Planning on slipping that snazzy new jacket in under ‘work-related clothing’ this tax-time? You might want to have a re-think, with the Australian Taxation Office (ATO) announcing it’ll be paying particularly close attention to work-related clothing and laundry expense claims made in 2017-18 tax returns.
The ATO says that clothing claims are up nearly 20% over the last five years with people either making mistakes or deliberately over-claiming. Common mistakes include people claiming ineligible clothing, claiming for something without having spent the money and not being able to explain the basis for how the claim was calculated.
Around a quarter of all clothing and laundry claims were exactly $150, which is the threshold that requires taxpayers to keep detailed records. We are concerned that some taxpayers think they are entitled to claim $150 as a ‘standard deduction’ or a ‘safe amount’, even if they don’t meet the clothing and laundry requirements,” Assistant Commissioner Kath Anderson said.
While this particular announcement focuses on clothing-related expenses, it’s been clear for some time that the ATO is paying very close attention to work-related expenses in general. All claims should be supported by evidence, just in case the ATO decides your claim requires closer scrutiny. We’ve heard of a number of real-life examples in the last year where the ATO has queried and challenged very small deductions which couldn’t be supported by appropriate evidence. It’s not just the big deductions anymore that attract attention.
So what can you claim?
You can only claim a deduction for the cost of buying and cleaning:
- Occupation-specific clothing: for example, the checked pants a chef wears.
- Protective clothing: fire-resistant and sun-protection clothing, safety-coloured vests, non-slip nurse’s shoes, rubber boots for concreters, steel-capped boots, gloves, overalls and heavy-duty shirts and trousers, smocks and aprons you wear to avoid damage or soiling your ordinary clothes during your income-earning activities; and
- Unique, distinctive uniforms – clothes that are designed and made for the employer and not publicly available, like shirts with the company logo.
Unfortunately just because your employer requires you to wear a suit, doesn’t mean you can claim the cost of the suit or its cleaning.
In a nutshell, if you claim $150 on clothing and laundry expenses, just be aware that you might be asked to justify those expenses. So maybe put that jacket on your Christmas list instead.
If you’d like advice on what you can and can’t rightfully claim this tax-time, just call us on 9887 8751 or send us an email.