In a perfect world, claiming tax deductions would be simple, straightforward, and intuitive. Unfortunately, we live in the real world, where the tax rules are (necessarily) complex. Not every purchase you make for work is tax deductible, and you’re probably not claiming everything you can claim!
To help self-employed nurses and midwives navigate the wild west of tax deductions, the ATO has come up with three golden rules for making claims. If your expense meets these three requirements, it’s possibly tax deductible:
- The expense must have been for your business, not for personal use.
- If the expense is for a mix of business and personal use, you can only claim the portion that is used for your business.
- You must have records to prove it.
On top of these three rules, there are a few other guidelines to bear in mind:
- You can only claim what you’ve paid for out of pocket. If you have an employer, and they reimburse you for an expense, it’s no longer claimable.
- The exception is allowances. If you receive an allowance for an expense (eg. travel), and you spend it on travel, you can claim it as an expense
To help you make heads AND tails of it all, we’ve put together a quick cheat sheet for some of our most queried health care professional expenses.
Key:
- ✅ - straightforward and claimable
- ⚠️ - claimable if certain conditions are met
- ❌ - not claimable at all. Sorry folks.
15 expenses you can and can’t claim
1. Fees and insurance ✅
All professional fees and insurance payments are claimable including your:
- Agency fees
- Agency commission
- Annual practising certificate fees
- Australian Health Practitioner Regulation Agency (AHPRA) registration
- Australian Primary Health Care Nurses Association (APNA) Membership
Make sure you claim them all!
2. Tools and equipment ✅
Any equipment you need in order to do your job (mobile phone, disability ramp, stethoscope, pin watch) is tax deductible. Remember though: If the equipment is for both business and personal use, you can only claim the business portion of the cost.
3. Child care ❌
Even if you aren’t able to work without paying for childcare, childcare is considered a personal expense. It’s never claimable (sorry).
4. Phone and internet expenses
You can claim the work-related percentage of phone and internet expenses, including:
- your phone itself (including its decline in value!)
- your data plan
- internet expenses
5. Protective items ✅
Protective items like:
- gloves
- hand sanitiser
- PPE
- non-slip nursing shoes
- safety glasses
- lab coats
- aprons
- stockings
- vests
are all claimable, but only if an agency doesn’t reimburse you.
6. Training, self-education and study ⚠️
You can claim all training, self-education, and study expenses IF your course relates directly to your current role. In order these expenses to be eligible, your education needs to:
- Maintain or improve the specific skills and knowledge you need for your current duties
- Be likely to result in an increase in income from your current employment.
You can’t claim a deduction for a course that will help you get a new job, or if it’s only tangentially related to your line of work. Personal development courses unfortunately don’t cut the mustard with the ATO.
7. Seminars, conferences, and training courses ✅
Like with education, costs for seminars, conferences, and training courses that will help you get ahead in your current role are tax deductible.
Better yet, travel expenses, accommodation, and meals are all also tax deductible if you’re required to stay away from home for more than a day. Whoohoo!
You just need to make sure that the whole trip is 100% work related. You can’t fly to Bora Bora for a holiday, attend a seminar on a new pharmaceutical, and then expense the entire trip (unfortunately). In this case, only direct costs like the seminar registration fees will be tax deductible.
After miscalculating his taxes and incurring a hefty fine from the ATO, her agency recommends he attend a free basic bookkeeping seminar for health care professionals. Zafeer decides to go, driving three hours to the seminar’s location, and staying in a motel overnight.
Unfortunately, she is unable to claim any costs for the trip because the seminar didn’t directly relate to her ability to do her job.
He did, however, sign up for Hnry, and never missed another tax payment again.
8. Clothing and laundry ⚠️
This one’s a bit tricky. The ATO only allows deductions for:
- uniforms with logos,
- occupation-specific clothing (eg. nurse scrubs),
- and unconventional costumes (eg. a clown suit if you work as a clown).
Even if you only use certain clothes for work, if they could feasibly be worn outside of work, you’re out of luck.
If your work clothes ARE tax deductible however, you can also claim the related laundry expenses. This includes:
- Dry cleaning and repairs.
- $1 for every load containing just your work clothes.
- $0.50 for every load containing a mix of work and personal garments.
If your laundry expenses (minus dry cleaning) are less than $150, you don’t need to keep records to prove your costs, but you will need to be able to show how you calculated and worked out your claim.
9. Driver’s licence ⚠️
While you can’t claim the cost of getting or renewing your regular driver’s licence, you can claim the costs for any additional special licences or conditions you need for work.
For example, a heavy vehicle permit needed to drive a retirement-home bus is a claimable work expense.
10. Entertainment and social functions ❌
This one’s a bit of a hard pill to swallow, we won’t lie. Entertainment and social event costs are considered personal expenses, even if they’re related to work. Even if they’re required for work. It’s not tax deductible to:
- Take your patient out for a coffee, or any other social activity,
- Attend a networking event (even if your agency says it’s compulsory for you to be there - ouch!).
11. Glasses ❌
The ATO doesn’t care if you’re as blind as a bat without them; glasses are a personal expense.
12. Grooming ❌
Your agency might need you to be well turned out 24/7, but the ATO likes you exactly the way you are. Grooming costs are considered personal expenses.
13. Meals ⚠️
- ❌ You CAN’T claim the cost of food, drinks, and snacks consumed during normal work hours, even if you receive an allowance. These are considered private expenses.
- ✅ You CAN claim meals bought when working overtime IF you receive an overtime meal allowance, and this allowance is included in your assessable income.
- 📖 Your assessable income is the income you pay taxes on. For more information, read our article on how taxes work.
- ✅ Similarly, you CAN also claim meals you buy when travelling overnight on a work trip (memo to self: remember this burger next time you’re in Perth for work).
14. Travel expenses ✅
Like with seminars, conferences, and training courses, you can claim any costs associated with an overnight trip for work. The exception is if you’re staying overnight at a patient’s house; the ATO doesn’t consider this a travel expense.
If you receive an allowance for overnight costs, and this allowance is part of your assessable income, you can still claim these expenses if you can show:
- You were away overnight
- You spent money while away
- The trip directly relates to earning income
- How you worked out your claim
15. Car expenses ⚠️
Car expenses are tax deductible, but only in specific circumstances:
- ❌ You CAN’T claim the cost of normal trips between home and work, even if you work outside of usual business hours. This includes any taxi or public transport fares; the ATO considers your regular commute a private expense.
- There are limited exceptions to this rule. For example, if you have no fixed place of employment and you continually travel from one work site to another.
- ❌ You CAN’T claim any tolls you pay driving between home and your regular place of work.
- ❌ You CAN’T claim parking costs for parking at or near your regular place of work.
- ✅ You CAN claim the cost of driving from one job to another during the working day.
- ✅ You CAN claim the cost of driving between alternate work locations for the same employer eg. if you transport a patient between locations.
- ✅ You CAN claim the cost of tolls and parking on work related trips.
She drives from her house to her first client Joy’s house, and conducts a routine health check. She then takes Joy to a clinic for a blood test, where she pays $3.00 to park her car.
After dropping Joy home, Serena then heads to her second client Sarah’s house, incurring a $2.00 toll on the drive over. Sunny administers Sarah’s afternoon medication, checks in with her family about Sarah’s general health over the last week, and writes up her notes.
As the sun sets, Serena says goodbye and drives home. Aside from the drive to work (from home to her first client Joy’s house), and the drive home again (from second client Sarah’s house), Serena can claim all trips, parking fees, and tolls as business expenses.
Claiming car expenses
To claim the cost of car expenses, you can use either the logbook method or the cents per kilometre method.
Logbook method
The logbook method is used to calculate the business-use percentage of the expenses for the vehicle. Expenses include fuel, maintenance, and registrations.
To work out your business-use percentage, you’ll need to keep a logbook (obviously) for a minimum of 12 continuous weeks. Note the income year you create the logbook, and then for each trip you take, record:
- the date the journey began, and the date it ended
- the car’s odometer reading at the start and end of the journey
- how many kilometres the car travelled on the journey
- why the journey was made (eg. for business or personal reasons)
Once your logbook is complete, you can work out the percentage you use your car for work, and claim that percentage of all running expenses. Unless your circumstances change significantly (eg. you change jobs), your logbook will be valid for five years.
You can claim fuel and oil costs based on your actual receipts, or you can estimate costs based on your odometer readings. For all other expenses, you’ll need written proof (eg. WoF, maintenance etc).
💡If the cost of fuel skyrockets unexpectedly, using the logbook method means your fuel claims will keep pace with the pump price. It might be worth the admin if you use a lot of petrol for work.
Cents per kilometre method
From 1 July 2022, you can claim $0.78 per kilometre for every tax deductible trip you take, up to a maximum of 5,000km (or $3,900). You won’t need to keep a logbook, but the ATO might ask you to show them how you calculated your business kilometres. It’s far easier, but less accurate than using a logbook.
| Logbook method | Cents per kilometre method |
|---|---|
| Pros: | |
| Potentially a bigger deduction, if your vehicle expenses are high. | Low admin |
| Cons: | |
| More admin. | Potentially a lower deduction, if your vehicle expenses are high. |
Claim tax deductions with Hnry
We may be biased, but we reckon the best way for self-employed nurses and midwives to maximise tax deductions (cost-effectively and legally!) is to use Hnry.
Hnry is an award-winning app that’s helping health professionals spend less time on financial admin, and more time doing what they love (unless what they love is financial admin).
Once you’re up and running with Hnry, we’ll automatically deduct all relevant tax payments and levies every time you’re paid, so you won’t accidentally end up with a massive tax bill at the end of the financial year. We’ll even lodge your annual tax return for you, at no additional cost.
Raising expenses through our app is as simple as taking a photo of your receipt and inputting a few extra details. From there, our accountants will manage all your tax deductions, so you get the right tax relief in real time (rather than having to wait until the end of the financial year).
Get your tax ducks (and deductions) in a row by joining Hnry today!
DISCLAIMER: The information on our website is for general educational purposes only. It doesn’t cover all situations and circumstances, and shouldn’t be taken as direct tax advice. If you’re looking for specific help with your taxes, join Hnry and our team of experts can provide you with assistance tailored to your business needs.
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