Don’t get taken to the cleaners with laundry deductions

A timely warning at tax time for people wanting to claim laundry expenses.

The Australian Tax Office is concerned about the increasing levels of claims by tax payers for clothing and laundry expenses and will be “increasing attention, scrutiny and education” this tax season.

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.
“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.

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.

It is a myth that taxpayers can claim a standard deduction of $150 without spending money on appropriate clothing or laundry. While record-keeping requirements for laundry expenses are “relaxed” for claims up to the $150 threshold, taxpayers do need to be able to show how they calculated their deduction.

If you are unsure of what you can claim, contact your Tax Agent for advice and sleep easy this tax season.

Emma Baxter
Accountant
YOUtax