A Complete Guide to Tax Deductions for FIFO Workers

If you are a FIFO worker, there are plenty of special tax rules and deductions that you need to be aware of.

Filing taxes is an obligation for any individual that earns income. The government, through the ATO, expects every citizen to file returns to show details about their income. For a tradie, filing tax returns is important for several reasons.

Given that filing tax returns is a requirement by the government, a Fly-In, Fly-Out (FIFO) worker has to file returns to comply with the laws. Filing tax returns helps individuals report their income, which is the basis for their taxes. Failure to file tax returns can result in fines and penalties.

Filing tax returns also helps provide an accurate assessment of your taxable income. The tax returns by individuals provide the ATO with information that they can use to determine the amount of tax they owe accurately.

Tax returns can further help you build a tax history as well as financial records. That can be of great benefit when you apply for loans, mortgages, and business funding. Most financial institutions check your tax returns as proof of income.


FIFO Worker Tax Return Guide

  1. What Can FIFO Workers Claim on Tax?
  2. What FIFO Workers Can’t Claim on Tax
  3. Tax Offset for FIFO Workers
  4. When Should I Make My FIFO Tax Return?
  5. Tips for FIFO Workers to Make the Most Out of Their Tax Return
  6. FIFO Tax Return FAQS


What Can FIFO Workers Claim on Tax?

FIFO workers can claim deductions on several expenses. Their out-of-the-ordinary work arrangements mean that they incur expenses such as travel, which they may need to claim on their tax returns. However, some of the expenses may not be deductible. A look at some of the categories of expenses will help illuminate the expenses that are eligible for deduction.

1. Travel

Generally, travel for regular work under FIFO arrangements is not tax deductible. That includes travel between your place of residence and the airport. It also includes flights. However, you can claim travel expenses if you have to travel temporarily to another location for work-related activities such as training, a meeting, or a seminar.

Where the employer does not provide secure storage at the place of employment, you are allowed to claim travel expenses when you have to transport large and bulky items for use in your work. You can also claim travel expenses if you have to shift work sites.

ATO allows you to deduct car expenses if you drive between different jobs on the same day or you drive between different workplaces for the same employer on the same day.

2. Meals

As per ATO, meals are a private expense. They are therefore not deductible. However, you may deduct meal expenses if they are part of work-related travel that is not within your regular FIFO arrangement.

You can also claim the cost of meals when you are working overtime under an industrial award or agreement that involves the employer providing a meal allowance. However, you have to keep the meal expenses under $31.90 per day.

3. Phone and Internet Expenses

You can claim phone and internet expenses as a tax deduction if your work requires you to stay in touch with your employer during off periods. However, the deduction should only be for work-related expenses. Further, you can claim internet and home office expenses if it is a requirement for you to work or engage in training from home.

4. Uniform and Protective Clothing

The cost of buying a work uniform is only deductible if it has your employer’s logo. Other clothing that your wear with your uniform such as socks and shoes do not qualify as tax deductible expenses.

Expenses on protective clothing such as gloves, safety glasses, reflector vests, steel cap boots, and masks are deductible against tax. The cost of renting, cleaning, and repairing protective clothing may also be eligible for tax deductions. However, you cannot claim deductions where the employer pays for, provides, or maintains protective clothing.

Sun protection equipment such as sunscreen, hats, and sunglasses are also eligible for tax deductions.

5. Tools and Equipment

Claiming tax deductions for expenses on tools and equipment depends on the cost of the tools and the percentage of usage for work. If the purchase of tools and equipment for work amounts to less than $300, ATO allows tax deductions on your tax return. However, if it exceeds $300, you will have to claim depreciation over the useful life of the tools or equipment.

When claiming tools and equipment, you have to indicate the percentage of work-related usage. ATO only allows you to claim for work-related use. You cannot claim for private use.
Other Work-Related Tax Deductions

ATO allows you to claim other work-related expenses on your tax returns. Some of the deductions allowed include first aid course expenses if compulsory, fees for self-education relevant to your current education, and the cost of compulsory medical assessments or examinations other than pre-employment assessments. You can also claim expenses on the renewal of permits, licences, and certificates required for your work.

Australian residents are taxed on their worldwide income, so if you fly into a foreign site your income is still subject to Australian tax law.

What FIFO Workers Can’t Claim on Tax

  • The cost of flights between home and place of employment
  • Travel costs from home to departure airport for work. That includes vehicle costs and airport shuttle fees.
  • Cost of obtaining your first machinery licence or ticket
  • Relocation expenses when you move to a location near your place of employment
  • Cost of conventional clothing such as work shirts with no logo and jeans
  • Cost of pre-vocational courses before employment

Tax Offset for FIFO Workers

Tax offsets refer to deductions on your income that reduce your taxable income. You can reduce your tax payable to zero by taking advantage of non-refundable tax offsets such as those under the low and middle-income tax offset category. In case you fail to use any tax offset amount, it is non-refundable.

The amount of tax offset is dependent on your income tax. Your tax payable would be zero if you have a taxable income of $18,200 and you have not paid any tax. If you have paid tax, you would get a refund for the tax paid, which brings your taxable income to zero. You would not be eligible for tax offset in either case.

For taxpayers with taxable income exceeding $18,200, ATO uses your taxable income to calculate the tax due, from which they then deduct the offset amount

1. Low-Income Tax Offset

Tax offsets for low-income workers are as follows.

Taxable Income Tax               Offset

$37,500 or less                      Full offset of $700
$37,501 – $45,000                 $700 less 5 cents for every $1 above $37,500
$45,001 – $66,667                 $325 less 1.5 cents for every $1 above $45,000

2. Low and Middle-Income Tax Offset

This tax offset is available for the 2018-2019, 2019-2020, 2020-2021, and 2021-2022 income years. The tax offset amounts are as follows.

Taxable Income                      Offset

$37,000 or less                      $255
$37,001 – $48,000                 $255 plus 7.5 cents for every $1 above $37,000 (Maximum of $1,080)
$48,001 – $90,000                 $1,080
$90,001 – $126,000               $1,080 less 3 cents for every $1 above $90,000

Zone Tax Offset

As a remote worker, there is a set of criteria that you must meet to qualify for a zone tax offset. The basic requirement is that you should reside in an area that ATO considers ATO for you to be eligible for the zone tax offset. ATO classifies towns into Zone A, Zone B, and Special Zone.

For you to qualify for the zone tax offset, you must have lived in a remote zone for 183 days or more between 2019 and 2020 or for 183 days or more between July 1, 2018, and June 30 2020. You should not have claimed a zone tax offset in your income tax return for the 2018-2019 tax period.

When Should I Make My FIFO Tax Return?

The deadline for lodging FIFO tax returns is October 31. You will be required to lodge returns for the previous year by this deadline to avoid penalties and fines from ATO.

Tips for FIFO Workers to Make the Most Out of Their Tax Return

As a taxpayer, your objective should always be to make the most of your tax return while meeting all your legal obligations regarding taxes. There are a few things that can help you achieve that objective.

First, you need to understand the tax deductions that you are eligible for and those that you cannot claim. That will ensure that you do your taxes right. You will be able to claim all your deductible expenses, which would have a positive effect on your net income.

As a FIFO worker, you also need to keep a record of your expenses. keeping records ensures you have all the information you need when filing your tax returns. It ensures you do not forget any item, allowing you to claim all eligible tax deductions. Keeping records also eases your work when lodging your tax returns.

Tax laws change from time to time. It is therefore imperative for you to keep abreast with the changes in tax laws. That will ensure that you always meet all your tax obligations and avoid fines and penalties. It would also ensure that you make the most out of your tax return by claiming all eligible tax deductions.

Consulting tax experts can also help you make the most out of your tax returns. Tax experts and agents will be able to guide you on your tax returns, advising you on what to do and what not to do. Their advice can help you avoid fines and penalties while ensuring you maximise your tax claims.

FIFO Tax Return FAQS

1) Can FIFO workers claim airport parking on tax?

Generally, ATO does not allow deductions for travel expenses from your residence to your place of work. That means that vehicle costs, including airport parking fees, are not deductible.

2) Are meal allowances taxed in Australia?

ATO considers meals a private expense. It is therefore generally a taxable expense. However, you can claim a deduction on meal allowances if the employer provides meal allowances under an industrial award or enterprise agreement, and you incur the meal expense while working overtime.

3) Can I claim flights on my tax return?

As per ATO, there are circumstances when you can claim flights on your tax return. For flights to be eligible for a tax deduction, they must be directly related to your employment. Flights between your place of residence and your place of work, as well as flights between different designated work sites, can be considered work-related travel expenses eligible for deduction on your tax return.