Despite wide publicity on the issue, the ATO has reminded taxpayers that it is increasing its attention, scrutiny and education on work-related expenses. Last year over 6.3 million people made a work-related expense claim for clothing and laundry expenses, totalling almost $1.8 billion. Claims for clothing and laundry expenses have increased by around 20% over the last five years.
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.
While over 1.6 million taxpayers claim a deduction of exactly $150 for clothing, laundry and dry-cleaning, the ATO expects many of these claims to be legitimate, although the results of random audits show that people are making mistakes.
For example, a public servant made a number of claims including $150 for work-related clothing, laundry and dry-cleaning. When reviewing her claim, the ATO asked for details of the expenses, such as a letter from her employer confirming she needed to wear occupation-specific clothing or a uniform, details of how the laundry cost was calculated, and records to support her other expenses. The public servant's tax agent advised that the claim was a "standard claim of $150" and could not provide any supporting evidence. The claim was disallowed in full because there was no indication the public servant was required to wear a uniform or had spent the money she was claiming as a deduction.