Deductions reduce the amount of tax your client has to pay — or increase their refund if too much tax was withheld. These deductions are reported under labels D1 to D15 in an individual tax return.
It’s important to get them right. Each deduction must meet ATO rules and be backed up with documents.
Here’s how to prepare deduction claims properly from start to finish.
Step-by-step:
1. Ask your client for supporting documents
You’ll need receipts, bank records, travel logs, work-related diaries, super contribution statements — anything that proves the deduction.
👉 Use our deductions checklist to help guide the client.
2. Check that the deduction is allowed
Make sure the expense is directly related to their job or investment income.
It must not be private (e.g. normal clothes, commuting)
If it’s shared (like phone, internet, car), it must be apportioned
Some deductions have special rules — check the ATO if unsure
3. Fill in the deductions workpaper
👉 Use the deductions workpaper to add each claim by label (D1–D15).
Include any notes — like how you calculated business use, or why something is being claimed.
4. Upload everything to Xero Workpapers
Add the completed workpaper and all supporting documents to the client’s Xero file.
Make sure it's organised and easy to review.
5. Add the totals to the tax return
Enter each amount under the correct D label (D1–D15).
Most clients will only use D1–D10 — but check if D12 (super) applies, and flag anything under D11, D13, D14, or D15 for your reviewer.
6. Submit for review
Tag your reviewer in Xero.
Leave clear notes, especially for:
Business/private use splits
Super contribution acknowledgments
Logbook methods or fixed rates used
📌 Tip: If you’re not sure about a deduction — ask before adding it. The goal is to make sure every claim is valid, backed up, and easy to follow.