Hospitality tax deductions should be seriously considered for anyone who makes a living as a hospitality worker. While the topic of taxes might sound loaded, understanding your taxes is key to claiming crucial tax deductions that can lower the amount you pay annually.
But what deductions can hospitality workers claim to make the most out of tax time? This article will cover everything a hospitality worker should consider when completing taxes to understand what you can claim, what you’ll need to prepare, and what you might not know about your taxes to ensure this tax season is successful.
What Can Hospitality Workers Claim on Tax?
Before diving into the specifics of what you can claim on tax as a hospitality worker, make sure everything you meet the following requirements to claim deductions for work-related general expenses:
- You need to spend the money yourself without being reimbursed.
- Your spending must be related to earning your income.
- You must have a spending record to prove what you’ve paid.
- You can only claim work-related portions of your expenses; any part not directly related to earning your income cannot be claimed.
So what can hospitality workers claim on tax? Let’s take a closer look.
Many clothing expenses are eligible for tax deductions as a hospitality worker. You can claim deductions for the total cost of buying, hiring, repairing, or cleaning work-related clothing that meets some of the following requirements:
- Protective gear worn to lower the risk of injury on the job; for instance, gloves, aprons, and other clothing can be claimed.
- Compulsory uniforms that must be worn according to your employer or workplace policy provided it’s consistently enforced and tailored to your organisation, such as embroidered shirts with the company’s logo that your employer doesn’t already cover.
- Occupation-specific clothes that identify you as associated with your workplace/job position–for instance, a chef’s hat.
- For Australian workers, any non-compulsory uniforms registered with AusIndustry are eligible for deductions.
Car expenses are also eligible for tax deductions if they meet specific criteria outlined by the Australian government. You can claim the costs of using your car when driving:
- Between separate jobs on the same day
- To and from alternate workplaces for the same organisation/employer on the same day
- Taxis and short-term care vehicles if they are necessary for work-related activities
While most meal expenses are not eligible for tax deduction, you can claim overtime for these expenses if you work overtime or receive an “overtime meal allowance.”
Self-Education and Study Expenses
Self-education and study expenses are eligible to be claimed for courses related to your role as a hospitality worker. These expenses must meet the following criteria:
- Education maintains or enhances the skills and knowledge necessary to complete your work duties, such as specific courses to operate more efficiently at work
- The education received leads to an increase in income from your employer
Tools and Equipment Expenses
Tax deductions for hospitality workers include the cost of tools and equipment necessary to complete work tasks, such as the following:
- Tools and equipment used for work, such as chef knives, computers, cooking utensils, and other related equipment
- Repairs for tools and equipment that are necessary to meet the requirements of your job
- Insurance for relevant tools and equipment necessary for the job
These deductions vary depending on how much you spend on the tools and equipment to complete work-related activities. For tools and equipment costing more than $300, you can claim deductions for the cost over some years because of a decline in value. For tools and equipment costing less than $300, you can claim immediate deductions for the entire equipment cost.
Additional Work-Related Expenses
Other work-related expenses are eligible for hospitality tax deductions, and you can claim a portion of the following expenses related to your work:
- Union and professional association expenses
- Costs of renewing licences like gaming and alcohol certificates, but not for the cost of receiving your initial licence
- Costs for personal protective equipment, particularly for jobs that require close interaction with others. This equipment can include gloves, sanitiser, antibacterial spray, and face masks.
- Expenses for hiring equipment
What Can’t Hospitality Workers Claim on Tax?
While there are many expenses you can claim on tax as a hospitality worker, there are some costs you’ll have to cover without deductions. Below is an overview of the categories mentioned above and what items are not eligible for deductions within these categories:
While some clothing expenses are covered, tax deductions for clothing do not include any conventional work clothing, regardless of whether or not these clothes are required for the job and only worn at work. Conventional clothing includes everyday clothes, like runners, white shirts, regular pants, and other clothes that aren’t identifiable as work clothing.
Car deductions do not cover the price of trips between your home and workplace, such as gas costs or rideshare trips, regardless of how far away you are from your workplace or if you work outside of regular business hours.
Meal expenses cannot be claimed for food eaten during the workday outside of overtime hours. If the amount for overtime meals is included in your salary, it will be taxed as part of your normal income and cannot be claimed as an additional expense.
Self-Education and Study Expenses
Your self-education and study expenses are not deductible under the following circumstances:
- You cannot claim deductions for studies related generally to your position or to get a new job.
- You cannot claim deductions if your employer is covering or reimbursing you for your educational expenses.
Tools and Equipment Expenses
Tools and equipment provided by your employer or another individual are not eligible for tax deductions. Any tools or equipment used for private portions can only be deducted for the work-related portion. Additionally, Australian regulations require you to apportion the total cost of insurance and repairs between work-related and private use of your tools and equipment.
Additional Work-Related Expenses
The following work-related expenses are not eligible to be claimed for tax deductions:
- Private expenses like childcare, vaccinations that are required for work, fines, and other additional costs necessary because of your position.
- Costs that are met or reimbursed by your employer are not eligible to be claimed.
Factors to Consider
There are several factors to consider for hospitality workers when doing their tax returns:
- Identify all of your sources of income, such as wages, tips, bonuses, and other compensation from your employer.
- If you receive tips as a hospitality worker, ensure your tip reporting is accurate–underreporting can cause tax issues, so have a daily record of all your tips received.
- Report all of your forms of income, including all cash payments and non-cash benefits, and keep in mind any additional income provided by your employer.
- Have thorough records of your work expenses, receipts, and income-related documents, including mileage logs and business-related travel costs.
- Consider using tax tools to understand your taxes and expenses, or seek professional help to navigate complicated tax situations.
- Know your tax filing deadlines and adhere to this schedule to avoid additional penalties and interest.
- Stay on top of any changes in tax laws in your area that can impact hospitality workers specifically.
What Receipts or Records Should Hospitality Workers Keep?
While physical receipts might be difficult to keep track of, you should ensure that you have digital records and receipts to make the tax return process easier during tax season. The following are the key documents you’ll need for tax season:
- Tip records
- All work-related expense receipts
- Mileage logs if you’re using your vehicle for work-related activities
- Travel records, including information like transportation, meals, and accommodations
- Records of tuition, registration fees, and related educational expenses if you attend job-related training or educational activities
- Receipts for work-related tools and equipment
- Bank statements proving your income and expenses related to your work operations
- Copies of previous tax returns and other tax-related documents
- Supporting documentation, including receipts and invoices, for deductible expenses
- Records of tips that are shared or pooled
Tax Return Tips for Hospitality Workers
Still worried about navigating hospitality tax deductions? Here are a few final tips to navigate tax deductions for hospitality workers:
- File your taxes electronically–it’s typically faster, simpler, and more accurate.
Seek professional guidance during tax season, especially if you have doubts about your tax documents.
- File your tax return by the deadline and keep track of the final date you can file your taxes to avoid missing it–if the date passes, you might be subject to penalties and interest charges.
- Request an extension if you cannot file your tax return by the deadline. While this extension won’t grant you extra time to pay your taxes owed, it can help you avoid late filing penalties for your tax return.
- Always plan for your taxes–never wait until the last minute to make significant financial decisions. Planning can help minimise your tax liability.
- Set aside a portion of your finances annually to cover your tax liability.
- Review your tax return documents thoroughly before submitting them, and consult with a professional to ensure everything is in order.
Navigate Your Taxes With TaxReturn.com.au
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Don’t stress over your taxes – contact TaxReturn.com.au today to find out everything you need to know about tax deductions for hospitality workers.