Five tax tips for nurses and midwives

Ah, tax time. For many of us, it’s likely a love-hate relationship that brings with it equal parts joy in getting a refund and dislike for having to complete your return. Tax time doesn’t have to be overwhelming and can be quite an easy process if you have a good understanding of what you need to do ahead of time.

This information is not to be taken as taxation advice. You should consult a registered tax advisor for all tax-related matters. This article was originally published in July 2019 and updated in June 2022.

Here are our tips for making the most of tax time this year. 

1. Know what you can claim

Knowing what and how to calculate your claims can make all the difference to your tax return. To claim a deduction for work-related expenses you must:

• have spent the money yourself and not been reimbursed for it
• have incurred the expense in order to earn your income
• have a record to prove it (usually a receipt).

There are a number of work-related expenses nurses and midwives may be able to claim, such as:

• costs to buy, hire, repair, replace or clean clothing, uniforms and footwear you wear at work if it’s protective (non-slip shoes), occupation specific, a compulsory uniform or non-compulsory uniform (registered with AusIndustry)
• commission payments made to a nursing agency
• renewing your annual practising certificate
• the costs of using a car you own, lease or hire (under a hire-purchase arrangement) when you drive:

  ○directly between two separate jobs on the same day

  ○to a different workplace for the same employer on the same day

  ○from home directly to an alternate workplace (for example, if you’re visiting a patient in their home). 

• Professional development expenses directly related to your current job as a nurse or midwife.
• COVID-19 tests purchased from 1 July 2021 can be claimed as tax deductions if the test was used for work-related purpose or to attend work, was a qualifying test (either RAT or PCR), you paid for the test yourself and weren’t reimbursed and you kept a receipt.

You can find a full list of deductible expenses on the ATO’s website.

Donations and gifts to registered charities may also be claimed, as long as you haven’t received anything in return for your donation – such as raffle tickets or novelty items. 

2. Keep accurate records

One of the most important things you can do to make tax time easier is to keep accurate records of your expenses throughout the year. You should keep track of any work-related expenses that you incurred and weren’t reimbursed for. By having accurate records you can make sure you’re able to claim everything you’re entitled to. It’s important you keep records for five years from the date you lodge your tax return. 

Record keeping once meant a shoebox or folder full of slightly faded and crumpled receipts, but there are now plenty of apps and other digital ways to store these documents.
Apps such as Expensify and Smart Receipts can help you organise and keep track of all of your receipts. The myDeductions tool in the ATO app goes one step further and can email your data to your tax agent or pre-fill your myTax return with information you input throughout the year.

If you don’t like the idea of using an app, take pictures of your receipts with your smartphone or tablet and create a folder on your device to keep everything together. 

3. Take advantage of incentives and entitlements

There are other ways to reduce the amount of income tax you need to pay besides work-related expense deductions. Find out if your employer offers novated leasing or other salary package options which can reduce how much income tax is taken out of each pay.

Salary packaging allows you to exchange a portion of your salary for non-cash benefits. The value of your salary package is deducted from your pre-tax income, reducing your Pay-As-You-Go tax liability. Depending on what your employer offers, you might be able to package recreational and leisure activities and memberships, car parking costs or other entertainment expenses. These are fringe benefits that will need to be reported in your tax return.

A novated lease is a specific type of salary packaging that bundles repayments on your car and general running costs such as fuel, maintenance and insurance through your employer. Your employer makes the repayments to the financier and then takes the cost of the payment out of your pre-tax income. We recommend you double check which fringe benefits need to be reported in your tax return.

4. Lodge online or with a registered tax agent

You can lodge your tax return online using myTax. To get started you’ll need a myGov account linked to ATO online services. myTax is a free, simple and effective way to prepare and lodge tax returns. It even has built-in help and calculators. The best time to lodge your return is late July when a lot of your information is automatically prefilled by the ATO – including income, bank interest payments, health fund details and government payments. 

If you want peace of mind, you can work with a registered tax agent to complete and lodge your return. Working with a tax agent also means you may be able to lodge your return after the usual 31 October deadline. This can help take some of the pressure off if you need additional time to get your documents together.

As a bonus, the fee you pay to the tax agent can be claimed as a tax deduction on the following year’s return.

5. Put your refund to good use

What’s the best way to make the most of your refund? It’s worth taking the time to work out where your refund will have the most impact. Take a look at your short and long term financial goals to determine what’s most important.

If you want to meet your short term goals more quickly, consider paying down debts like a credit card or personal loan or boosting your holiday savings or emergency fund. If you’re focused more on the longer term, put it towards a house deposit, make an extra repayment on your mortgage, contribute to your super or add it to your savings.

If you have any questions or concerns about what’s right for your situation, a financial planner or accountant can help you make decisions to maximise your refund at tax time.