Clothing deductions hung out to dry
The Australian Taxation Office is closely examining work-related clothing and laundry expense claims of taxpayers submitting their 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 has been clear for some time now 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 have heard of a number of real life examples in the last year or so where the ATO has queried and challenged very small deduction amounts which could not be supported by appropriate evidence.
What can I 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, and overalls, smocks and aprons you wear to avoid damage or soiling to 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.
Just because your employer requires you to wear a suit, this does not mean you can claim the cost of the suit or its cleaning.
If you claim a $150 on clothing and laundry expenses, just be aware that you might be asked to prove these expenses.
Thinking outside the box.
Our thinking doesn’t
just deliver value.
It saves you time.
It’s more than just reducing expenses or helping you improve profitability today. It's about fast tracking your success by taking the time to build a shared vision of your best future. Backed with dedicated and unparalleled team industry leading expertise, empowering you with the tools and guidance to make informed decisions, streamline your financial processes, raise the bar on what’s possible and help you achieve your business goals more efficiently.
The most valuable thing to our success is you. The most valuable thing to you is time.
Where knowledge meets
understanding in tax solutions.
With over thirty years of experience, we know that a good business stems from the roots; from our people.
We offer a unique combination of taxation, accounting, financial and advisory services tailored to the individual requirements of your business.
The contents of this website should be read in conjunction with the Terms & Conditions and Privacy Policy.
LIABILITY LIMITED BY A SCHEME APPROVED UNDER PROFESSIONAL STANDARDS LEGISLATION
Liability Limited by a Scheme Approved under Professional Standards Legislation