead to a formal qualification).
• Language course expenses - where expenses are incurred while employed by the ADF (ie not provided through the military school).
• Home office running expenses associated with study.
• Travel expenses (for example from your usual place of work to the educational institution).
• The cost of subscribing to journals, periodicals and magazines that have content specifically related to ADF member’s work (for example, an Aerospace Engineer purchasing an aeronautical engineering journal).
• A deduction is allowable for the cost of attending conferences, seminars and training courses to maintain or increase the knowledge, ability or skills required by an ADF member. There must be a relevant connection with the current income-earning activities of the ADF member and these costs must not have been reimbursed by the ADF.

FAQ

I am a currently employed as a nurse in the ADF but am undertaking further studies to become an engineer with the view of receiving a promotion. Am I able to claim self-education expenses?
You would not be entitled to a deduction as the costs are not related to your current income-earning activities and have been incurred at a point too soon. However, if you were to study a masters of nursing, any self-education expenses (where a reimbursement has not been received), would be an allowable self-education deduction.

Other Work Expenses

Home-office Expenses
You may be entitled to claim deductions for home office expenses including a computer, phone or other electronic devices you are required to use for work purposes, as well as a deduction for running costs.

Generally you can't claim a deduction for occupancy expenses, including rent, mortgage interest, council rates and house insurance premiums.

Claiming a computer, phone or other electronic device as a work-related expense
If you are required to use your computer, phone or other electronic device for work purposes, you may be able to claim a deduction for your costs. Similarly, if you are required to be (and can demonstrate that you are required to be) “on call” on a regular basis then you will be able to claim a deduction for a proportion of telephone rental costs.

Running costs

• If you perform some of your work from a home office, you may be entitled to a deduction for the costs you incur in running it, including: for home office equipment, such as computers, printers and telephones, the cost (for items costing up to $300) or decline in value (for items costing $300 or more).
• work-related phone calls (including mobiles) and phone rental (a portion reflecting the share of work-related use of the line) if you can show you ** are on call, or ** have to phone your employer regularly while you are away from your workplace.
• the costs of repairs to your home office furniture and fittings.

You can claim the work-related portion of actual amounts or use the ATO approved amount of 45c per hour (this takes into account running expenses such as heating, cooling and lighting).

Records you must keep

You must keep records of home office expenses, such as:

• Receipts or other written evidence of your expenses, including receipts for depreciating assets you have purchased.
• Diary entries you make to record your small expenses ($10 or less) totalling no more than $200, or expenses you cannot get any kind of evidence for, regardless of the amount.
• Itemised phone accounts from which you can identify work-related calls, or other records, such as diary entries (if you do not get an itemised account from your phone company).
• A diary you have created to work out how much you used your equipment, home office and phone for business purposes over a representative four-week period.

FAQs

I live on base. Am I able to claim home office expenses?
You will not be able to claim home office running costs. However, you will be able to claim other expenses such as the depreciation of your personal laptop if you are required to use it for work-related purposes.

Grooming and haircuts
Although ADF members are required by Australian Military Regulations and orders to keep their hair short (and for women tied up), a deduction is not allowable as these expenses are considered private in nature.

Mess Fees

You can claim a deduction for the portion of compulsory mess subscriptions which are attributable to work-related activities. 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 can also not claim a deduction for compulsory and non-compulsory mess functions (this includes functions such as dinners, dances and cocktail parties).

Physical Training Fees

Expenses you incur in maintaining a standard high level of fitness are generally private in nature, so you cannot claim a deduction for these. Expenses for fitness courses and gym memberships are also considered to be private in nature.

Some ADF members such as physical training instructors and those in special combat squads are required to maintain a very high level of fitness (well above the general ADF standard).

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.In this situation, you may claim a deduction for fitness courses and gym memberships.

If your ADF unit has designed their own physical training clothing with the logo or emblem of your particular unit, you will be able to claim a deduction for the physical training clothing.

A deduction will not be allowed for other conventional clothing such as tracksuits, shorts, T shirts, socks and running/sports shoes.

FAQs

Are there some examples of common ADF work related expenses that the ATO generally allows or does not allow?

Please refer to the following table: