Last year, a fashion industry manager was also denied her claim of more than $10,000 in luxury-branded clothing and accessories, which she said had been bought to be well-presented at work, and to attend events, dinners and functions. “The clothing was all conventional in nature and was not allowed,” the ATO said.
While Thomson acknowledged people could make mistakes, he said most could be avoided with “a little time and effort”.
The ATO’s three golden rules when claiming work expenses
- You have spent the money yourself and were not reimbursed.
- The expense relates directly to your job or the income that you earn.
- The expense is not private in nature (or you need to make sure to claim deductions only for the work component).
“Work-related expenses must have a close connection to your income-earning activities, and you should be prepared to back it up, with records like a receipt or invoice,” he said, noting travel to and from work and childcare costs could not be claimed. “When in doubt, look for guidance on the ATO website or speak with your registered tax agent.”
The latest statistics from the ATO show that in 2021-22, work-related expenses continued to be the single biggest contributor to the tax gap: the difference between the amount the Tax Office expects to collect if every taxpayer were fully compliant with the law and the amount that is actually collected. In 2021-22, the gap was a shortfall of $948 million.
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While there are many wild claims, Thomson says one in particular sticks with him.
“Last year, we had someone that worked in a laundromat that tried to claim about $30,000 on their overseas safari trip as a work-related expense,” he said. “Obviously, that one was a personal expense.”
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