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2022 Tax Return: Lawyer Tax Deductions

May 25, 2022 0 Comments

As 2021-22 tax return time approaches, here are 5 deductions you might consider to maximise your tax return. 

Benjamin Franklin famously wrote, “…in this world nothing can be said to be certain, except death and taxes”, and as we approach the end of the 2021-22 tax year, it’s time to pile up the receipts and sort out what lawyer tax deductions you can make. Here are some things you should know as you prepare to file your tax return.

This is for general information purposes only and should not be taken as professional tax advice. 

General tips about lawyer tax deductions

Any taxpayer is entitled to claim certain deductions against their earnings from the previous year that are incurred in the course of earning income.

The important things to remember when considering what you might claim are that the expenses must meet deductibility tests and satisfy substantiation rules, primarily:

  • You must have kept records of the expenses (these can be digital but must clearly state the name of the supplier, amount of the expense, nature of the goods or services, date expense was paid and date of the document)
  • Your employer cannot have reimbursed you for the expense
  • The expense is recognised by the Australian Tax Office (ATO) as a legitimate expense (see the full list here).

So, what are the 5 lawyer tax deductions you could consider?

Vehicle and/or travel expenses

Many lawyers tend to undertake some kind of travel for work. This can take the form of day-to-day professional activity that incurs vehicle or travel expenses, such as attending court or visiting a client, or more comprehensive travel expenses requiring an overnight stay or several nights away.

Keep detailed records of these expenses as the day-to-day can include petrol, tolls and parking, while more extensive travel can include airfares, meals, accommodation and any other relevant incidental expenses. You could also claim job-to-job travel if you hold more than one role, for example in a law firm during the day and lecturing in the evening.

Clothing and laundry expenses

While general business attire can’t be claimed, lawyers can claim for court attire, such as wigs and gowns because they are compulsory and occupation-specific. Repairs, alterations, upkeep and replacement are also claimable.

You can also claim a briefcase or a larger handbag/carry bag so long as you can substantiate it as being bought specifically for work purposes.

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Photo by Nataliya Vaitkevich on Pexels

Annual Practising Certificate Fees

As with many professions requiring yearly registration, lawyer tax deductions could include your annual practising certificate fees, although you can’t claim the initial cost of obtaining the certificate.

Self-education and study expenses

Education or study expenses could be claimed, with the caveat being these must be related to your current employment, so cannot be undertaken to upskill you for a future role.

These kinds of lawyer tax deductions could be anything from tertiary education fees to short training courses to attending seminars or conferences, and can include ancillary expenses involved with undertaking these study/training activities so long as these can be substantiated as essential for you to complete the study activity.

Home office/Working from home (WFH) expenses

WFH was a thing for many lawyers well before the COVID pandemic made it effectively mandatory for extended periods of time, and for many will remain a part of their professional lives going forward.

This means it’s critical to keep intricate records of the work-related portion of expenses, which can include:

  • electricity
  • internet
  • cleaning expenses
  • depreciation of home office equipment
  • cost of repairs to home office furniture
  • cost of logbooks, diaries, and pens that you use for work

Running a legal business solely from home is a whole different ball game, as while there are deductions you can claim, you will also need to consider capital gains tax and the ‘Main Residence Exemption’ implications associated with claiming costs – something best handled by a tax accountant.

Other expenses

As well as the key expenses noted above, there are a range of other work-related expenses you may be able to claim (this table is useful as a general guide).

So, it’s worth being thorough in keeping records of everything you think might be claimable before doing an end-of-financial-year forensic deep-dive into the lawyer tax deductions you can make to ensure you maximise your tax return.

This is for general information purposes only and should not be taken as professional tax advice. 

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