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Top Tax Deductions Every Nanny Should Know About

Top Tax Deductions Every Nanny Should Know About

Are you a nanny struggling to understand which tax deductions you can claim?

Looking after children can be a rewarding job, but it can also leave little time to think about tax deductions.

However, knowing the tax deductions available can help nannies keep more of their hard-earned money.

Understanding these deductions can help maximise your tax return and keep more of your hard-earned money.

So we decided to share a blog to provide essential information on tax deduction tips for every Nanny should know about in Australia.

What Is Tax For Nannies?

The Australian Taxation Office (ATO) deducts tax from your earnings. In most cases, nannies are considered employees, but there are very specific circumstances where they might be independent contractors.  

This is uncommon and for most nannies, the following information applies.

  • Parents, who act as your employer, will withhold income tax through a system called PAYG (Pay As You Go).
  • An employment agency might also handle your tax deductions.
  • Some families use a nanny payroll service to manage tax deductions.

Claiming Tax Deductions

To claim tax deductions on your tax return, you’ll need an income statement from your employer. This is sometimes called a payment summary or group certificate. It details your wages, allowances, and bonuses for the financial year. Your employer should lodge this information with the ATO each year.

Once you have this document, you can download the information to see if there are any tax deductions you can claim for work-related expenses you paid for yourself. It’s important to note that your employer cannot have already reimbursed you for these expenses, and you must have receipts as proof.

Tax Deductible Expenses

There are a variety of childcare expenses you might be able to claim tax deductions.

Here are the common expenses nannies can claim:

Category Description
Car Expenses This could include using your own car to collect supplies, travel for excursions, training courses, or sporting events. It can also include travel between different families’ homes if you work for more than one family, or if you do school pick-ups and drop-offs.
Clothing If your employer requires you to wear a uniform that isn’t generally available to the public, you can claim for the uniform itself and the cost of laundering it. This might also include sun protection items like hats, sunscreen, and sunglasses if they are required for your job
Training and Education Courses that help you develop your skills and knowledge in childcare are tax deductible, as long as they are directly related to your current job. This could include first aid training or courses on specific childcare techniques.
You can claim expenses for textbooks, stationery, equipment needed for the course, certificates and diplomas, and even travel costs (including meals and accommodation) related to the training.
Child Care Equipment In some cases, working parents might not pay for or reimburse you for certain items you need to use in your job. You can claim tax deductions for out-of-pocket work-related expenses like teaching aids, stationery, toiletries, and food for the children. This might also include musical instruments, art or craft supplies, and even toys or prizes.
Phone and Internet Expenses If you need to use your personal phone to contact other childcare workers, parents, or a childcare centre, you can claim a deduction for the work-related use of your phone. This might also apply to emails you send or receive for work purposes using your own internet provider.

Other Deductible Expenses

  • Association or union membership fees, if they relate to your work as a nanny.
  • Subscriptions to work-related publications or library costs.
  • Expenses for organising and attending excursions, day trips, or events for the children you care for.
  • Donations to registered charities (but only if you don’t receive anything back in return, like a raffle ticket).
  • The fees you paid to a tax agent in the previous year to help you complete your tax return.

Nanny Expenses You Cannot Claim

  • Travel between your home and work.
  • Standard clothing items that you could also wear outside of work, even if your employer asks you to wear them (like black trousers or white shirts).
  • Charitable donations where you receive something in return.
  • Upfront fees, joining fees or search fees paid to an employment agency.
  • Meals you eat during the course of a normal working day.
  • Grooming costs, even if your job requires you to look smart and well-presented.
  • Unsubstantiated claims – the ATO may reject your claim if you cannot provide a receipt or invoice for an expense.

How Much Can You Claim in Nanny Expenses?

Expenses must be reasonable and job-related. Travel claims using your own car are capped at 5,000 km per year. All expenses must be paid using your own money and supported by receipts.

How to Claim Nanny Expenses

Record-Keeping

Keep detailed records of your expenses and receipts. Digital copies are acceptable, and receipts should include the supplier’s details, date, and nature of the expense.

Compiling Receipts

For items under $10, receipts are not necessary if the total doesn’t exceed $200. However, keeping all receipts is advisable for your records.

Using expense tracking software like FreshBooks can help manage your receipts and expenses efficiently.

Don't Miss Out On Your Tax Return!

Even though tax filing can seem complicated, there might be ways for you to save money! This blog gave you a head start on what work-related expenses you might be able to claim as deductions.

If you’re a nanny and want to make sure you’re getting all the deductions you can rely on KPG Taxation. Our experienced tax accountants can help you understand what you can claim and take care of all the paperwork for you. Don’t waste time trying to figure it out yourself – let the experts handle it! Call KPG Taxation today for a consultation and see how much you could save on your taxes.

Consulting with KPG Taxation

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  • Bookkeeping : Let us handle your record books and expense reports.
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