With tax season fast approaching, we thought it would be timely to review some of the most common areas regarding the deductibility of work-related expenses.
The ATO offers free, practical industry-specific advice on this topic and a tax time toolkit (see ato.gov.au/truck).
But we also contacted accountant Trevor Stanton of Stanton Advisory who has immense experience in the trucking industry, being himself a part-time trucker in the family business while running his accountancy practice.
With this experience, he has been able to help a large number of truckers meet their tax compliance obligations over the past few years.
Here, Stanton shares with you some of the most common deductions seen among truckers, before discussing some common misconceptions.
Motor vehicle expenses
Essentially, this is any work-related travel performed in your personal vehicle. A common misunderstanding among truckers is that all travel expenses between home and work can be deducted.
With a few exceptions (like if you haul heavy tools to and from work every morning), that’s not the case. However, truckers are generally allowed to claim a deduction for the use of their personal car when traveling directly between two workplaces or between alternate workplaces for the same employer (eg depot-to-depot).
Now let’s move on to calculating the amount to be claimed. There are two options we can use when claiming motor vehicle deductions.
The first is the “logbook” method, which consists of keeping a logbook of all trips (personal and professional) for a continuous period of at least 12 weeks.
This is then used to derive a percentage of work-related car use which, in turn, is used to calculate the work portion of the actual expenses incurred.
The second method is the “cents per kilometer” method, which simply involves claiming a deduction using the ATO’s pre-determined rate (72 cents per kilometer for 2021-22) for the total number of business kilometers traveled ( noting that this is capped at 5000 km).
Travel expenses incurred for overnight stays in the performance of your professional duties may be deducted.
A very common example we see is where truckers are required to personally pay for accommodation to satisfy the mandatory rest period.
These can be claimed as a deduction in the event that the costs are not reimbursed by your employer.
Clothing and laundry costs
This is another common area that many taxpayers often get confused about what they can actually claim.
You simply cannot claim a deduction for the purchase of clothes you wear to work. You can, however, deduct if the uniforms are mandatory (i.e. your employer makes certain work clothes compulsory and systematically regulates their wearing) or if the clothes are of a protective nature (for example, helmets, masks, goggles and sunglasses).
Contrary to the belief of many truckers, you generally cannot claim the cost of a driver’s license because in the eyes of the ATO it is considered a personal expense. Music subscriptions are another that we see, which are rarely deducted.
As can be seen, the deductibility of work-related expenses can be a complex area to fully grasp.
For tax questions and answers specific to your situation, we suggest speaking to your accountant, or feel free to contact Trevor Stanton of Stanton Advisory.
Note: The comments in this article are general in nature and do not constitute tax advice.