The hospitality industry has been one of the hardest hit sectors during the covid-19 pandemic. To make your financial situation less difficult it is important for hospitality workers to be aware of the many tax deductions that they are entitled to thus allowing them to put a huge amount of hard-earned cash back into their wallets.
Here are a few times to help hospitality workers such as; event managers, waitstaff, mixologists and baristas gain full access to all the deductions that they are entitled to.
Claim Tax Deductions on Various Expenses From Various Areas of Your Job
There are a number of tax deductions made available for clothing that is required to be worn by hospitality employees during work.
It is possible to claim tax deductions on the laundering and repair of uniforms with logo or if an item forms part of a compulsory uniform, protective clothing such as; aprons and protective boots or work specific clothing such as; chef’s hats and chef’s pants.
It is important to know that you are unable to claim conventional clothing such as a plain white shirt or black shoes as the wearing of these items is not limited to your workplace.
Tax deductions are also available for various tools and equipment. This includes; the costs to purchase equipment used in your job up to $300. Equipment may include; chef’s knives, cooking utensils, tablet, computers, cocktail mixers, tools or anything similar.
Tax deductions are available for the depreciation of equipment costing over $300, the repair and maintenance costs of work-related equipment and leasing costs of equipment used in your job or for interest on loans taken out to purchase work related equipment.
Claim Work-Related Car Expenses
Australian workers who are required to use their personal car for employment related reasons besides driving to and from work, are generally able to claim fuel and maintenance costs as a tax deduction.
The method for calculating the deduction can be done in two different ways. The first method is to use a 12-week logbook. This logbook generates numbers that can be re-used for five years. The second method is for the worker to use the cents per kilometre method.
The Australian Tax Office (ATO) defines work-related kilometres as “kilometres travelled in your car while you are earning your income”. To be eligible for this deduction you must be the owner of the car and your travel must be part of your working day.
Examples of travel that is part of your working day includes; driving between different offices, driving from one job site to the next or trips to the post office or to the bank (this excludes stop-offs on the way home from work).
You are unable to claim trips between work and home unless you are carrying heavy equipment for work, or transporting heavy tools which are required for you to do your job.
Hospitality workers might be entitled to tax deductions if they travel to conferences or trade fairs, or if they are required to travel for training as part of their job.
Some of the common tax deductions include payments spent on; taxis, trains and bus fares, flights, tolls, car hire, overnight accommodation and meals they are purchased when you are staying overnight.
Your employer may give you an allowance to cover the costs of your work-related travel that you do within Australia. This will be included as income on your Payment Summary at the end of each financial year and you should include this in your tax return. If this is the case, you don’t need to substantiate your expenses as long as the amount you claim is deemed a reasonable amount by the Australian Tax Office (ATO).
Home Office Running Expenses
If you need to work from home for part of the time you may be able to claim: The cost of using a designated home office space for example; power costs for heating, lighting and cooling.
Home office equipment, such as computers, scanners or printers which cost $300 or less.
You might be able to claim a decline in value of plant and equipment such as; computers, printers, scanners costing more than $300)
The decline in value of furniture and furnishings such as; chairs, curtains orblinds, floor coverings, light fittings. The cost of repairs to furniture and furnishing used for your work and various cleaning costs.
You claim home office running expenses in one of two ways:
- “The amount of actual expense incurred through an established pattern of use.” – In other words, keep a diary and records of all expenses and the time and days your used the office space.
- Or at a flat rate of 80 cents per hour which is known as the “covid rate”.
To ease the burden on Australian taxpayers who are working from home the Australian government has extended the 80 cents per hour shortcut deduction method. This incentive originally introduced in April 2020 will now be in place until 30th June 2021.
Under this arrangement, taxpayers are allowed to claim a rate of 80 cents per hour for all their running expenses, as opposed to having to calculate costs for specific running expenses. The original requirement of having a dedicated work-from-home area is also removed. Under this scheme multiple people in a household are allowed to claim the 80 cents per hour rate.
Tax agents or self-lodgers must include the “Covid-hourly rate” in their annual tax returns if they choose to nominate to use this method. If choosing to use this shortcut method, all an individual has to do is keep a record of the hours they have worked from home as evidence when making a claim.
To be eligible to claim a deduction whilst working from home the ATO outlines that; “you must have spent the money, the expenses must be directly related to earning your income and you must have a record to prove it”.
These additional expenses include more money spent on lighting, heating, clean and cooling. Working from home also means that more money is spent on electricity used to operate electronic items. Phone bills increase, internet expenses surge and there is also a decline in the value of furniture and computers that are used for employment purposes.
These expenses can include; tuition or tuition fees and equipment purchased for the study (test books or software, travel costs, associated phone and internet fees or accommodation and meals if you are away from home overnight.
You are unable to claim self-education expenses if your goal is to get a different job or money from a new income-earning activity.
Miscellaneous Hospitality Tax Deductions
There are a number of other tax deduction fees that people often miss out on such as; tax agent fees for preparing your prior year’s tax return, work related phone calls and the work percentage of phone expenses, cost to renew a gaming license and some other work-related licenses and certificates. Also journals and publications relating to your position, the renewal of union and professional association fees, work bags, income protection insurance, charity donations when donating to registered charities and sunglasses and sunscreen if you are required to work in open air functions.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
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