Tax Deductions for Farm Hands: How to maximise your next tax refund!

There are many tax deductions available for farm hands. Make sure you’re not leaving any money on the table this tax time!

Farm hands are responsible for a range of manual labour tasks to keep farms in production all year round. These include operating and repairing machinery, ploughing, planting, maintaining and harvesting crops and building and repairing structures and fences – as a farm hand, there’s always something to be done!

In saying that, with so much time spent out on the farm, getting your affairs in order for tax time often gets put out to pasture!

Don’t worry! At Etax we’ve put together a comprehensive guide covering a range of tax deductions for farm hands to help you get everything you deserve back at tax time!

Common tax deductions for farm hands

There are a range of farm hand tax deductions that apply to most people who work on a farm. They include:

Clothing and protective equipment

Firstly, farms can be dangerous environments. With high powered machinery, unpredictable livestock and the grueling Australian climate – safety is always a high priority. Farm hands are required to wear some form of safety specific clothing or use protective equipment each day. The good news, you can usually claim the associated expenses as a tax deduction on your tax return.

Specific items may include:

• Steel toe boots
• Non-slip / waterproof boots
• Masks
• Overalls
• Gloves
• Hard hats
• Hair nets
• Goggles
• High-vis vests, jackets and trousers
• Ear muffs/plugs
• Sunscreen and sunglasses
• Purchase and repair of uniforms or clothing with company logo
• Laundry and dry cleaning costs of uniforms or clothing with company logo

Important Note: You can only claim items that you have paid for yourself. If your employer provides the equipment to you, or they reimburse you for any purchases you make, you can’t claim them on your return.

Meals, travel and accommodation

Work related travel expenses are another common tax deduction for farm hands. They can include:

• Meal costs when working overtime (must be paid under an award or industrial agreement)
• Meal costs when you are working away from home (overnight trips etc.)
• Accommodation costs when working or training away from home
• Incidental costs
• Work related travel and/or car expenses for traveling to pick up equipment, between locations, to meetings or training

Training

If you’re completing a traineeship or certification, most out of pocket training expenses are usually claimable on your tax return. However, there are a few conditions that must be met by the ATO before claiming self-education costs which you can read more about here.

Most importantly, the training should be directly related to your current role or necessary for your current work. If you’re completing work related training, include the following expenses on your tax return:

• The fees for short courses or university courses directly related to your work.
• Course related expenses including:
  • Internet
  • Phone calls
  • Travel costs
  • Accommodation and meals (if the course requires an overnight stay)
  • Tools and equipment required to undertake the course
  • Books and training manuals

Other farm hand tax deductions

• The cost of new or renewing licenses or permits required to carry out your work
• Union and membership fees
• Work related phone calls and internet connection fees (percentage used for your work only)
• Books and magazines specifically related to your work
• Purchase, lease or repair of tools and equipment necessary for your work.

Here’s an example of a typical farm hand and deductions they can claim:

Gemma works on a dairy farm. Let’s take a look at some real deductions she could claim this year based on her job:

Uniform:

Gemma is required to wear steel cap boots and protective gloves. She also purchases a high SPF sun block and UV blocking sunglasses to protect herself while working in the sun.

Gemma can claim a deduction for the cost of all the items mentioned because they are protective items.

Training:

During the year Gemma started a Certificate in agriculture which is closely related to her current role and as a result, is likely to receive a pay rise once she completes the course. She pays for the course fees and required study material herself, including textbooks and a laptop.

Gemma can claim:

• The cost of the course fees
• Any internet, phone or travel costs associated with attending the course
• Her textbooks and laptop

Phone expenses:

As part of Gemma’s job she regularly uses her phone to contact her manager while working out on the farm. Therefore, she is able to claim a deduction on her $79 a month plan.

To work out the work-related percentage Gemma goes through one of her monthly phone bills. She works out that 40% of her calls are work related.

As a result, Gemma can claim 40% of her $79 per month phone bill for the year ($79 x 40% x 12 months = $379.20) on her tax return.

5 questions to ask yourself about each deduction

Often, farm hands ask us “how do I know if I can claim this item on my return?”.

If you can answer yes to these five questions, the item likely qualifies as a farmhand tax deduction:

1. Is it directly related to your work or required for your work?
2. Do you have evidence to prove you made the purchase (receipt, bank statement, tax invoice)?
3. Did you pay for it yourself?
4. It was not part of an allowance?
5. I was not reimbursed for the cost by my employer (or anyone else)?

If you’re not sure about a particular deduction, always keep the receipt. At tax time you can ask your Etax accountant. Remember, it’s their job to ensure you get the best possible refund!

Should you have any questions about your deductions, or want to know more, please email us at [email protected], or message us on Facebook.