Teacher Tax Deductions: Everything You Need to Know

Teaching children and managing your taxes at the same time can become quite difficult. When your attention is divided between teaching kids and reconciling your tax information, you can easily miss important information and eligible tax deductions. This can be concerning, especially if you have a busy schedule during tax time. However, this blog will help you understand teacher tax deductions and eligible expenses. 

What are Teacher Tax Deductions?

Teacher deductions are the professional expenses that teachers can claim under tax deductions on their tax returns. The Australian Taxation Office (ATO) classifies these deductions under work-related expenses. These expenses are incurred on the individual’s earned income. 

Teachers bear various professional expenses and some of these expenses may be eligible for teacher tax deductions. Here are some common ATO-approved ^[1] teacher tax deductions:

Teaching Aids and Equipment: 

Teachers can claim deductions for the cost of purchasing teaching aids, such as textbooks, stationery, educational software, and classroom supplies.

Protective Clothing: 

If teachers are required to wear protective clothing such as lab coats or safety vests over their conventional clothing, they can claim deductions for the cost of purchasing and maintaining this clothing. Protective clothing Dry cleaning expenses are also eligible for tax deductions. 

Work-related car expenses: 

Teachers who use their vehicles for work-related travel, such as visiting different schools or attending conferences, may be eligible to claim deductions for car expenses. This can include fuel costs, maintenance and repairs, insurance, and depreciation.

Professional development expenses: 

Teachers can claim deductions for expenses incurred in attending professional development courses, workshops, conferences, and seminars directly related to their teaching profession.

Union and professional association fees: 

Membership fees paid to unions or professional associations related to teaching can be claimed as deductions.

Can You Claim Work from Home Teacher Tax Deductions?

Yes, teachers can claim work-from-home tax deductions. You can claim deductions on home office running costs, office equipment depreciation, electricity costs, internet bills, and work-related phone call bill. 

Presently, ATO uses the fixed rate method to calculate work-from-home tax. The ATO Fixed rate for WFH is 52 cents per hour WHF. ^[2]

Tax Deductions for Teachers: Allowances, and Reimbursements

It’s essential to understand how income and allowances relate to your teacher tax return.^[3] Here is how ATO deals with tax deductions on allowances and reimbursements.

Allowances:

As a teacher or education professional, you must include all income you receive during the income year in your tax return. This includes salary, wages, cash or bonus payments, compensation and insurance payments.

Employers may give you allowances to cover certain costs or compensate for specific work aspects. Vehicle allowances, remote area allowances, or allowances for special duties or qualifications must be reflected as income in your tax return.

Declaring Allowances:

All allowances reported on your income statement or payment summary should be included as income in your tax return for accurate reporting.

Allowances Not on Income Statement:

Some allowances, such as travel and overtime meal allowances, may not be included on your income statement but are mentioned on your payslip. 

Claiming Deductions:

If want to claim a deduction for allowance spent on work-related expenses, you must mention that allowance amount as income in your tax return. You must claim the incurred work expenses and maintain expense records.

Note: The deduction amount is usually not the same as the allowance. The allowances you receive will vary from tax time deduction amount depending on your circumstances.

Teacher Tax Deductions on Allowances – Eligibility

Reimbursements:

Work-related expense Reimbursements are not your income and you should NOT include them in your income statement. These reimbursements are meant to cover specific costs you’ve already incurred. Reimbursements are different from allowances.

• You do not need to include the reimbursement as income in your tax return.
• You cannot claim a deduction for reimbursed expenses.

Work-related expense Reimbursements are excluded from your income and cannot be claimed as deductions.

Teacher Tax Deductions – Eligible Work Expenses

1. Teaching aids and educational materials.
2. Professional development courses.
3. Protective clothing and equipment.
4. Home office expenses.
5. Work-related phone and internet.
6. Union and professional association fees.
7. Travel expenses.
8. Car Expenses
9. Computer software and equipment.
10. Stationery and teaching supplies.
11. Books, journals, and subscriptions.

Consult with a registered tax agent to get tailored teacher tax deductions advice.

You can also visit the ATO Website teacher tax deductions eligible expenses to find more information. 

How Does the ATO Calculate Travel Deductible Expenses?

The “cents per kilometre” method ^[4] is a simplified calculation for travel and car-related tax expenses. It uses a set tax rate per km to determine work-related travel expenses.

• Maximum Claim: You can claim a maximum of 5,000 business kilometres per car per financial year.
• Set Rate: The ATO determines a specific rate per kilometre, which may vary each financial year. It represents the average cost of owning and operating a vehicle.
• Calculation: To calculate your deduction, you multiply the number of business kilometres you travelled by the set rate per kilometre.

Keep an accurate record of the work-related travel dates, distances travelled, and the purpose of each trip.

Let’s take an example:

Let’s say you are a teacher who travels 2,500 kilometres during the financial year for work-related purposes. The ATO’s set rate for that year is 66 cents per kilometre.

To calculate your deduction using the cents per kilometre method: 

Deductible amount = Number of business kilometres x Set rate per kilometre

Work the calculations:

Deductible amount = 2,500 km x $0.66/km Deductible amount = $1,650

Therefore, you would be eligible to claim a $1,650 deduction for your work-related car. 

Maintain appropriate travel records to claim eligible deductions easily.

The Bottom Line

Teachers can claim various work-related tax deductions. Certain allowances must be reflected in your income statement during your tax return in order to claim tax deductions. You can also claim deductions on work from home. On the other hand, you can not claim teacher tax deductions on reimbursements and certain allowances. 

Related Links:

• How do I Find my Tax File Number in Australia?
• How to Lodge Tax Return in Australia?
• How Long Does Tax Return Take in Australia?

References: 

[1] “Teachers and education professionals – income and work-related deductions.” Australian Taxation Office, ATO, https://www.ato.gov.au/Individuals/Income-deductions-offsets-and-records/In-detail/Occupation-and-industry-specific-guides/Teacher-and-education-professionals—income-and-work-related-deductions/. Accessed 6 July 2023.

[2] “Fixed rate method – 52 cents.” Australian Taxation Office, ATO, 26 April 2023, https://www.ato.gov.au/individuals/income-deductions-offsets-and-records/deductions-you-can-claim/working-from-home-expenses/fixed-rate-method—52-cents/. Accessed 6 July 2023.

[3] “Deductions for work expenses.” Australian Taxation Office, ATO, https://www.ato.gov.au/Individuals/Income-deductions-offsets-and-records/In-detail/Occupation-and-industry-specific-guides/Teacher-and-education-professionals—income-and-work-related-deductions/?page=2#Income_and_allowances. Accessed 6 July 2023.

[4] “Cents per kilometre method.” Australian Taxation Office, ATO, https://www.ato.gov.au/Business/Income-and-deductions-for-business/Deductions/Deductions-for-motor-vehicle-expenses/Cents-per-kilometre-method/. Accessed 6 July 2023.