ATO targeting clothing and laundry claims
As we are coming up to “tax time” the ATO is again being active in announcing the areas in individual tax returns which it will be focusing on. One area the ATO has indicated it will be keeping a close eye on this year is deductions claimed for clothing and laundry expenses.
The increased focus is based on data for the 2018 income year which indicated that nearly half of all taxpayers claimed work-related clothing and laundry expenses, which are only allowed for uniforms, protective clothing or occupation-specific clothing.
Further, as almost a quarter of these claims were for precisely the amount allowed without requiring full substantiation, the ATO is concerned that taxpayers are claiming ‘standard’ deductions without actually incurring the expenses.
It is important to note that even where substantiation is not required, the ATO can still ask how the claim has been calculated and are now going to the extent of asking employers if their employees have a required uniform.
If your clients are claiming deductions for clothing and laundry expenses, it would be a good idea to review the rules in this area and to confirm that clients do have eligible expenses and evidence to support deductions that are being claimed.