Top 7 Tax Deductions Every Hospitality Worker Must Claim in 2024

As a hospitality worker in Australia, it’s high time you took all your eligible deductions back from the ATO. You may wonder why. You have worked hard this year and can claim certain expenses from your income taxes. This guide will highlight the key deductions that every hospitality worker should consider. We will also go deeper by explaining some of the deductions you aren’t eligible for. This is to make sure you aren’t stressing yourself for nothing. The following is a list of some tax deductions related to hospitality that you can claim on your tax return. 

To qualify for a work-related expense deduction:

You must have ticked some boxes to qualify for any work-related expense deduction in Australia. They are;

1. You must have spent the money yourself and weren’t reimbursed.

You can only claim expenses that your employer hasn't reimbursed. If your employer covers the cost or reimburses you for it, you can't claim it as a deduction.

2. It must directly relate to earning your income.

To assess the eligibility, it is necessary to have incurred a cost in carrying out your job responsibilities. It is not a cost associated with a personal or family concern nor a domestic expense. Direct expenses include things like paying for the laundering of a mandatory uniform.

3. You must have a record to prove it.

When you file for a deduction, you must have records demonstrating that you incurred the amount in question. You can keep track of the following by using the myDeductions function that is available in the ATO app:

• Expenses associated with work, such as mileage on company vehicles.
• Miscellaneous expenses, such as presents and contributions.

During tax season, you can make the process of submitting your tax return more manageable by uploading this data or sharing it with a tax agent.

You can't claim a deduction if:

• You don't keep records of your work-related expenses.
• Someone else (such as an employer) pays for the cost or reimburses you for it.
  
  

Who are hospitality workers?

Hospitality workers work in the service sector to assist individuals who are vacationing in a particular location or going to various locations for recreational purposes. Companies categorised as providing hospitality services, such as hotels, sporting event venues, restaurants, cruises, and other tourism-related enterprises, are included in this economy sector.

Working in the hospitality industry is quite lucrative, both for the owners of businesses and for the employees who work for those businesses. The sector earns from its clients' free time, disposable income, and overall contentment.

What you should know about tax deductions; Top 5 tax tips

Before claiming a deduction on your taxes in 2024, it's crucial to be informed and organised. Here are some essential tips to keep in mind:

 

1. Understand eligibility criteria

Ensure you meet the specific eligibility criteria for each deduction you claim. Different deductions have different requirements, and qualifying under the relevant guidelines is important.

2. Keep detailed records

Maintain thorough records of all expenses you plan to deduct. This includes receipts, invoices, and any supporting documents. Proper documentation is vital in case of an audit.

3. Stay informed about changes in tax laws

Australian tax laws can change yearly, affecting which deductions are available and their associated rules. Stay updated on any new changes that might impact your tax situation.

4. Seek professional advice

If you need clarification on any aspect of tax deductions, consider consulting a tax professional or advisor. They can provide personalised guidance and ensure you're maximising your eligible deductions.

5. Plan for deductions

Be sure to think about deductions before tax season. Throughout the year, keep track of potential deductible expenses. This approach can save you time and stress when it's time to file.

7 Top tax deductions you can claim

Now that you know tips to follow this tax period, let’s go into top tax deductions you should know.

1. Car Expenses

You should always pay attention to car expenses as a top tax deduction.

What you can claim

When you drive, you can deduct the costs of using a car you own.

• Moving straight between different jobs on the same day, such as travelling from your first job as a waiter to your second job as a cleaner, for example,
• To and from a different employment location for the same employer on the same day—for instance, travelling from the restaurant where you work to a catering function—would count as commute time.

When calculating the amount of your deduction for car expenses, you can use either the logbook technique or the cents per kilometre approach.

What you can’t claim

• Even if you reside a significant distance from your customary place of employment or are required to work outside of normal business hours (such as on vacations or night shifts), you cannot deduct the travel expense between your home and place of employment.

2. Clothing Expenses

Clothing is one part of the hospitality sector you can’t ignore. Most times, there are uniforms peculiar to hospitality workers. So, why miss the tax deductions that come with it?

What you can claim

You may deduct the following expenses related to purchasing, renting, mending, or cleaning clothes:

• Protective: clothes with features or purposes designed to shield you from particular hazards of sickness or harm at work; examples of such items are aprons and protective gloves.
• A required uniform: apparel that is clearly mandated to be worn by a workplace agreement or policy that is rigorously and consistently enforced and sufficiently unique to your organisation. An example of such a requirement would be an embroidered shirt bearing your employer's logo that you must wear to work.
• Occupation-specific attire: clothes that clearly identify you as a member of a given profession, such as a chef's cap and chequered pants.
• Non-obligatory uniforms registered with Industry; if unsure, inquire with your company.

What you can’t claim

In some cases, clothing is not deductible as a cost of doing business.

• If your employer mandates that you wear traditional clothing and you only wear these items at work, you are not eligible to claim the expense of purchasing, renting, cleaning, or repairing the clothing. People wear "conventional clothing" daily, such as white shirts and black slacks.
• If your company covers these costs out of pocket or reimburses you, you are not eligible to deduct them.

3. Study Expenses

You may want to go to school and gain more knowledge in your career sector. Are there deductions relating to this? Of course, let’s check them out.

What you can claim

You are eligible to submit claims for expenses related to self-education and studies.

• If your course is directly related to your work in the hospitality industry.
• Maintains or develops the skills and information you need for your current job—for instance, enrolling in a barista course if you already work in a coffee shop.
• Results in or is expected to result in a rise in revenue from your existing employment.

What you can’t claim

You are not eligible for a deduction

• If the subject matter of your study is only marginally relevant.
• If it is intended to assist you in finding a new career. For instance, if you want to switch careers from food delivery driver to chef, but first you need to get some training, you can't deduct the cost of that training.
• If your employer pays for or reimburses you for certain expenses, you cannot claim a deduction for them.

Can you claim self-education or study expenses?

Yes, you can claim self-education expenses if the course you are undertaking directly relates to your current employment or is likely to increase income from your current employment. This can include course fees, textbooks, stationery, and travel expenses directly related to your study.

Can I still claim the education expense as a barista studying to become a chef?

Yes, as long as the culinary course you're undertaking is related to your current employment (barista) or is likely to lead to an increase in income from your current employment, you can claim the education expenses.

Can I claim the cost of renewing my RSA or gaming certificate for my job?

Yes, you can claim expenses related to renewing your RSA (Responsible Service of Alcohol) or gaming certificate. These are considered necessary qualifications for your employment in the hospitality industry, so the expenses are considered work-related and can be claimed as deductions. Again, always ensure that you keep accurate records of these expenses, including receipts and documentation, to support your claims.

4. Meals Expenses

Feeding is part of the important aspect that comes with being a hospitality worker. Let’s check the claims you are eligible for.

What you can claim

• Work-related meals: If you are required to work back-to-back shifts or work overtime, you can claim the cost of meals consumed during these extended working hours.
• Travel-related meals: These can generally be claimed if you're travelling for work and incur meal expenses. This includes meals during business trips or when you must be away from your usual place of work overnight.
• Business meetings and entertainment: These can be claimed if you incur meal expenses while entertaining clients or during business meetings. However, there are specific rules and limits for claiming entertainment expenses.

What you can’t claim

• Private or non-work meals: Meals not directly related to your job or are for personal enjoyment cannot be claimed. This includes meals with family or personal friends.
• Commuting meals: Meals consumed during your regular commute from home to work and vice versa are not deductible.

What are the expenses you can claim as a chef?

Here are some expenses you are eligible for as a chef

• Uniform costs: This includes the cost of purchasing, cleaning, repairing, or replacing chef's uniforms and specialised workwear.
• Tools and equipment: Expenses related to purchasing and maintaining knives, kitchen utensils, and other specialised equipment essential for your work as a chef
• Self-education expenses: Costs associated with courses, workshops, or seminars directly related to enhancing your skills or advancing your career as a chef.

Can you claim food expenses when working away?

Yes, you can generally claim food expenses when working away from your usual place of work overnight. This includes the cost of meals during business trips or when you must be away for an extended period for work-related purposes.

5. Travel Expenses

Travelling can also come up during your time as a hospitality worker. Here are things you should know

What you can claim

You can claim your out-of-pocket expenses if you travel to conferences or trade shows or are forced to travel for training or as part of your job.

• Fares for taxis, trains, and buses.
• Flights.
• Tolls for car rentals.
• Overnight lodging is available.
• Meals (for overnight stays).

Your employer may provide you with a stipend to cover the costs of any work-related travel within Australia. This will appear as income on your payment summary at the end of each fiscal year, and you must include it in your tax return. In this scenario, you do not need to substantiate your expenses as long as the ATO considers the amount you claim to be fair.

What you can’t claim

• You can’t claim travelling that is related to personal reasons.

6. Tools and equipment expenses

Some equipment you use at work can also be eligible for tax deductions in 2024.

What you can claim

You are eligible to deduct the expenses for:

• Whatever equipment you use in your work, such as chef knives.
• Insurance coverage for all of your tools and machinery.
• Maintenance and repairs to your tools and machinery. If a piece of apparatus or device costs.
• If the price is over $300, you can deduct it for years (the declining value).
• If it costs less than $300 (and does not come as part of a set that costs more than $300), you are eligible for an instant deduction for the entire item cost.

What you can’t claim

• You are not allowed to deduct the cost of tools and equipment that are provided to you by either your employer or another person.
• Only the percentage of the cost directly relevant to your job can be deducted from your taxes if you use the tools and equipment for professional and personal reasons. You must also determine how much of the total expense of insurance and repairs is attributable to work-related use versus personal use.

I have equipment that costs less than $300; can I still claim the cost of it?

Yes, you can claim an immediate deduction for equipment costing less than $300 in Australia. This means you can deduct the full cost of the equipment in the same income year that you bought it.

What about equipment costing more than $300?

For equipment costing more than $300, you'll typically need to depreciate the expense over the equipment's effective life. The depreciation amount can be claimed as a deduction over several income years.

My workplace requires me to wear black pants and a white shirt. Can I still claim the cost, as it is a compulsory uniform?

If your workplace requires you to wear specific clothing, like black pants and a white shirt, which are unsuitable for everyday wear, you can claim a deduction for the costs associated with buying, cleaning, repairing, or replacing these items.

Are safety glasses tax-deductible?

Yes, if your job requires you to wear safety glasses and your employer does not provide them or reimbursement, you can claim a deduction for purchasing and maintaining safety glasses.

7. General Expenses

What you can claim

And then there are all the additional tax deductions you may claim, which many people don't realise they are eligible for.

• Costs incurred by a tax preparer for the filing of your tax return for the prior year.
• Calls made for work and the work-related portion of phone expenditures (not including connection fees).
• The price of renewing a gaming licence and several other permits and certificates linked to work (check with your tax agent for further information).
• Scholarly journals and other publications pertinent to your role.
• Renewal of dues for various professional and trade associations.
• Donations to registered charities from charitable organisations.
• Work bags.
• If your job requires you to wear sunglasses and sunscreen to perform functions outside.

What you can’t claim

• Even if you need them for work, you can't claim personal costs like music subscriptions, child care, fines, flu shots, or other medicines.
• You can't take a deduction if your company paid for it or paid you back for it.

Deductions you can’t claim

There are several essential expenses that you are unable to deduct, including the following:

• Any regular attire worn to your workplace that might also be worn outside of work (such as black pants or a white shirt), even if you exclusively wear it for work and bought it particularly to wear to work, An example of this would be black pants or a white shirt. Except if it’s an attire you don’t consider good for everyday outings.
• Expenses incurred for the care of your children while you are working.
• The cost of any meals or snacks consumed throughout a typical workday, even if your employer provides an allowance to cover the cost of meals for you to use during the workday.
• Any costs associated with grooming, such as going to the hairdresser or purchasing items of makeup, even if your job requires to show yourself in a professional manner,
• Any costs incurred when travelling between your house and your place of employment, regardless of how far away you live from both locations,
• The expenses incurred for consuming food and beverages at competing establishments under the guise of "market" research".

What records do I need to keep?

Record keeping is very important when it comes to claiming deductions as a hospitality worker. You need to keep records of all your work activities. It's a good idea to devise a simple and dependable approach to stay on top of this record-keeping throughout the year. You don’t need to have the physical records, you can use digital copies (such as a photo of a receipt or an email receipt) as long as it's legible.

• The manufacturer's name.
• The amount of money spent.
• Characteristics of the goods or services.
• Date paid for the expense.
• Date of the document.

You also don't need to keep receipts for expenses under $10 (as long as the total is less than $200).

Final thoughts on tax deductions for hospitality workers

Tax period always comes with new updates every year so it is important you keep up with them. Understanding and claiming the right tax deductions can significantly impact the financial well-being of hospitality workers. By taking advantage of these opportunities, you can maximise your tax refund and keep more of your hard-earned money. If you are in Australia and ready to make the most of your tax deductions? Then, The Kalculators is the best tax agent for you. You can try our expert tax agents out as they can guide you to your financial success.

Frequently asked questions:

What deductions can I claim in hospitality?

In the hospitality industry, standard deductions may include expenses for uniforms, tools, and equipment, meals and travel expenses while on duty, work-related training and education, union fees or professional association memberships, and a portion of phone and internet expenses used for work-related purposes.

Can I claim laundry expenses on tax?

Yes, if you must wear a distinctive uniform (not a conventional outfit that you could wear outside of work) that needs to be cleaned, repaired, or replaced, you may claim a deduction for laundry expenses.

What is an example of hospitality expenses?

Hospitality expenses in the context of tax deductions could include costs associated with purchasing and maintaining work-related items like uniforms, specialised tools or equipment, meal and travel expenses during work shifts, and fees for professional memberships or union dues.

What expenses cannot be deducted?

Expenses considered private or domestic, such as regular clothing not specific to your job, commuting between your home and regular workplace, and personal grooming, cannot be claimed as work-related deductions.

What expenses are claimable by employees?

Employees can typically claim deductions for work-related expenses that are directly related to their job. This includes items like uniforms, tools, training costs, union fees, and certain travel and meal expenses.

What other work-related expenses can I claim?

Other work-related expenses may include costs associated with using your vehicle for work-related travel, phone and internet expenses if used for work purposes, and, in some cases, home office expenses if you are required to work from home.