There has been a 20% increase in clothing and laundry claims in the past 5 years, and now, the ATO is watching.
Last year alone, 6.3 million Australians claimed clothing and laundry when they lodged their tax returns – but not all of them were entitled to claim what they had. Random audits highlighted a larger than expected number of incorrect claims. As such, the ATO is now watching carefully.
Somewhere along the line, a rumour was born that you can claim up to $150 on clothes you have purchased to wear to work, or clothing related expenses with no record of purchase. This is not true. ATO Assistant Commissioner Kath Anderson explains;
“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.
A record number of tax payers last year had their $150 claim for work-related clothing, laundry and dry cleaning rejected, because they could not provide evidence that they were required to wear occupation-specific clothing or had spent the money they were claiming as a deduction.
The three golden rules to abide by when claiming clothing expenses:
1. You must have spent the money yourself, and not have been reimbursed;
2. It must be directly related to your income; and
3. You can prove you made the purchase
There are specific rules relating to the type of clothing claim you are making such as:
- Occupation-specific clothing
- Protective clothing
- Work uniform
- Cleaning of work uniforms
If you are looking to claim clothing related expenses, ensure you have receipts for everything. Don’t get caught out with incorrect claims. Let Tax Arana take care of you and make sure your tax returns are completed and submitted correctly and on time.
For more information on what you can claim regarding laundry and clothing, visit the ATO website.