18 Jul ATO putting clothing claims through the wringer
ATO putting clothing claims through the wringer
A focus on work related clothing expenses this Tax Time will see the ATO “more closely examine taxpayers whose clothing claims donâ€™t suit them”.
According to Assistant Commissioner Kath Anderson – around 6 million people claimed work related clothing expenses last year. With total claims adding up to nearly $1.8 billion.
“While many of these claims will be legitimate. We donâ€™t think half of all taxpayers wear uniforms, protective clothing, or occupation-specific clothing.â€
With clothing claims up nearly 20% over the last five years, the ATO believes a lot of taxpayers are either making mistakes or deliberately over-claiming.
Common mistakes include:
- people claiming ineligible clothing,
- claiming for something without having spent the money, and;
- being unable to explain the basis for how the claim was calculated.
What the ATO has to say aboutÂ work related clothing expenses:
â€œAround a quarter of all clothing and laundry claims were exactly $150. Which is the threshold that requires taxpayers to keep detailed records. We are concerned that some taxpayers think they are entitled to claim $150. That this is a â€˜standard deductionâ€™ or a â€˜safe amountâ€ Ms Anderson said.
â€œJust to be clear, the $150 limit is there to reduce the record-keeping burden. It is not an automatic entitlement for everyone. While you donâ€™t need written evidence for claims under $150.Â 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.â€
Ms Anderson said the ATO also has conventional clothing in its sights this year. â€œMany taxpayers do wear uniforms, occupation-specific or protective clothing and have legitimate claims”.Â However, far too many are claiming for normal clothing, such as a suit or black pants.Â Some people think they can claim normal clothes because their boss “told them” to wear a certain colour or items from the latest fashion clothing line.Â Others think they can claim normal clothes because they bought them just to wear to work.
â€œUnfortunately they are all wrong â€“ you canâ€™t claim a deduction for normal clothing, even if your employer requires you to wear it, or you only wear it to workâ€.
Work related clothing expenses aren’t the only things being investigate – car claims are also in the ATO’s sights.Â
Source: National Tax & Accountants’ Association Ltd.