CATS4TAX – Tax Tip #4
In order to claim a deduction:
You must have spent the money and not have been reimbursed.
The expenditure must be related to your income earning. It must not be domestic/private in nature.
You must have a receipt to prove your claim.
With regard to the second point conventional clothes are not deductible ie. Clothes that can be readily purchased by members of the public. Deductible clothing includes; occupation specific uniforms ie. Police uniforms, banking staff uniforms etc or logo uniforms which are part of a corporate wardrobe. Clothes purchased from retail outlets & only worn to work do not qualify. If work clothing is deductible, you may claim the purchase cost, embroidery of logo, repairs & dry-cleaning with the substantiation of receipts. Washing the items can also be claimed using the commissioner’s formula.
Taxpayers have asked if they can claim their Peter Alexander pyjamas as a work uniform during the COVID lockdown. This made me laugh, but unfortunately the answer is no. Pyjamas are not a registered work uniform & are also private in nature. Also slippers cannot be claimed as protective footwear. An example of protective footwear is steel cap work boots.
Where a purchase has both a business & private use eg. Home computer, the expense must be apportioned for the private usage.
Bank statements are insufficient evidence for a claim. Evidence requires a date, description, supplier name & amount, so a receipt/invoice is appropriate substantiation. Receipts fade over time, particularly those printed on thermal paper. If the Tax Office cannot read a receipt, they remove it from your claim. Penalties may also apply. It is best to photocopy receipts or use the ‘My Deductions’ app to save a copy.
You need to keep accurate and complete records to support your claim as the Tax Office may call on you to substantiate your claim up to five years after you lodge. Penalties may apply if you don't have the correct records to substantiate your claim.
Items for which you don’t receive a receipt eg. Tolls, gold coin donations etc. can be substantiated using diary records.
In order to claim for motor vehicle business use, you must keep a record of: the date of travel, purpose of the travel & kilometres travelled. You can claim up to 5000 km using the cents per kilometre method & if you travel more than 5000 km you must use the log book method. You must keep receipts relating to all expenditure incurred on your car. Travelling to & from work (commuting) is not claimable, as it is considered a private expense.
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