How to organise your deduction records before tax time

Start with the three golden rules

Before sorting a single receipt, it helps to hold every possible deduction against the same test. You must have spent the money yourself and not been reimbursed, the expense must directly relate to earning your assessable income, and you must have a record to prove it.

If an expense fails one of these, it is not a deduction no matter how organised the paperwork is. Applying the test as you sort means you spend time only on claims that will actually stand up.

Sort by category, the way a return is built

Returns are prepared by type of expense, so grouping your records the same way makes the appointment fast and thorough. Useful categories include:

• Work-related travel and vehicle use (excluding the ordinary home-to-work commute).
• Tools, equipment, and technology.
• Work-specific clothing, protective gear, and laundry.
• Self-education and professional development connected to your current role.
• Home office running costs and a record of hours worked from home.
• Phone and internet used for work.
• Union fees, professional memberships, and subscriptions.
• Donations to registered deductible gift recipients.

Apportion private use honestly

Many expenses are part work, part private — a mobile phone, home internet, or a car used for both. You can generally only claim the work-related portion, and you need a reasonable basis for the split. A four-week diary of phone use, or a vehicle logbook, turns a guess into a defensible figure. Overstating the work percentage is one of the most common issues the ATO raises.

Keep the records that back each claim

Receipts and invoices are the primary evidence, but bank and card statements can support them as a secondary record. For small or irregular expenses, a diary can be enough. For a home office or vehicle, the record of hours or kilometres is what makes the method valid.

Good to know — If your total work-related claims come to $300 or less, you may not need a written receipt for each item — but you still must have spent the money and be able to show how it relates to earning your income.

Add a note wherever a receipt cannot speak for itself

A receipt from a hardware store or an online marketplace rarely explains the work purpose on its own. A one-line note — what it was for and why it relates to your job — attached to the receipt saves questions later and protects the claim if it is ever reviewed.

Higher-cost items such as a laptop or tools may be claimed over several years through depreciation rather than all at once, so keep the purchase details even when the amount is large.