The Australian Taxation Office will target false clothing and laundry work-related expense claims this Tax Time. In 2018, around six million people claimed work-related clothing and laundry expenses totalling nearly $1.5 billion.
Assistant Commissioner Karen Foat said although many Australians can claim clothing and laundry expenses, it's unlikely that half of all taxpayers are required to wear uniforms, protective clothing or occupation-specific clothing to earn their income.
"You must have spent the money you are claiming on buying or cleaning eligible clothes. While you don't need receipts for claims up to $150, we can ask how you calculated your claim. We may even ask your employer if you have a required uniform," Ms Foat said.
"Last year a quarter of all clothing and laundry claims were exactly at the record-keeping limit. But don't think that we won't scrutinise a claim because we don't require receipts," she said.
The ATO is also concerned about the number of people claiming deductions for conventional clothing. Some retail workers claim normal clothes because their boss told them to wear a certain colour, or items from the latest fashion clothing line. Others think they can claim normal clothes because they only wear them to work.
"Your workplace may expect you to wear clothing items like suits or black pants. But an official 'dress code' doesn't qualify as a uniform and you can't make a claim for normal clothing, even if your employer requires you to wear it, or you only wear it to work."
The ATO's sophisticated data analytics is constantly improving and can identify unusual claims by comparing taxpayer claims to others in similar occupations.
"Our data analytics will flag claims that are significantly above the average in occupations that regularly claim for laundry, like chefs or security guards. It will also flag claims made by people in occupations that usually don't claim, like office workers," Ms Foat said.
"We don't ignore incorrect claims just because they are small, because small amounts add up. No matter how small, it's not ok to expect other Australians to pay for your dodgy claims. The ATO will be taking strong action this tax time to protect honest taxpayers who are claiming the right amount - no more and no less."
Taxpayers who can't substantiate their claims should expect to have them refused, and may be penalised for failing to take reasonable care when submitting their tax return.
For more information about work-related expenses, visit ato.gov.au/deductions
How to calculate your laundry claim
Claiming $150 or less for clothing and laundry (and less than $300 for work-related expenses in total)?
- Make sure your claim is for eligible clothing (occupation-specific, protective or uniform). Remember, you can't claim for plain or conventional clothing, even if your employer requires you to wear it and even if you only wear it to work.
- Calculate your claim for washing, drying and ironing at:
- $1 per load if the load is made up only of work-related clothing
- 50c per load if you include other laundry items
- You may be asked to demonstrate how often you wore your eligible clothing (for example, evidence that you worked three shifts a week for 48 weeks in a year)
Case studies - Clothing claims hung out to dry
A retail assistant working in a fashion store claimed more than $700 for store brand clothing she had purchased and was expected to wear to work. As the clothing was conventional she was not able to eligible to claim a deduction, and her claim was disallowed.
A stockbroker claimed the cost of purchasing suits which he regarded as his 'work uniform'. While many workplaces have a written or unwritten dress code, his suits are considered conventional or everyday clothing and his claim was refused.
Conventional clothing such as black trousers and a white shirt, or a suit, are not sufficiently distinctive or unique to your employer. Clothing in a specific colour or brand isn't enough to classify clothing as a uniform.
