The ATO has warned they are closely reviewing claims for work-related clothing and laundry expenses.
“Last year around 6 million people claimed work-related clothing and laundry expenses, with total claims adding up to nearly $1.8
billion. While many of these claims will be legitimate, we don’t think that half of all taxpayers would have been required to wear
uniforms, protective clothing, or occupation-specific clothing,”
– Assistant Commissioner Kath Anderson
Clothing claims are up nearly 20% over the last five years and the ATO believes taxpayers are making common mistakes and errors like 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. In some cases, the ATO will ask employers if they require their employees to wear a uniform to check the validity of claims made.
In one case highlighted, a car detailer claimed work related laundry expenses of over $20,000 per year over two years. It seems that the taxpayer worked out how many hours he spent doing his laundry then multiplied that by what he thought was a reasonable hourly rate ($227 per hour because his personal time was valuable). Needless to say, the taxpayer’s claim was reduced to $0.
It’s not just large claims that the ATO is reviewing but claims up to the $150 substantiation threshold. Claims over $150 have to be substantiated with receipts for expenses. Below this level taxpayers are not required to keep normal records. The ATO believes that a lot of taxpayers are simply ticking the box thinking that the claim is a ‘standard deduction’ but it’s not an automatic entitlement.
“Just to be clear, the $150 limit is there to reduce the record-keeping burden, but it is not an automatic entitlement for everyone. While you don’t need written evidence for claims under $150, you must have spent the money, it must have been for uniform, protective or occupation-specific clothing that you were required to wear to earn your income, and you must be able to show us how you calculated your claim,” Ms Anderson said.
So, what can I actually 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 such as fire-resistant and sun protection clothing, safety-coloured vests, non-slip nurse’s shoes, rubber boots for concreters, steel-capped boots, gloves, overalls, heavy duty shirts and trousers, smocks and aprons worn to protect everyday clothing during income-earning activities. Unique, distinctive uniforms, clothes that are designed and made for the employer and not publicly available, such as shirts with the company logo.
Other helpful articles on claiming work-related expenses:
| When can you claim deductions for car expenses? The ATO may request proof that you were required to undertake the travel for work when claiming expenses, so you need to make sure you’re keeping accurate records. Read More… |
| What expenses can you claim if you work from home? A lot of people do some sort of work from home. It might be simply answering emails on the couch or working from home a few days a week. So, what can you claim if you’re putting in extra hours? Read More… |
| What can medical professionals claim on their tax return? Between equipment, insurance, overtime, travel and specialised clothing – it can be hard to sift through all the expenses you incur as a doctor or medical practitioner and find out what you can and can’t claim on your tax. Read More… |
| The government will no longer pay for “rental expense” holidays! The Government restricted travel deductions to stop residential property investors from using the tax system to pay for their holidays by claiming costs as a rental expense. Read More… |
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