With the end of financial year behind us, if you haven’t already lodged your income tax return, you may be considering your claims and deductions.  Now, if you are a superstar at record keeping, no doubt you have been filing receipts and invoices throughout the year, in preparation for the processing of your return.  If not, it is really important to understand that you may be asked to provide supporting documentation to verify the amounts included in your tax return. 

This week, we will cover work-related laundry expenses.

Substantiation

The ATO Commissioner has advised, “If a taxpayer relies on the exception from substantiation, they may still be required to show the basis for determining the amount of their claim, that the expense was actually incurred, and that it was for work-related purposes. What counts as evidence for a claim subject to the substantiation exception will vary according to individual circumstances and the nature of the expense.”

Work-related clothing, laundry and dry-cleaning expenses

If you claimed the cost of a work uniform that is distinctive (such as one that has your employer’s logo permanently attached to it), it must comply with one of the following conditions;

• a non-compulsory uniform that your employer has registered with Aus Industry (check with your employer if you are not sure); or
• a compulsory uniform. This can be a set of clothing or a single item that identifies you as an employee of the company. Wearing these items must be strictly enforced and specified in the employer’s policies, making it compulsory to wear these items of clothing (colors, style and type), at work. The compulsory uniform may include shoes, stockings, socks and jumpers where they are an essential part of a distinctive uniform.

You can also claim the cost of:

• Occupation-specific clothing: such as the checked pants a chef wears when working, which allows people to easily recognize that occupation and which are not for everyday use.
• Protective clothing and footwear: to protect you from the risk of illness or injury, or to prevent damage to your ordinary clothes, caused by your work or work environment. This may include fire-resistant clothing, sun protection clothing, safety vests, non-slip nurse’s shoes, steel-capped boots, gloves, overalls, aprons, and heavy-duty shirts and trousers (but not jeans). You can claim the cost of protective equipment, such as hard hats and safety glasses as other work-related expenses.

You can also claim the cost of renting, repairing and cleaning any of the above work-related clothing.

Laundry Expenses

Claims for laundry expenses that do not exceed $150 can be based on a cost of $1 per load if you wash only your work clothes and $0.50 cents per load if you wash other clothes together with your work clothes.

In order to make a claim for laundry in this manner, the clothing being laundered must be a uniform, occupation specific clothing or protective clothing.

You cannot claim the cost of purchasing or cleaning plain clothes, such as black trousers, white shirts, suits and stockings, even if your employer requires you to wear them.

Substantiation Requirements:

In order to substantiate your claim, you may be asked to provide the following documentation:

• a list of all items included in your claim
• an explanation as to how each item on the list was an expense incurred in the course of earning your assessable income
• a letter from your employer confirming that:
  • the clothing was part of a compulsory work uniform, or
  • the clothing was part of a non-compulsory work uniform registered with Aus Industry, or
  • you are required to wear protective clothing at work
• written evidence for all of your expenses, cross-referenced to the relevant item on the list, except for a laundry claim that does not exceed $150
• if your laundry claim does not exceed $150 and you do not have written evidence, provide details of how you calculated your claim.

If you have any questions or need advice and clarity specific to your business, feel free to contact Semmens & Co on 03 8320 0320 for a free consultation.