FIFO and Mining Worker Deductions: What the Rules Actually Turn On

Western Australia has a large fly-in fly-out workforce, and a persistent amount of folklore about what those workers can claim. Some of it is close to right. Quite a lot of it describes a rule that either never existed or stopped applying some years ago.

The underlying position is unremarkable: a deduction is available for an expense incurred in earning assessable income, to the extent it is not private in nature, and the taxpayer has to be able to substantiate it. Everything below is that test applied to circumstances FIFO workers actually encounter.

Travel is where most of the confusion sits

The general rule is that travel between home and a regular place of work is private, and that does not change because the distance is long or the journey is by air. This is the point where a great deal of FIFO folklore breaks down.

Where travel becomes deductible is fact-dependent — it turns on things like whether the travel is between workplaces, whether the employee is required to transport bulky equipment with no secure storage at the site, and what the employer provides or reimburses. Two workers on the same roster can genuinely have different answers because their arrangements differ. The ATO publishes the current position on transport and travel, and it is worth reading against your own circumstances rather than against what a colleague says.

Protective gear, tools and equipment

Protective clothing and equipment required for the work — the categories that are genuinely protective rather than merely a uniform preference — are a more straightforward area, as are tools and equipment used for work. Items with a longer effective life are generally written off over time rather than claimed in full immediately, and items used partly privately are apportioned.

The recurring practical problem is not eligibility but evidence: gear bought in cash years ago, no receipt, and no record of the private-use split.

Self-education, licences and tickets

Resources work runs on tickets and renewals, and expenditure on maintaining them is a routine feature of these returns. The general position is that self-education and training expenses connected to the income currently being earned sit differently from expenses incurred to obtain new employment or to move into a different field.

That distinction does most of the work. A renewal of a ticket already required for the current role is a different proposition from a course undertaken to qualify for a role the worker does not yet hold, and the two are treated differently even when the invoice looks identical.

Allowances are not the same as deductions

An allowance shown on an income statement is assessable income, and receiving one does not by itself create a deduction of the same amount. The two are assessed separately: the allowance is declared, and any related expense is deductible only if it was actually incurred and meets the ordinary tests.

This is a persistent source of confusion, because the amounts often look like they should cancel out. Sometimes they roughly do. Often they do not, and assuming they will produces a return that is wrong in both directions at once.

Substantiation is the part that decides the outcome

An expense that was genuinely incurred and genuinely work-related still fails if it cannot be supported. In a review, the question is rarely philosophical. It is what records exist.

• Receipts or invoices for the expenses claimed, retained for the required period.
• A logbook or other record where a vehicle claim is made on that basis.
• A defensible basis for any apportionment between work and private use, recorded at the time rather than reconstructed later.
• Records of what the employer paid, provided or reimbursed, because a reimbursed expense is not a deduction.

What records are required and how long they must be kept is set out by the ATO. The mechanics of retention are covered in more depth in our post on what records the ATO expects.

Where a FIFO return gets genuinely complicated

Usually not through deductions at all, but through everything else attached to a higher income: an investment property, a share portfolio, salary sacrifice arrangements, or a spouse with a different income pattern. Those interact with the return in ways a deduction schedule does not, and they are handled under tax return preparation and lodgement.