Over the last few years we have seen a large increase in the number of FIFO (fly in fly out) workers and people employed in mining sites. Many mining employers pay a significant amount in allowances which consequently have seen an increased level of allowable deductions, and as such the industry has become a target of the Australian Tax Office (ATO) with many employees being subject to review and audit. For this reason, see below for a guideline as to what type of expenses a FIFO worker can claim as a Tax Deduction.
Motor Vehicle and Travel deductions are always a hot topic for the ATO, including for FIFO workers. There are only limited circumstances where a FIFO employee will be able to claim a deduction for use of their Motor Vehicle or travel expenses.
- The majority of mining employers pay for the cost of airfares and associated travel between your home and place of work and therefore there is no deduction that can be claimed for this travel. In the instance that you pay for your own airfares, unfortunately the Tax Office deem this as a personal expense for getting to and from work, and consequently no deduction is allowed.
- Similarly the use of your motor vehicle to drive from your home to the airport is also deemed as private in nature. Where an employee is local to a mining site and drives their own car to site each day there may be a deduction allowed but only where the employee carries bulky tools and equipment to and from work, and there is no secure place to leave them on site.
- Where an employee is able to claim a deduction for the use of their motor vehicle, any parking and toll expenses will also be deductible
- In order to claim a motor vehicle deduction it is recommended you keep a logbook for a 12 week period, in order to evidence your work related travel. For information on how to record your logbook to meet ATO requirements please click here.
Work Related Clothing & Uniform
- The cost of purchasing a work uniform is allowable as a deduction. The uniform must have a logo for your place of work on it for the deduction to be allowed.
- Also deductible is the cost of any protective clothing. For mining workers this will include items such as hard hats, steel capped boots, high-vis clothing, gloves, goggles etc. Where an employee is required to work outdoors, you are also able to claim for sun protection items such as hats, sunglasses and sunscreen.
- You can also claim the cost of laundering, dry-cleaning or altering your work clothing where it falls into one of the above categories.
- Please note that where an employer provided uniform and protective clothing there is no deduction allowed.
Tools & Equipment
- Where an employee is responsible for providing their own tools & equipment then you are able to claim a deduction for the cost of the item. Where an individual item exceeds $300 you are required to depreciate the item over its expected useful life.
- If your position requires you to use electronic equipment, such as a computer or phone, then you are also able to claim a deduction for this to the extent that the purchase is work related. Ie. The deduction must be apportioned if the item is also for personal use.
Other relevant deductions
- Additional expenses which are often incurred by mining and FIFO employees which are allowable deductions are as follows:
o Income Protection Insurance
o Union Fees
o Machinery licence renewals (excluding motor vehicle licence)
o Tax agent fees
o Phone and internet expense or a portion thereof
o Industry related subscriptions and publications
o Training and courses not paid for by your employer
It is important to always keep receipts, or evidence of incurring each expense, to provide to the ATO in the event of an audit. Should you fail to provide substantiation, regardless of whether the deduction is correct, it will be disallowed and any tax refund received relating to that deduction will be repayable to the Tax Office.
Please note this is a general guide only, and as individual circumstances will differ please always discuss any specific queries or concerns with your Accountant.