ATO sets target on Clothing and Laundry Claims

Every tax season the ATO has a specific set of targets, and this year it’s work-related clothing and laundry expenses. The Australian Taxation Office (ATO) has warned individuals and business owners that clothing and laundry expenses are not available to many people. In addition, incorrect claiming of these deductions can cost you trouble.

According to the taxation office, 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.

Here are some examples:

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.

But you can’t claim everyday items you wear that might offer you some protection – like closed in shoes.

A uniform clearly identifies you as being part of a particular organisation.

If you want to make sure on what expenses you can claim, you may check the ATO website for reference.

What you need to do?

If you incurred work-related clothing and laundry expenses and wish to claim these as a deduction. You need to have evidence such as receipts, invoices or other written evidence such as diary records. For laundry expenses not exceeding $150, an explanation of the basis for working out the claim is needed. The reason the ATO will be paying more attention to the deductions being claimed and what people mistakenly believe as a “standard deduction” is due to the following:

“Last year around six million people claimed work-related clothing and laundry expenses. With total claims adding up to nearly $1.8 billion and over 1.6 million taxpayers claim a deduction of exactly $150. We expect many of these claims to be legitimate but the results of our random audits show that people are making mistakes” ATO assistant commissioner Kath Anderson said in a statement.

She says that it’s obvious that individuals who make this claim this year can expect the tax office to come asking for evidence of why they needed to make it.

So for assurance purposes, it’s better to be ready with your evidence to avoid any further actions by the tax office. If you don’t have any, it’s better not to claim it. The penalty might be higher than the benefit you will get when you claim incorrect deductions.

If you need additional information on the above, you may contact us on 02 4732 3844 or visit www.judgeaccountants.com.au