The ATO is cracking down on individuals making unsubstantiated and exaggerated claims for work-related clothing and laundry expenses.

According to the ATO, clothing claims went up nearly 20% over the last 5 years and last year around 6 million people claimed expenses totalling nearly $1.8bn. In addition, around a quarter of all clothing and laundry claims were exactly $150, which is the threshold that requires taxpayers to keep detailed records.

Assistant Commissioner Kath Anderson said: “[we] are concerned that some taxpayers think they are entitled to claim $150 as a ‘standard deduction’ or ‘safe amount’, even if they don’t meet the clothing and laundry requirements… the $150 limit is there to reduce the record-keeping burden, but it is not an automatic entitlement for everyone”.

To assist in weeding out dodgy work-related clothing expenses and laundry expenses this tax time, the ATO will be using sophisticated analytics on every tax return to identify unusual claims. This includes comparing taxpayers to others in similar occupations earning similar income. If a “red flag” is raised by the analytics, the ATO will investigate the amounts claimed, which may be as simple as checking whether you are required to wear uniforms, protective clothing, or occupation specific clothing with your employer. The ATO warns those taxpayers who are unable to substantiate their claims should expect to have them refused, and may be penalised for failing to take reasonable care.

So what can you claim?

Purchase of clothing items

You can only claim a deduction for work-related clothing if it is:

• A uniform;
• Protective clothing; or
• Occupation-specific clothing;

that you are required to wear to earn your income.

You must also be able to show that you have spent the money, and that the clothing was not provided by, paid for by or reimbursed by your employer.

Uniforms

Uniforms are only eligible if they are:

• A compulsory uniform; or
• Items of clothing with your employer’s logo on them.

General work clothing such as suits, pants or shirts cannot be claimed as work-related clothing. This is the case even if you have been told by your boss to wear a certain colour or design (ie white shirt and/or black pants), or items from the latest fashion clothing line, or if you bought the item specifically for work and do not wear it anywhere else.

Protective clothing

Protective clothing includes things such as:

• Safety-colour vests
• Non-slip shoes (in certain work environments)
• Rubber boots
• Steel-capped boots
• Gloves, overalls and heavy-duty shirts and trousers.

Occupation-specific clothing

This includes clothing that is specific to your occupation, is not everyday in nature and allows the public to easily recognise your occupation – such as the checked pants a chef wears.

You can’t claim the cost of purchasing or cleaning clothes you bought to wear for work that are not specific to your occupation, such examples as a bartender’s black trousers and white shirt, a business person’s suit or a swimming instructor’s swimwear.

Laundry of clothing

In order to claim a deduction for laundry of work clothing, the clothing items must meet the above criteria (ie. be uniform, protective or occupation specific).  If the clothing items are eligible, you can claim a deduction for the cost of washing, ironing and drying the clothing (including dry-cleaning).

You must have evidence (such as a diary) and receipts if the amount being claimed is greater than $150, or if your total work-related deductions exceed $300.

If no written evidence is required, you are able to work out your deduction based on a reasonable amount set by the ATO:

• $1.00 per load for only works related items; or
• $0.50 per load for a mix of work related and personal items.

You may be required to show how often you wore the clothing including evidence of number of shifts and weeks worked per year.

Want to find out more?

Are you required to wear work-related clothing and not sure how to calculate a claim? Or maybe you have laundry expenses for work-related clothing and are unsure what the reasonable amount to claim is? We can help you navigate the treacherous waters this tax time.