Tax Deductions


Immediate deductions

4 August 2022

Businesses may be able to claim an immediate deduction for expenses through the temporary full expensing measure. This allows a business to claim an immediate deduction for new assets if they have a turnover of less than $5 billion, and for second-hand assets if the business has a turnover of less than $50 million.

The assets must be first held, used or installed for use between 6 October 2020 and 30 June 2023.

For many businesses, deductions made through the temporary full expensing measure this EOFY are likely to include digital transformation costs. If your business has invested in technology this financial year you may be able to claim a deduction.

Impact HR has also seen an increase in businesses investing in education, online courses and other professional development. If your business has paid for the course, you can claim a tax deduction. Given the difficulty in recruiting during 2021-22, development is an area of focus for companies as reskilling and upskilling to meet the skills shortage has emerged as a critical business and HR need.

If an employee queries if they can claim a tax deduction for a course they’ve paid for and undertaken, the HR answer will depend on the type of course. Employees need to be very careful that they tick all the boxes for deductibility if they’re claiming self-education costs.  It’s worth encouraging your employees to talk to a tax agent to make sure there is a necessary connection to their employment. If, for example, an employee is taking a course that enables them to get a promotion into a different type of job, that’s typically not tax deductible.

Employees may also be able to claim for protective gear or occupational clothing required for work. Hard hats or steel cap boots, may also be tax deductible. If your business has provided it then the business can claim a deduction. If it isn’t standard and employees have to buy the equipment themselves, then employees can claim it. Regardless of whether the deduction is being claimed by the employee or the employer, it’s important that proper records are kept to support the claim.

Importantly, a deduction can only be claimed if the substantiation exists and it should include:

  • The name of the supplier
  • The amount of the expense
  • The nature of the goods or services provided
  • The date the expense was paid
  • The date of the document

Typically, a receipt or invoice is sufficient.

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