FIFO Tax Deductions: What You Can Claim, What You Can’t, and What the Bloke in Seat 14C Got Wrong

If you work as a fly-in-fly-out (FIFO) worker, you already know the drill. Long swings, early flights, and a pay packet that’s meant to make up for missing your kid’s footy grand final. The least you can do is make sure the taxman isn’t getting a bigger slice of that pay packet than he’s entitled to.

Here’s the problem: FIFO tax advice is mostly handed around the break room and the departure lounge, and half of it is wrong. Some of it was right ten years ago and the rules changed. Some of it was never right at all. So let’s sort the genuine claims from the campfire stories, because the ATO audits FIFO workers with great enthusiasm, and “a mate on site told me” has never once held up as a defence.

1. The zone tax offset: the big one most FIFO workers can no longer claim

Let’s rip the band-aid off first. The zone tax offset exists to compensate people for the isolation, harsh climate and high cost of living in remote Australia. And once upon a time, FIFO workers could claim it just for working in a zone long enough.

Those days ended on 1 July 2015. Since then, the offset is based on where your usual place of residence is, not where you work. If you live in Perth, Brisbane or anywhere outside the zones and fly in to site, you are not eligible, full stop, no matter how many days you clock up in the Pilbara. And offshore oil and gas rigs don’t count as zones at all.

Who can still claim? Workers whose actual home is in a zone for 183 days or more in the income year. Live in Karratha or Mount Isa and fly elsewhere for work? You keep the offset attached to your home zone. The base amounts are modest ($57 for Zone B, $338 for Zone A, and $1,173 for special isolated areas, plus a percentage loading tied to certain dependant offsets), but money is money, and it comes straight off your tax bill rather than just reducing your taxable income.

If your last tax agent claimed this for you while you lived in the suburbs, that’s not a loophole. That’s a future ATO letter.

2. Travel: mostly a dead end, with one exception

Here’s the one that stings. Your travel between home and the airport (or whatever departure point your employer nominates) is generally not deductible. The ATO treats it the same as anyone else’s commute, even though your “commute” involves a 737. Relocation costs to move closer to a new site? Also not deductible. I know. Sorry.

The main exception: if you’re required to lug bulky tools or equipment to site because your employer provides nowhere secure to store them, your travel to the departure point may become claimable. The key words are “bulky” and “nowhere secure”. A laptop bag doesn’t cut it.

What you can claim is the work-related portion of luggage used for work travel: a sturdy bag or case that carries your work gear back and forth. Items costing $300 or less can be claimed outright; anything dearer gets depreciated. And keep it honest: the esky for the fishing trip doesn’t qualify just because it once carried your hi-vis gear.

3. Working offshore or overseas: where it gets genuinely tricky

If you’re an Australian tax resident, the starting point is that you’re taxed on your worldwide income, so flying to a rig off Indonesia or a mine in Africa doesn’t, by itself, get you out of an Australian tax return. If you pay foreign tax on that income, a foreign income tax offset generally stops you being taxed twice on the same dollar.

But the starting point isn’t always the finishing point. Long international rotations can muddy your residency status, and where a tax treaty is involved, the outcome can change completely: if you end up a treaty resident of the other country, the treaty can hand that country the sole taxing right over your employment income earned there. This is specialist territory, and it’s where international FIFO workers either save serious money or make serious mistakes.

Now for two corrections to claims you may have read elsewhere (including, ahem, in older versions of articles). The cost of obtaining or renewing a visa is not deductible, even when it’s a condition of getting on site; the ATO treats it as private. Same goes for vaccinations: not deductible, even if your employer requires them. The narrow exception in this neighbourhood is COVID-19 tests required for work purposes, which have been deductible since 1 July 2021.

4. Phone and internet: claimable, but the ATO wants receipts, not vibes

If you’re on call, need to contact your employer, or handle rosters and work emails from your phone, the work-related portion of your phone and internet costs is deductible. The operative words are “work-related portion”. You can’t claim the whole bill because you once rang the site supervisor.

The clean way to do it: keep a four-week diary of your usage, work out your work percentage, and apply it across the year. Itemised bills help. The ATO sees inflated phone claims from FIFO workers every single year, and they’re embarrassingly easy to knock back when there’s no record behind them.

5. Clothing and protective gear: yes to safety, no to style

This is the happiest category for FIFO workers. Protective items you buy yourself are deductible: hi-vis, steel-capped boots, hard hats, safety glasses, gloves, and, if you work outdoors, sunglasses, sunscreen and sun hats. You can also claim the cost of laundering your work uniforms and protective clothing.

What you can’t claim is conventional clothing, even if you only ever wear it to site. Jeans, plain work shirts, runners: the ATO says no, and has said no for decades. The test is whether the clothing is protective or occupation-specific, not whether you happen to wear it at work.

6. The extras that get left on the table

While we’re here, a few more deductions FIFO workers commonly forget: union and professional association fees; renewing work-specific licences and tickets (renewals only; the initial cost of getting qualified for a new role is private); tools and equipment you buy yourself, claimed outright under $300 or depreciated above it; income protection insurance premiums paid outside super; and self-education costs that directly connect to your current job. None of these will buy you a boat on their own. Together, over a few years, they’re helpful, slightly.

The bottom line

FIFO tax isn’t complicated, but it is specific. The zone offset depends on where you live, not where you work. Your commute isn’t deductible, your safety gear is, and your phone claim is only as strong as the records behind it. Claim everything you’re entitled to, nothing you’re not, and keep the receipts in something better than the glovebox.

Tread your own path. Preferably in steel-capped boots you’ve claimed correctly.

Don’t donate the results of your hard work to the taxman

Every swing you work is hours away from your family. The very least your tax return can do is give back everything you’re legally entitled to, without the dodgy claims that turn into ATO letters two years later.

That’s where our specialist expatriate tax team earns its keep, especially if your FIFO life crosses borders: offshore rigs, overseas mines, international rotations. Residency calls, treaties, foreign income offsets… they handle the lot, remotely, wherever your roster takes you, and they’ll tell you straight what’s claimable and what’s a campfire story.

Book a chat with our expat tax specialists today and get your return done properly this year. Your future self (and your hip pocket) will thank you.

General information only. This article doesn’t consider your personal circumstances and isn’t tax or financial advice. Speak to our specialist expatriate tax team today, or with another registered tax agent, before acting.

References

1. Australian Taxation Office, “Zone tax offset” (usual place of residence test and 183-day requirement): ato.gov.au
2. Taxrates.info, “Zone Tax Offset” (offset amounts and the 2015 Budget exclusion measure): atotaxrates.info