What Can FIFO Workers Claim On Tax? 2021 Tax Deductions Explained
Fly-In, Fly Out workers (FIFO) have an out-of-the-ordinary work arrangement, and with it comes some unique questions about what is deductible at tax time. The nature of their job requires FIFO employees work long continuous hours with limited downtime, and when they are rostered off, it’s understandable that FIFO workers want to make the most of their time at home, not waste it trying to sort out their finances.
However, it’s important to make sure all the paperwork is in order to actually claim all the tax deductions you’re entitled to this year. Record-keeping is vital, and being prepared ahead of time will ensure you have everything you need to maximise your tax return in 2021.
When it comes to these tricky tax arrangements, it’s always best to seek professional assistance from an experienced FIFO tax agent and accountant sooner rather than later. Having an expert advise you on your FIFO tax return makes the process fast, easy, and stress-free, while also making sure you don’t miss out on potential deductions.
To help you get started, this list of tax deductions and common tax FAQs for FIFO workers will give you some helpful information for your 2021 tax return. Read on to learn more about which deductions might be available to you this year.
2021 FIFO Tax Deductions in Australia
There are many tax deductions available to FIFO workers in Australia. For an average FIFO worker, determining which expenses are eligible for tax deduction can be quite challenging, especially as the regulations around travel-related deductions are complicated.
It’s important to note that if your employer reimburses your travel costs, accommodation or other expenses – either before or after the cost is incurred – these costs aren’t claimable on your tax return. A reimbursement is a payment that covers the exact cost, whereas an allowance is a more general payment, and certain expenses related to an allowance may be deductible.
To ease up the confusion, here’s a list of tax deductions that all FIFO workers should think about when filing their returns:
- Typically meals are considered a private expense and aren’t deductible, even for FIFO workers.
- However, if you’re in the process of work-related travel that is not part of your regular FIFO arrangement, your meals may be deductible as part of your travel expenses.
- If your employer provides you with a meal allowance under an industrial award or agreement, the cost of meals when you’re working overtime can be claimed. Note that you need to keep these claims under $31.90 per meal, per day.
- Travel as part of your regular FIFO arrangement is not a deductible expense for tax purposes, including travel to the airport and the cost of flights.
- You can claim travel expenses you incurred if your job requires you to travel temporarily to another location for a meeting, training, seminar, or other work-related activity.
- If you’re using your personal vehicle for work-related purposes, you can claim the cost of vehicle expenses. However, this doesn’t include travel to the airport or transit for DIDO workers, which is a private expense.
- You can claim car expenses as a tax deduction if, a) you drive between separate jobs on the same day, or b) drive to and from different workplaces for the same employer on the same day.
- If you need to transport large and bulky items as part of your job and there’s a lack of secure storage at the work facility, you are eligible to claim your trip to and from your accommodation and the job site. This also applies if you have shifting places of employment (ie. no regular work site).
Uniform and/or Protective Clothing
- You can claim the cost for buying a work uniform as long as it has your employer’s logo. Note that typical clothing such as socks, shoes, and underwear that you wear along with your uniform cannot be claimed as work expenses.
- Protective clothing such as safety glasses, masks, steel cap boots, gloves, and reflector vests are eligible for tax deductions.
- The cost of cleaning, renting, or repairing work-related and/or protective clothing can be claimed, subject to the following conditions:
- if the claims are under $150, you don’t need to submit written documentation. The ATO approximates the cost of laundry at $1 per load of work-related clothing, or 50 cents per load if other non-work-related clothing is included.
- you need to keep the receipts if you want to claim for costs related to dry cleaning and clothing repairs
- If your employer pays for, provides and/or maintains protective clothing, those expenses are not deductible.
- Sunscreen, sunglasses, hats, and other sun protection equipment used for work purposes are eligible for tax deductions.
Tools & Equipment
- Purchases of work-related tools and equipment amounting to less than $300 dollars is claimable in full. For tool and equipment purchases of more than $300, you are required to claim for depreciation over the tool or equipment’s useful life.
- You need to indicate in your claim the percentage of usage of the tool or equipment for work and private purposes. You can only claim the percentage for business and work-related purposes, so if you also use the tool or equipment privately, that portion is not deductible.
- Examples of tools and equipment that are eligible for tax deduction include power tools, computers, mobile phones, beacons, GPS equipment, first aid kits, and safety gear, plus cases and bags used to transport the gear.
Work-Related Phone and Internet Expenses
- If you need to stay in touch with your employer during off periods, part of your phone and/or internet expenses may be tax deductible.
- Any requirement to do work or training from home can also make you eligible for deductible internet and home office expenses.
Other FIFO Work-Related Tax Deductions
- Fees related to renewal of licenses, permits, card or certificates required to operate machinery and equipment. Note that standard driver’s licenses are not tax deductible, and getting a machinery licence for the first time is not covered – only renewal fees.
- Cost of any compulsory medical assessments or examinations, including drug and alcohol tests. This doesn’t include pre-employment assessments, though.
- Fees for self-education relevant to your current employment. This doesn’t include pre-vocational courses but does include short courses, TAFE or university studies.
- First aid course expenses may be claimed if compulsory or if you’re a designated first aid person (unless the costs are reimbursed by the employer).
In addition to the eligibility mentioned above, there are general tax deductions to consider. These are available in all Australia, no matter the occupation or occupation of the FIFO worker:
- seminar and conference fees, and travel to attend them
- purchasing reference books, manuals, etc
- professional publications where work-relevant
- fees related to work-relevant self-education (other than pre-vocational courses)
- tax agent fees
- monetary donations to registered charities
- costs related to income protection insurance
- yearly union fees or professional association fees
Tax Offsets for FIFO Workers in Australia
A tax offset means you pay less tax on your taxable income (total income less any deductions).
The amount of tax offset you receive is dependent on the amount of tax required of you to pay on your income. Non-refundable tax offsets, such as those categorized as low and middle-income tax offsets, can reduce your tax payable to zero. However, you cannot claim for a refund for any unused tax offset amount. Tax offsets cannot decrease your Medicare Levy and Medical Levy Surcharge, which constitutes a 2% surcharge of your taxable income.
If your taxable income is $18,200 and you haven’t paid any tax, then your tax payable is already zero. If you have paid tax, you will often get back all of the tax as a refund. Therefore, your tax payable is zero as well. In both cases, you are not eligible for tax offset.
However, if your taxable income is more than $18,200, the ATO will refer to your taxable income when calculating the amount of tax you need to pay. Then the offset amount that you’re entitled to will be deducted from your payable tax.
Low-Income Tax Offset
With this change, the following offsets are currently available for low income workers.
|Taxable Income||Tax Offset|
|$37,500 or less||full offset amounting to $700|
|between $37,501 and $45,000||$700 less 5 cents for every $1 above $37,500|
|between $45,001 and $66,667||$325 less 1.5 cents for every $1 above $45,000|
Low and Middle-Income Tax Offset
The ATO has set the low and middle income tax offset amount to a base of $255 and up to $1,080. Although the full offset amount is $1,080 per year, you may not be entitled to the full offset amount. This tax offset is available for the 2018 to 19, 2019 to 20, and 2020 to 21 income years. The value of the tax offset you’re eligible for depends on factors like your present living circumstances, taxable income, and the amount of taxes you paid.
Check the table below to determine the amount of tax offset you’re entitled to as per your taxable income:
|Taxable Income||Tax Offset|
|$37,000 or less||$255|
|$37,001 to $48,000||$255 plus 7.5 cents for $1 above $37,000 (maximum of $1,080)|
|$48,001 to $90,000||$1,080|
|$90,001 to $126,000||$1,080 less 3 cents for every $1 above $90,000|
Zone Tax Offset for FIFO Workers
For workers who live in remote or isolated parts of Australia, the ATO offers a zone tax offset. This concession offset is designed to help workers cope up with the high cost of living, higher rates of amenities and services, environmental factors, and other challenges associated with living in remote areas of Australia.
It’s a common assumption that FIFO employees working in remote areas will be able to claim the Zone Tax Offset. However, this only applies to people whose normal residence falls in one of the designated remote zones. This means that the place you live during ‘off weeks’ needs to be in a remote zone to qualify for the offset.
Workers on offshore oil or gas rigs also aren’t eligible for the zone tax offset.
If your normal residence is in one of the ATO’s remote zones, then you may be eligible for the Zone Tax Offset, depending on the number of days per year you spend at home.
Eligibility for Zone Tax Offset
You need to satisfy some specific criteria to qualify for the zone tax offset as a remote worker. As a core requirement, you must be living in an area classified by the ATO as remote to be eligible for the zone tax offset. The ATO publishes a detailed Australian zone list outlining which towns are within Zone A, Zone B or a Special Zone.
In addition, you should comply with any of the following conditions:
- You lived in a remote zone for 183 days or more during the year 2019 to 2020, OR
- for 183 days or more during the period July 1, 2018 to June 30, 2020, AND
- You haven’t claimed a zone tax offset in your 2018 to 2019 income tax return
It’s possible that you can still take advantage of the zone tax offset if you’ve resided in a zoned region for less than 183 days. To be eligible, you need to satisfy all of the following conditions:
- you resided in a zone for a continuous period of less than 5 years following July 1, 2014
- you lived in the said zone for 183 days or more in the first year or in the year 2019 to 2020
- you cannot claim a zone tax offset during that first year because you were there for less than 183 days
Zone Tax Offset Rates
Several factors are taken into account when computing for zone tax offset rates, including marital status, whether you have any dependents or carer duties, which zones you’ve lived in and for how long, and any other offsets you may be eligible to receive.
The ATO website has some helpful resources for calculating your zone offset rates. However, the variables can be quite tricky, so talking to your local accountant can help.
FIFO Tax FAQs
Here are some common questions we hear regarding FIFO tax deductions and tax offset eligibility.
How are overseas FIFO workers taxed?
Australian residents who work overseas still need to pay tax in Australia. You may also have tax obligations in your country of work, so you’ll need to check with an experienced accountant to find out how this may affect you. The cost of an international work visa, travel vaccinations and some other costs related to working overseas may be deductible depending on your circumstances.
Can FIFO workers claim travel to airports?
As per the ATO, traveling from your residence to your work site is a personal expense. Thus, you cannot claim deductions for trips from your home to the airport. Similarly, you cannot claim tax deductions for airfares between your home and your work site, or the cost of fuel for DIDO workers.
Can FIFO workers claim living away from home expenses?
No. While work travel expenses can be deductible, living away from home is a separate category of tax treatment, and expenses such as accommodation and meals aren’t deductible. You may receive a ‘living away from home allowance’ (LAFHA) from your employer to cover these costs.
Can FIFO workers claim relocation expenses?
No, relocating closer to your job site – even for FIFO workers – is a private expense and is not tax deductible.
Can FIFO workers claim child care expenses while working away?
No, childcare expenses are always a private expense, even during school holidays.
Are suitcases and luggage tax deductible for FIFO workers?
The cost of suitcases, trolleys, suit bags, backpacks, and any luggage that you use to travel with may be tax deductible – but only to the extent of work-related usage. If you also use luggage for private travel and vacations, you can only claim the percentage of business-related travel on your tax return.
Can FIFO workers claim zone allowance?
Yes. However, they need to fulfill certain requirements as mandated by the ATO. As a general rule, they should have been living for 183 days or more in an area designated by the ATO as a remote area.
Are union fees fully tax deductible in Australia?
Yes, union fees are 100% tax deductible. If you are a FIFO worker, your union membership fees can be claimed as a tax deduction.
This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent financial advice upon which any person may act. Implementation and suitability requires a detailed analysis of your specific circumstances.
Aaron is a Chartered Accountant with over 15 years experience in the accounting industry. Aaron has been able to provide advice around structuring, cashflow, tax compliance and working with clients to develop strategies.