The Police Debrief: Your Annual Tax Checklist

Welcome, to the Podcast! Our newsletter made easy! Please note, this podcast features AI-generated voices for your hosts, Mia Taylor and Leo Baker, bringing you expert insights from owner, Ben De Rosa, at Aevum Accounting. Each week, we're here to help you confidently navigate the ins and outs of Australian tax – whether it's for your individual finances, or the complexities of your business. We'll cut through the jargon to give you strategies for compliance, smart planning, and that ultimate peace of mind. So, if you're looking to understand your obligations, maximize your financial position, or simply gain clarity on your money matters, you're in the right place. Let's get started with our review of the week! Sarah Grasett said "Ben is awesome to work with! Super knowledgeable, approachable, and broke things down in a way that was easy to understand. He found deductions I would’ve missed and made the whole tax thing way less stressful. I wouldn’t hesitate to recommend him to anyone needing a solid accountant!" Thank you for the amazing feedback Sarah! We love hearing from our clients and a positive review gets our podcast started on the right foot. And we are back! Leo Baker here, and Mia, today we are continuing our series on specific professions, and we’re talking about a group of people who do an incredibly tough and vital job for our community: our police officers and detectives. That’s right, Leo. It’s a career with unique challenges, long hours, and a very specific set of work-related expenses. So today, we're putting on the safety vest and diving into the essential tax guide for the police force. I love it. Let's give them a financial debriefing! Where do we start? We start with the foundation for every single claim. Before we get into specifics, every police officer needs to know the ATO’s Three Golden Rules for claiming a deduction. First, you must have spent the money yourself and not have been reimbursed for it. Second, the expense must directly relate to you earning your income. And third, you must have a record, like a receipt, to prove it. Rule one, two, and three: you paid for it, you needed it for work, and you can prove it. Got it. So let’s hit the road. What about car expenses? This is a big area of confusion. The ATO is very clear that you cannot claim the cost of normal trips between your home and your regular station, even if you’re called in at 2 AM or work on a public holiday. Okay, so your daily commute is off the table. But police work isn't always at the station. What about when you're on the move? That’s where you can claim. You can claim the cost of using your own car when you drive to and from an alternative workplace, for example, from your station to a crime scene, a courthouse, a different station that isn't your home station or the local hospital. You can also claim if you travel directly between separate jobs on the same day, like from your police role to a second job in security. What about that famous 'bulky equipment' rule? If an officer has to lug a massive evidence kit or some other huge piece of gear home because there’s no secure locker at the station, can they claim their commute then? Yes, in that specific situation, they can. If the equipment is bulky and essential for the job, and there genuinely is no secure place to store it at work, the travel between home and the station can become deductible. But you need to meet all parts of that rule. When it comes to claiming, there are two methods. The simple one is the 'cents per kilometre' method, where you claim a set rate for every work-related kilometre. That rate covers everything, so you can't claim fuel or insurance on top of it. The second is the 'logbook method', where you can claim the business-use percentage of all your actual car expenses. It’s more work, but for officers who do a lot of driving between different sites, it often results in a much bigger deduction. Okay, let's move from the car to the closet. Uniforms. This must be a straightforward claim, right? For the most part, yes. You can claim the cost of buying, repairing, and cleaning your compulsory uniform, which is distinctive to your organisation. You can also claim protective clothing designed to protect you from specific risks of illness or injury on the job. But what about detectives or officers who work in plain clothes? They have to wear suits or other specific attire, but it's not a uniform. That’s a great point, and you’re right, you can’t claim for conventional clothing like normal business attire. However, there is a fascinating exception. An undercover officer or a detective may be able to claim the cost of conventional clothing if they have to buy a specific look for a particular operation. For example, if they need to buy certain clothes to blend in with a specific group they are investigating, those costs could be deductible. Wow! So your tax deduction depends on your disguise. That is cool. But the golden rules still apply, right? If you get an allowance or are reimbursed for those clothes, you can't double-dip? That's exactly right. No reimbursement means you can potentially claim it. However some allowances are taxed in your payslip so you may still need to claim against these, and the rules for substantiation if an allowance is paid, are slightly reduced in this case as well. Now. Let’s talk about self-education. Right, hitting the books to get ahead. What are the rules here? You can claim a deduction for a course if it directly relates to your current role and either maintains or improves the skills you need for your current duties, or is likely to lead to an increase in your income from your current job. So, a constable taking a course on advanced interview techniques or a forensic photography course would be a definite yes. But if that same constable decides to take a course on becoming a landscape gardener, that’s a definite no? Correct. It can't be only generally related, and it can’t be to get you a completely new job outside of the force. Other common deductions we see include union and professional association fees, subscriptions to technical publications like police journals, and the work-related portion of phone and internet costs even if you are provided with a work phone. But for those phone and internet costs, you must have records to prove your work use, and you can’t just claim it if you only make a few calls about shifts. Okay, that’s a great checklist. Now, I want to touch on something specific to our listeners on salary packaging. Yes! This is an important area. As a government employee, police officers and detectives have access to salary packaging, which is administered by lots of different organisations and in WA most commonly called Smart salary. This lets you pay for certain things with your pre-tax salary, which lowers your taxable income. So, what amazing benefits can the police package? Is it the same as the health sector, with living expenses and meal benefits? This is a critical distinction, and I'm glad you asked. Unlike the health sector, police officers are not eligible for those capped benefits for general living expenses or meals and entertainment. The main benefit available to them is typically a novated car lease. A novated lease. In simple terms, what is it? It’s an arrangement where you bundle your car's finance payments and all its running costs – fuel, insurance, servicing, tyres – into a single payment. This payment is then taken out of your salary, using a combination of pre-tax and post-tax dollars. Using those pre-tax dollars to pay for a big chunk of your car costs is how you save on tax. But, and this is a huge 'but', a novated lease is a type of fringe benefit. This means it will show up on your income statement as a "Reportable Fringe Benefit Amount". That amount gets added to your taxable income to work out your repayment income for government debts. This can significantly impact your compulsory help debt repayments, so it needs to be considered very carefully. So, it can be a great benefit, but it can also give you a nasty surprise with your student loan if you're not prepared. It really shows that every part of your financial life is connected. That’s the key message. From your car, to your uniform, to your salary package, the financial world of a police officer is full of specific rules and opportunities. Understanding these nuances is key to making sure you're not paying a dollar more in tax than you need to. And that is where we come in. At Aevum Accounting, we specialise in this. We take the time to understand the specific duties of your role, whether you're on the beat, in forensics, or working as a detective, to ensure you get tailored advice. We help you navigate the complexities of things like novated leases and make sure your tax return reflects the true cost of you doing your important job. It's about having an expert in your corner, watching your back financially, so you can focus on watching ours. A perfect place to end. And that brings us to the end of another episode! We hope today's discussion has provided you with valuable insights and helps you navigate your financial world with greater confidence. Before we go, a quick but important reminder: The information and strategies shared on this podcast are for general informational purposes only and do not constitute specific tax or financial advice. Everyone's situation is unique, and tax laws are complex and constantly evolving. For personalized advice tailored to your specific individual or business needs, we always recommend consulting with a qualified professional. You can connect with our team at Aevum Accounting – visit our website to learn more about our services, including detailed tax guides for various occupations, and how we can support your financial journey. Thank you so much for tuning in! If you enjoyed this episode, please consider subscribing, leaving us a review, and sharing it with anyone who might benefit. Your support helps us reach more Australians. Until next time, stay savvy, stay proactive, and keep building your financial future! From all of us at Aevum Accounting. Goodbye for now.