Putting the spotlight on tax deductions for workers in retail
Retail employees like sales assistants, store managers, suppliers and buyers often ask us what tax deductions they should claim on their annual tax return.
If you work in a retail shop, there are a lot of tax deductions you might be able to claim.
Many people get a smaller tax refund than they should, because they forget about claimable items they paid for. Don’t let this be you! But do it the right way; only claim tax deductions you’re legally entitled to. Read on to see some deductions that will help you get the best possible tax refund.
Common tax deductions for retail staff – the essentials:
Here’s our “essentials” list of retail worker tax deductions. Keep in mind, most people cannot claim every item on this list and the ATO may ask you for proof of the deductions you claim.
General work related equipment costs
- Mobile phones – if you are required to make or take work related calls on your personal mobile phone
- Tablets and laptops – if you send emails, manage rosters or do stock orders on your personal tablet or laptop computer
- Internet costs – if you use your home internet for work related purposes
- Car Expenses – if you ever use your car to travel between shop locations. (Remember, travel from home to work is not claimable though).
- Union or Membership fees
- Stationery – diary, logbooks, pens and pencils
- Books, catalogues or magazines that relate to your position
- Work bag
Clothing and protective equipment
- Purchase and repair of uniforms (only for items that have a company logo)
- Laundry or dry cleaning costs of uniforms with logos
- Protective equipment including:
- Head/hair protection
- Sunscreen and sunglasses (if your work requires outdoor work)
- Boots or protective shoes
Important Note: If you claim uniform costs, the item must be a required item for your job and have the employer’s logo, or be a protective or safety item. If the item of clothing is, for example, a plain black skirt or pants with no logo, then the ATO does not allow it as a claim on your tax return.
Meals, travel and accommodation
- Meal costs when working overtime
- Meal costs when you are working away from your home city (overnight trips etc.)
- Accommodation costs and incidental costs when working or training away from home
- Work related travel and/or car expenses for traveling to meetings, training, to pick up stock or between stores. (Travel costs between home and work are not deductable unless you are carrying heavy equipment that cannot be left at work.)
- The fees for short courses or university courses directly related to your work
- Related expenses including:
- Phone calls
- Travel cost
- Accommodation and meals (if the course requires an overnight stay)
- Tools and equipment required to undertake the course
- Books and training manuals
General tax deductions
These are common deductions that are not specific to your work:
- Tax agent fees
- Income protection insurance payments
- Interest paid (on investment accounts)
- Charity donations (if charity is a registered Deductible Gift Recipient)
- For more general tax deductions, see our post on the most commonly forgotten tax deductions
Let’s meet two different retail employees and see the tax deductions they can claim:
Tax Deduction Case Study:
Katie – Sales Assistant – Retail Homewares
Katie is a sales assistant in a homewares store.
Clothing: Katie is required to wear a shirt with the company’s logo embroidered onto it along with plain dark blue trousers and flat shoes. Sometimes she wears an apron that’s provided by her employer. On Tuesday and Friday mornings, Katie has to wear steel capped boots so her feet are safe when she helps to unload and unpack stock deliveries. (She views those days as part of her workout routine, on top of trips to the gym.)
Katie is responsible for some of the visual merchandising in the store so she buys decorating magazines to help her stay on top of current trends.
About twice a week Katie moves stock between stores, using her own car. She also helps out in a nearby store for a few hours now and then, when they are short on staff. Katie uses her own phone to take work-specific phone calls when she is moving stock between stores.
The company installed a new system for tracking orders and inventory. It was hard to learn but Katie wanted a little more responsibility in that area of her job, so she did a short one-day course to improve her skills using the software.
What can Katie claim as tax deductions for a sales assistant?
- The cost of purchasing, laundering and repairing the work shirt with a logo on it.
- Her protective boots.
- The work related mileage and running costs of her car when transporting stock and standing in for staff at lunch times.
- Work related phone calls made on her own mobile phone.
- The decorating magazines.
- Last year’s tax agent fees.
What can’t she claim?
- The training course fees and related stationery or books etc. – because her employer reimbursed her for it.
- Her travel between home and work – that is not deductable.
- Her uniform apron – because her employer provides it.
- Her plain blue trousers and flat shoes – because they do not have a logo on them and are not protective clothing.
In 2016 Katie started a simple system of collecting receipts in a folder after Etax staff suggested that. The result? She remembered to claim several items that she’s forgotten in previous years. Consequently, Katie’s tax refund was hundreds of dollars higher for 2016.
Tax Deduction Case Study:
Amy – Buyer – Retail Goods
Amy is a homewares buyer for the same retail chain that Katie works for. Amy’s job typically requires her to be out on the road to visit stores and meet with suppliers for a large portion of her time. She is not usually working at one main office. Amy wears standard “semi-formal” business clothes to work and she needs to buy some nice clothes for work, now and then.
In addition, although she lives in Brisbane, Amy is required to attend trade fairs twice a year in Melbourne and Sydney. These run over two to three days.
To stay up to date with competitor ranges and current design and colour trends in Australia, Amy purchases the new releases for her Pantone colour books each year, various supplier catalogues and design magazines.
When Amy is on the road she keeps in regular contact with colleagues and her employer using her mobile phone. When out of office she accesses work emails using a tablet she recently purchased. It is common for Amy to catch up on her admin and stock reports in the evenings after work, using the office she has set up at home. She uses her business laptop for this.
Amy’s employer pays for her petrol but she uses her own car. Her employer also pays for her flights and she is given an allowance for her incidental costs and accommodation while she is away at trade fairs.
What can Amy claim as tax deductions?
- All her work related mobile phone calls and the work related percentage of the phone plan costs.
- Her new tablet as this was bought specifically for work, although it must be depreciated over 3 years as it cost more than $300
- The portion of her internet costs that relate to her work usage.
- As she receives an allowance for the accommodation and incidental costs (e.g. transport and food) while she’s away, Amy can claim these costs.
- Home office running costs.
- Equipment such as her printer and scanners that cost less than $300 each.
- The depreciation of her office furniture that cost over $300.
- The costs of heating, cooling and lighting her home office.
- A percentage of the running and maintenance costs of her car, including registration and insurances.
- Last year’s tax agent fees.
What can’t she claim?
- Petrol – because her employer pays for her petrol.
- The laptop she uses at home – because it’s her business laptop which her employer paid for, therefore Amy can’t claim it herself.
- Her business clothes – they don’t have a logo on them and are not considered protective, so Amy can’t claim these on her return.
Amy is very conscientious about saving receipts for work-related items that she pays for. Therefore, she tends to get quite a healthy tax refund and she knows just where to find everything come tax time; it’s all in her tax folder.
A few things retail workers should not claim as tax deductions:
Don’t get caught out claiming items you’re not entitled to, because the ATO can come down hard with penalties and repayments for taxpayers who include false or exaggerated deductions on their return. If you’re not sure about a particular item, just ask your accountant.
- Don’t claim travel costs to and from your place of work. The only exception to this is if you are required to transport heavy equipment or stock AND your employer does not provide a place to leave it at work.
- You can’t claim the purchase, laundering or repair costs of general work clothes or footwear, even if you purchase them from a store where you work. If you are required to wear a certain colour or style, you still can’t claim it. Remember – the clothing must have a company logo or be protective in nature.
- Don’t claim the costs of training courses if the course is not directly related to your current (pre-existing) occupation. For example: if you are a retail assistant but plan to become a manager, you can’t claim a tax deduction for a management course as this is a different role to your current one.
- Don’t claim any expense that you did not pay for out of your own pocket or one that your employer reimbursed you for.
Every year the ATO gets better – and more strict – about verifying your tax deductions. They can automatically compare your deductions with average claims for your co-workers and people in similar roles. They can check your bank accounts and other records. They collect details from your employer. Therefore, it’s important to keep everything honest and simple on your tax return. (Plus, it’s only fair for us all to pay our share.)
Keeping records makes your taxes easier and makes your tax refund bigger
It’s important to keep a record of ALL your work related purchases, car and phone usage and any other expenses you plan to claim as a retail tax deduction.
Use a log book and diaries to keep records such as care mileage and home office use. Keep your receipts and keep them in order. Photographing each one as you get it will ensure you never lose one and are never find you have a receipt that is too faded to read.
The Etax App makes keeping track of receipts super easy – check it out!
Please note: The above article is a guide only and is not intended as detailed advice. Not all expenses can be claimed by all retail employees. Your tax agent will advise you on what you can and can’t claim based on your individual circumstances. You should have receipts for the items you claim.