The ATO has been very clear that there will be more focus on work-related clothing and laundry expenses this tax time!
According to Assistant Commissioner Kath Anderson, around 6 million people claimed work-related clothing and laundry expenses last year with total claims of $1.8 billion. She has also stated that although many of these claims are legitimate they don't think that half of all the taxpayers would have been required to wear uniforms, protective clothing, or occupation-specific clothing. The ATO believes that a lot of the 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 not being able to explain the basis for the claim calculation.
Although there is $150 maximum claim limit, without having a receipt, the emphasis is that it was put in place by the ATO to reduce the record keeping burden and not to be used as a standard entitlement. This was very clear when they said around a quarter of all clothing and laundry claims were exactly $150.
The issue here is that far too many people are claiming for "normal" clothing such as suits or blank pants which their boss has told them to wear or clothing bought to wear only for work purposes. The ATO is clear that you can't claim a deduction for "normal/conventional" clothing.
She has also gone ahead and said that there are 3 golden rules to follow to ensure your deductions are correct. They are:
1. You have to have spent the money yourself and can't have been reimbursed.
2. The claim must be directly related to earning your income.
3. You need a record to prove it.
Further, in regards to laundry expenses for work uniforms the ATO has provided a calculation for reasonable basis for claims up to $150 being:
1. $1 per load if the load is made up of only work-related clothing; or
2. 50c per load if the you include other laundry items in the load
Ms. Anderson has warned that the ATO's technology and access to data is improving each year and taxpayers may be penalized for failing to take reasonable care.
The note to take here is that we cannot just claim $150 for work related clothing, it needs to be substantiated and we need to be careful that we do not claim for "normal/conventional" clothing.
If you would like more information please refer to the following ATO link.