Basic rules for claiming deductions

Basic rules for claiming deductions

To make a deductions claim, you must have made the purchase in the course of earning your assessable (taxable) income and it must not be a private, domestic or capital expense. If the expense was both work-related and private or domestic, you can only claim a deduction for the work-related portion.

The basic rules for claiming a deduction are that you:

must claim the deduction in the same income year that you made the purchase
can’t claim an expense that you have been, or will be, reimbursed for
may have to substantiate your claims with written evidence.

Different rules apply for expenses where you prepay for a service that extends beyond the current income year.

If GST is included in the price, it is part of the total expense and therefore part of any allowable deduction.

You can’t claim a deduction for:

fines imposed under a law of the Commonwealth, a state, a territory, a foreign country, or by a court, such as speeding tickets and car parking fines
costs you incur earning income from illegal activities – refer to Income from illegal activities: losses and outgoings.

End of danger
Further information

Find out more

Deductions for prepaid expenses

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