A hydraulic system includes a storage tank, a cover assembly and a filter assembly for filtering hydraulic fluid, gasses and air. The tank includes an opening and an attachment ring bounding the opening. The cover assembly has an inlet port and is removably connected to the attachment ring to support and enclose the filter assembly in the tank. The filter assembly includes a filter element having a filter media ring for filtering hydraulic fluid, and an annular breather filter surrounding the filter media ring at one end of the ring for filtering vent gas and air. The filter element is supported in a diffuser tube received in the tank opening. The diffuser tube includes a stand-off ring with a convoluted groove or channel to provide a vent path between the diffuser tube and the tank opening to direct vent gasses and ambient air through or around the breather filter.