Taxes Consolidation Act 1997 section 114

General rule as to deductions

Section 114 sets out the rules for deducting employment expenses from taxable earnings, requiring that expenses be wholly, exclusively and necessarily incurred in the performance of the duties of the office or employment.

• An employee may deduct expenses from assessable earnings where those expenses are necessarily incurred and paid out of the employee's own resources in performing job duties.
• For travel expenses, the employee must be necessarily obliged to incur the expense in the performance of the duties; for all other expenses, the stricter "wholly, exclusively and necessarily" test applies, which is more demanding than the "wholly and exclusively" test for self-employed individuals.
• The test is objective: it is the duties of the employment that must impose the necessity for the expense, not the employer's requirements or the employee's personal circumstances, and any duality of purpose — where the expense serves even a partial non-employment function — is fatal to the claim.
• Expenses incurred merely to put the employee in a position to perform duties (such as commuting, general clothing, trade union membership, or continuing professional development) are not deductible; only expenses incurred in the actual performance of the duties qualify.