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. It is important to note that even where substantiation is not required, the ATO can still ask how the claim has been calculated and are now going to the extent of asking employers if their employees have a required uniform.
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). 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. The $150 limit is there to reduce the record-keeping burden, but it is not an automatic entitlement for taxpayers. 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 the ATO how you calculated your claim.
Claims over $150 have to be substantiated with receipts for expenses.