If you are a sales representative, here is a checklist of the tax deductions you may be able to claim on your personal tax return.
When Can Sales Representatives Claim for Car Expenses?
Our experience with sales representatives is they often, if not always, use their private car for work. In many cases, those work-related car expenses are an allowable deduction. The following is a checklist of when a sales representative can claim for the use of a car:
- Travel between home and work – A deduction is not allowable for the cost of travel between home and the normal workplace as it is generally considered to be a private expense. This principle is not altered by the performance of incidental tasks en route.
- Travel between home and work – transporting bulky equipment – A deduction is allowable if the transport expenses can be attributed to the transportation of bulky equipment rather than to private travel between home and work. A deduction is not allowable if the equipment is transported to and from work by sales representatives as a matter of convenience. A deduction is not allowable if a secure area for equipment storage is provided at the workplace.
- Travel between home and work where home is a base of operations and work is commenced at home. A deduction is allowable for transport expenses if they can be attributed to traveling on work, as distinct from traveling to work, i.e., where the sales representative’s home is used as a base of operations. His or her work has commenced before leaving home.
- Travel between home and shifting places of work. A deduction is allowable for the transport expenses incurred in traveling between home and shifting places of work, where the sales representative is required by the nature of the job itself to do the job in more than one place. The mere fact that a sales representative may choose to do part of the job in a place separate from that where the job is located is not enough.
- Travel between two separate workplaces if there are two separate employers involved – A deduction is allowable for the cost of traveling directly between two places of employment.
- Travel from the normal workplace to an alternate workplace while still on duty and back to the normal workplace or directly home. A deduction is allowable for the cost of travel from the normal workplace to other workplaces. A deduction is also allowable for the cost of travel from the alternate workplace back to the normal workplace or directly home. This travel is undertaken in the course of gaining assessable income and is an allowable deduction.
- Travel from home to an alternate workplace for work-related purposes and then to the normal workplace or directly home. A deduction is allowable for the cost of travel from home to an alternate workplace and then on to the normal workplace or directly home.
- Travel between two places of employment or between a place of employment and a place of business – A deduction is allowable for the cost of travel directly between two places of employment or a place of employment and a place of business, provided that the travel is undertaken to carry out income-earning activities.
- Travel in connection with self-education – See Self-education.
What Car Expenses Can a Sales Representatives Claim?
- The cost of using your own car for work, including travel to attend meetings, attend training courses, pick up supplies, and driving between or around job sites (to claim for care costs, it is usually best to keep a diary record of the number of kilometers you travel during the year for work purposes and then we can calculate the amount of your tax deduction at the end of the year).
- The cost of parking, tolls, taxis, and public transport if you are required to travel to attend seminars, meetings, and training courses not held at your usual place of work (if you need to stay away overnight, you can also claim for the cost of all meals and your accommodation)
- The cost of bridge and road tolls paid while driving between your depot and your client’s depot (but NOT while driving to and from work)
- You can claim the cost of using your own car to travel to and from work, BUT only if you are required to carry bulky tools and equipment for your work AND there is no secure area to leave these items on-site overnight.
How Can Sales Representatives Claim Car Expenses
The following is a checklist of the 2 different methods of claiming motor vehicle or car expenses:
- Set rate per Km;
- logbook method
Meals and Overnight Travel Away From Home
It is common for Sales Representatives to travel away from home. The following is a summary with links to what travel costs can be claimed as a tax deduction:
- Overnight Travel Away From Home – The cost of meals and incidental expenses when you are required to stay away from home overnight for work (if you receive an allowance from your employer, you can claim the full amount of that allowance provided it is shown on your PAYG payment summary). If you didn’t receive an allowance, you should keep receipts to prove the amount you have spent on all meals and accommodation.
- Overtime Meal Allowances – the cost of buying overtime meals when you work overtime, provided you have been paid an allowance by your employer (you can claim up to a maximum of $27.10 (2013 rate) per meal without having to keep any receipts, provided you can show how you have calculated the amount you spent – see Claiming Overtime Meal Allowance.
Keeping Records of Overnight Travel
The following tables explain what records you need to claim domestic or overseas travel expenses for accommodation, food, drink, or incidentals.
| If you did not receive a travel allowance: | ||||
| Domestic travel | Overseas travel | |||
| Written evidence | Travel diary | Written evidence | Travel diary | |
| Travel less than 6 nights in a row | Yes | No | Yes | No |
| Travel 6 or more nights in a row | Yes | Yes | Yes | Yes |
| If you received a travel allowance and your claim does not exceed the reasonable allowance amount: | ||||
| Domestic travel | Overseas travel | |||
| Written evidence | Travel diary | Written evidence | Travel diary | |
| Travel less than 6 nights in a row | No | No | No* | No |
| Travel 6 or more nights in a row | No | No | No* | Yes |
*Regardless of the length of the trip, written evidence is required for overseas accommodation expenses but not for food, drink, and incidentals
| If you received a travel allowance and your claim exceeds the reasonable allowance amount: | ||||
| Domestic travel | Overseas travel | |||
| Written evidence | Travel diary | Written evidence | Travel diary | |
| Travel less than 6 nights in a row | Yes | No | Yes | No |
| Travel 6 or more nights in a row | Yes | Yes | Yes | Yes |
Work Clothing
A deduction is allowable for the cost of buying, renting, or replacing clothing, uniforms, and footwear (‘clothing’) if:
- the clothing is protective in nature
- the clothing is occupation-specific and not conventional in nature
- the clothing is a compulsory uniform and satisfies the requirements of Taxation Ruling IT 2641 – for example, corporate wardrobe
- expenditure on shoes, socks, and stockings is considered of a private nature. Even when these items are worn at the employer’s request. Their cost will only be deductible in limited circumstances. To qualify for the deduction, the items must first form an integral part of a distinctive and compulsory uniform, the employer’s components in its expressed uniform policy or guidelines. In addition, the employer’s uniform policy or guidelines should stipulate the characteristics of the shoes, socks, and stockings that qualify them as a distinctive part of the compulsory uniform, e.g., color, style, type, etc. The uniform wearing must also be strictly and consistently enforced, with breaches of the uniform policy giving rise to disciplinary action. In strict compulsory uniform regimes, expenditure on shoes, socks, and stockings is likely to be regarded as work-related rather than private. In nature
- t, the clothing is a non-compulsory uniform or wardrobe that has been entered on the Register of Approved Occupational Clothing of the TCFDA. Taxpayers can obtain details of registered corporate wardrobes either from your employer or the Department of Industry directly on 03 9268 7944. NOTE, there is no longer a public register available on the web.
- A deduction is allowable for the cost of cleaning, laundry, and maintaining clothing that falls into one or more of the categories of deductible clothing above.
- The cost of buying other personal protection equipment (PPE) that is not supplied by your employer (including overalls, gloves, goggles, masks, steel-capped boots, high visibility vests, and winter outdoor jackets)
Training
- The cost of work-related short training courses (for example, first aid, OH&S, truck and heavy equipment driving, vehicle maintenance) that a University or TAFE does not run. You can claim for the cost of any course fees, books, stationery, Internet connection, telephone calls, tools or equipment, and traveling to and from the course. You can also claim any accommodation and meal expenses you have to pay if you are required to stay away overnight for your course.
- The cost of self-education courses run by a University (not including HECS/HELP fees) or TAFE directly relates to your current work. If you are studying, you can also claim the cost of books, stationery, equipment and travel required for your course.
Work Tools and Equipment
- The cost of buying and repairing equipment you use at work (including tools, CB radio, portable refrigerator, sleeping bag, electronic organizers, laptop computers, and mobile phones)
- The cost of any repairs to your employer’s vehicle, maintenance, spillage, or cleaning (provided your employer does not reimburse you for these costs)
- The cost of any materials or supplies that you buy for use at work (for example, safety gear, first aid equipment, backpack, or belt bag)
Reimbursements
If a sales representative receives a payment from his or her employer for actual expenses incurred, the payment is reimbursement, and the employer may be subject to Fringe Benefits Tax. Generally, if an employee sales representative receives a reimbursement, the amount is not required to be included in his or her assessable income, and a deduction is not allowable (see Taxation Ruling TR 92/15).
However, if an employer reimburses motor vehicle expenses on a cents per kilometer basis, the amount is included as assessable income of the employee sales representatives. A deduction may be allowable for the actual expenses incurred.
If the reimbursement by an employer is for the cost of a depreciable item (e.g., tools and equipment), a deduction is allowable to the employee sales representative for depreciation.
If a payment is received from an employer for an estimated expense, the amount received by the employee sales representative is considered to be an allowance (not a reimbursement) and is fully assessable to the employee sales representatives.
Other Work Expenses
- The cost of annual memberships or union fees (for example, Transport Workers Union fees)
- The cost of renewing machinery or other licenses and tickets that are required for your work, but not including your normal driver’s license
- The cost of work-related books, magazines, and journals
- The cost of work-related mobile or home telephone calls and rental (you should keep a diary record of the number of phone calls you make for work for one month, and then we can use that to estimate your usage for the whole year)
- The cost of work-related internet connection fees (you can only claim the proportion of your monthly fees that relate to work use, which could include emailing, research relating to your job, and research for your training courses)
General Expenses
There are some tax deductions that all employees can claim on their personal tax returns:
- The amount of any donations to registered charities (as long as you haven’t received anything in return for your donation, such as raffle tickets or novelty items)
- The cost of bank fees charged on any investment accounts
- The cost of income protection or sickness and accident insurance premiums (this type of insurance covers you if you hurt yourself (including when you are not at work) or become sick and unable to work. It will pay you your normal wage until you are fit to return to work – if you don’t have this insurance, you should see a financial adviser or ask us, and we will refer you to someone who can organize it for you. It is definitely worthwhile)
- Your tax agent fees (the amount you pay to your accountant to prepare your tax return each year)
- The cost of traveling to see your tax agent (you can claim the cost of traveling to see your accountant have your tax return prepared. You should record the number of kilometers you travel and any other incidental costs such as parking, meals, accommodation, etc.)
We suggest that you keep receipts for all purchases that are work-related, even if they are not listed above. That way, when we prepare your tax return, we can decide whether you are allowed to claim a tax deduction for them or not.
Reportable fringe benefits
Your employer is required to report the total grossed-up amount of certain fringe benefits exceeding $2,000 (a grossed-up taxable value of $3,738) provided to you or your relatives on your payment summary.
You do not include this amount in your total income or loss amount, and you do not pay income tax or Medicare levy on it. However, the total will be used in determining whether certain surcharges apply to you, whether you can claim certain deductions, and establish whether you are eligible for certain tax offsets and other government benefits.