No uniform, no deduction warns ATO

The Tax Office has warned that worked-related expenses will be put firmly under the microscope this year, with clothing and laundry claims top of its hit list.

“We have seen claims for clothing and laundry expenses increase around 20 per cent over the last five years. While this increase isn’t a sign that all of these taxpayers are doing the wrong thing, it is giving us a reason to pay extra attention,” Assistant Commissioner Kath Anderson said in a statement.

According to Ms Anderson, more than 6.3 million Australians claimed clothing and laundry expenses as part of their tax last year – worth close to $1.8 billion.

She is warning business owners and their employees that clothing and laundry expenses are not available to many people, and wrongly claiming these deductions can set you up for trouble.

“I heard a story recently about a taxpayer purchasing everyday clothes who was told by the sales assistant that they could claim a deduction for the clothing if they also wore them to work,” Ms Anderson said.

“This is not the case. You can’t claim a deduction for everyday clothing you bought to wear to work, even if your employer tells you to wear a certain colour or you have a dress code.”

Ms Anderson added: “For your clothing to be eligible for a deduction, it needs to be occupation-specific clothing, protective clothing or a uniform that is unique to [your company].”

Demonstrating her point, Ms Anderson provided an example that demonstrates the ATO’s rules on clothing deductions and how taxpayers are often caught out by the standard $150 deduction.

Case study:

We saw that a public servant made a number of claims, including $150 for work-related clothing, laundry and dry-cleaning.

When reviewing her claim, we asked for details of the expenses, including a letter from her employer confirming she needed to wear occupation-specific clothing or a uniform, details of how the laundry cost was calculated, and records to support her other expenses.

The public servant’s agent advised that the claim was a ‘standard claim of $150’ and could not provide any supporting evidence.

The claim was disallowed in full because there was no indication the public servant was required to wear a uniform or had spent the money she was claiming as a deduction.

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