The ATO is particularly concerned about taxpayers claiming for things they are not entitled to, such as private trips, trips they didn’t make, and car expenses that their employer paid for or reimbursed.
Each year many taxpayers claim the maximum amount under the cents-per-kilometre. The ATO is concerned that some taxpayers mistakenly believe that this is a “standard” deduction they are entitled to, without needing to provide any evidence of having travelled that distance, or even having undertaken any travel at all.
ATO TARGETING WORK-RELATED CLOTHING AND LAUNDRY EXPENSES
The ATO has announced that it will be closely examining claims for work-related clothing and laundry expenses this tax time as part of a broader focus on work-related expenses.
The ATO is particularly concerned about taxpayers claiming for things they are not entitled to, such as ineligible clothing, claiming for something without having spent the money, and not being able to explain the basis for how the claim was calculated.
Taxpayers are claiming everyday items they wear that might offer some protection – like closed in shoes and normal clothes that they happen to wear to work, like a suit or black pants.
Taxpayers think they can claim normal clothes because their boss told them there is a certain dress code in their workplace. Or in the case of some retailers, employees are required to wear items from the latest line. Others think they can claim normal clothes because they only ever wear those clothes to work. You can’t claim a tax deduction for normal clothing that you wear to work, even if your boss told you to wear it or you only wear it to work.
Taxpayers can legitimately claim work related clothing and laundry if they were required to wear either a uniform that’s unique and distinct to their employer, protective or occupation specific clothing.
Occupation specific clothing is something that clearly identifies you as being in that occupation, like a chef’s checked pants.
Protective clothing includes things like high-vis vests, steel capped boots or overall or aprons that protect your normal clothes.
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. The $150 limit 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 the ATO how you calculated your claim.