Land and Income Tax Amendment Act (No. 3) 1968

This commentary item was published in Public Information Bulletin Volume 48, March 1969

More information about Public Information Bulletins.

Part C - Salary and wage earners - deduction of expenses

New Deductions In Tax Returns

Recent changes in the tax law allow taxpayers some further expenses in working out their taxable income.

In this item we tell you about some of the new expenses salary and wage earners may claim in their tax returns for 1969 and later years.

The New Legislation

1. still allows all the deductions that you could get before.
2. also allows a deduction of any expenses directly related to your occupation and incurred in gaming or producing your assessable income for any income year - provided, it is not of a capital, private or domestic nature.

Allowance Paid by Employer

First of all it is important to tell you about the position when your employer pays you an allowance to cover any of the expenses we refer to in this item.

If the allowance is reasonable, that is, it is intended to do no more or less than cover your expenses over a period, leave both the allowance and your expenses out of your return.

We usually accept that an allowance under an award is "reasonable"

If the allowance paid by your employer is not enough to cover your expenses, you will need to show both the allowance and the expenses in your return if you wish to claim a deduction of the difference.

How To Claim

1. Claim the deduction in your tax return.
2. Give full details - if necessary send in a note with your return. This may save queries later.
3. Send or take your return to the nearest tax office.

What You May Claim

A guide to the expenses you may claim is given here under the headings

1. Clothing.
2. Travelling.
3. Education.
4. Reference Books, Journals, Periodicals.
5. Tools of Trade, Technical Instruments and Equipment.
6. Use of your Home.
7. Medical Examinations.
8. Licence Fees.
9. Trade Union Fees and Professional Association Subscriptions.

Remember

If you have expenses which are not covered here, or you are not sure about any point, ask at the nearest tax office. The staff will be glad to help you.

Special And Protective Clothing

You may claim the cost of protective clothing necessary for you to follow your occupation.

This could be -

1. a uniform required by your employer.
2. clothing to protect you from injury in doing your job - for example miners' special boots.
3. clothing to help you do your job or which is generally worn by people in your occupation - for example painter's overalls.

Cost of Extra Clothing Allowable in Some Cases

In some cases the cost of extra everyday clothing, over and above "normal" requirements is also allowable if it is needed because of conditions peculiar to your employment. Television personalities, public entertainers and models' are some examples of persons who may have extra expense for this reason.

Laundering and Dry Cleaning

The cost of laundering or dry cleaning the types of clothing mentioned, over and above any allowance from your employer, may be claimed as a deduction.

Travelling

You may claim the cost of travelling from one job to another. as long as you go directly from the one job to the other job. The cost of travelling from your home to your work and back is still not allowable.

A limited range of travelling expenses could also be allowable provided they are a condition of your employment, or would not have arisen but for your employment. For example you could claim car expenses over and above any untaxed allowance received from your employer if you have to make business calls on your way to and from work; or again, if you have to attend a technical seminar or conference directed to keeping up with modern developments or trends in your job.

If you think you may be able to claim travelling expenses. talk your case over with the staff at the tax office. Remember they are interested to see that you make the most of your rights as a taxpayer.

Education

If you are an employee in an occupation which requires some financial outlay to help you keep up with modern developments or to maintain your knowledge or skill in your job you may now claim some educational expenses, such as the cost of short refresher courses -travelling expenses may be allowable too. Some examples of courses which could qualify are -

1. Biochemist attending school on modern developments in chemistry techniques.
2. Business manager attending short courses run by the New Zealand Institute of Management.
3. Television technician attending lectures on new developments in TV receiver maintenance.

Teachers Training Aids

Any costs borne by teachers themselves in providing training aids to help them in their job may now be claimed as a deduction in their tax returns.

Reference Books, Journals, Periodicals

The cost of journals, periodicals and information services used for reference purposes and to keep up with developments in your work may be claimed as a deduction. The cost of replacing standard works and reference books is similarly allowable and we would also allow the cost of other new books costing $4 or less for any one book. Once again the tax office will be happy to look at your particular problem and tell you whether you can claim a deduction.

Tools Of Trade, Technical Instruments And Equipment

We would allow the cost of -

1. individual items or a group of items costing in the aggregate less than $20. Make your claim in the year the purchase is made.
2. replacing items which initially cost more than $20.

To qualify as a deduction the cost must relate to tools, instruments and equipment necessary in carrying out your duties.

Use Of Your Home

If you have set aside part of your home wholly for your work and are using it to help produce your income you can claim the expenses involved. The expenses may be split in the proportion which the rooms used bear to the whole area of your home. Give full details when you send in your tax return.

Medical Examinations

If your employer requires you to have a periodical medical examination and does not pay the cost, you may claim a deduction. The people mainly concerned will be aircraft pilots, but others could qualify.

Licence Fees

If you have to have a licence to engage in your occupation you can claim the cost as a deduction. Once again aircraft pilots are the ones mainly concerned here, but others could also qualify.

Trade Union Fees Professional Association Subscriptions

There has been no change in this allowance.

You can still claim for subscriptions, fees or levies paid to trade or professional unions or associations. As before the maximum claim under this heading is $20.

REMEMBER

1. If you do not get an allowance from your employer for out of pocket expenses directly related to your occupation, you may claim a deduction in your return. Please give full details of the payments you have made.
2. If you get an allowance from your employer, do not show either the allowance or the expenses in your return.
3. If your expenses are greater than the allowance you receive show both the allowance and the expenses and give full details of the payments you have made.
4. Ask at the tax office if you are not sure. This will save queries later.