Freeman / A uniform approach to tax deductions

LIBBY worked in a retail store over Christmas and came to see me because she was hearing differing stories about what she could and couldn’t claim as deductions in her tax return.

Gail Freeman.

For example, her boss told her that her laundry costs we deductible.

“You can, but not if they’re street clothes,” I told her.

“In order to be classed as uniform, claiminable clothes – for laundry or purchase – must either be occupation specific or be required to have a logo and you must be required to wear them at work. Without a logo you do not have a claim. You also can’t claim the laundry of your clothes.

“The Australian Taxation Office (ATO) has done a lot of research and audits recently and has discovered that there have been many over-claims in the past for clothing and laundry.

“Under the law, you can claim up to $150 a year for laundry without substantiation. The ATO view is that people think they can claim $150 a year for washing work clothes whether or not they are required to wear them. This is not the case. You have to be able to substantiate any claim you make.

“So, firstly, you have to be required to wear a uniform and then you have to be required to wash it. The ATO even puts out a calculation method for claiming laundry costs. As you do not wear a uniform as defined you won’t be able to claim a laundry deduction.”

Libby said that over the coming financial year she would be nursing and, in that situation, her employers would require her to buy a uniform and launder it. What about that situation?

“If your total expenses including laundry are less than $300 then, again, you don’t have to substantiate the expenses but you have to have spent the money, you can’t just claim $300 with no relevant expenditure,” I advised her.

“However, you are likely to be claiming more than $300 so you will need to keep receipts to substantiate your claims. But remember, you can’t claim shoes or black pants that you might wear to work and are not part of the uniform.”

“Amongst other items you can claim are your union and professional registration fees. However, if you pay a joining fee when you join a new association that fee is not deductible you can only claim the annual membership fee. You may also have some technical or professional journals that you can claim and, again, you will need to keep receipts. “You may also be able to claim travel between two work sites on the same day, but you cannot claim home-to-work travel.

“You don’t need to keep a logbook if your claim is for less than 5000 kilometres, but you do need diary notes of your travel so you can prove that you needed to do the trips if asked.

Libby left my office confident and prepared to do her tax returns for this year and next.

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