Pull up your socks, but don’t claim them

Wangaratta Chronicle - North East Regional Extra - - News -

THE Aus­tralian Tax­a­tion Of­fice (ATO) is in­creas­ing at­ten­tion, scru­tiny and ed­u­ca­tion on work-re­lated ex­penses this tax time.

As­sis­tant Com­mis­sioner Kath An­der­son said that last year over 6.3 mil­lion peo­ple made a work-re­lated ex­pense claim for cloth­ing and laun­dry ex­penses, to­talling al­most $1.8 bil­lion.

“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,” she said.

Ms An­der­son said com­mon mis­takes the ATO has seen in­clude peo­ple claim­ing in­el­i­gi­ble cloth­ing, claim­ing for some­thing with­out hav­ing spent the money, and not be­ing able to ex­plain the ba­sis for how the claim was cal­cu­lated.

“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,” she said.

“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 the or­gan­i­sa­tion you work for,” she said.

Ms An­der­son said it is a myth that you can claim a stan­dard de­duc­tion of $150 with­out spend­ing money on ap­pro­pri­ate cloth­ing or laun­dry.

She said that while record keep­ing re­quire­ments for laun­dry ex­penses are re­laxed for claims up to this thresh­old, tax­pay­ers do need to be able to show how they cal­cu­lated their de­duc­tion.

“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.”

Ms An­der­son said there are three golden rules to fol­low which will help tax­pay­ers to get their de­duc­tions right.

“One – you have to have spent the money your­self and can’t have been re­im­bursed, two – the claim must be di­rectly re­lated to earn­ing your in­come, and three – you need a record to prove it,” she said.

“The myDe­duc­tions tool in the ATO app is also a great way to make keep­ing records for your de­duc­tions eas­ier.

“If you start us­ing it now, next tax time will be a breeze be­cause you can send your de­duc­tions to your tax agent or up­load them di­rectly to myTax.”

It is im­por­tant to re­mem­ber, whether you lodge your own tax re­turn or go to an agent, you need to be aware of what you can and can’t claim.

If you use an agent, you are still re­spon­si­ble for mak­ing sure your de­duc­tions are cor­rect.

For more in­for­ma­tion about work-re­lated ex­penses, visit ato.gov.au/de­duc­tions and to find out about myDe­duc­tions, visit ato. gov.au/myde­duc­tions.

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