Small business owners who write off their clothing and laundry expenses might face close scrutiny from the ATO at tax time.
ATO assistant commissioner Karen Foat said that while Australians don’t need receipts for claims up to $150, the tax office can ask people how they calculated their claim.
To be eligible to make a claim, a worker needs to be required to wear uniforms, protective clothing or occupation-specific clothing to earn their income.
Last year, about half of all taxpayers claimed for clothing and laundry expenses, which the ATO believed was a suspiciously high number.
“Last year a quarter of all clothing and laundry claims were exactly at the record-keeping limit. But don’t think that we won’t scrutinise a claim because we don’t require receipts,” Ms Foat said.
“Your workplace may expect you to wear clothing items like suits or black pants. But an official ‘dress code’ doesn’t qualify as a uniform and you can’t make a claim for normal clothing, even if your employer requires you to wear it, or you only wear it to work.”
Ms Foat said the ATO has sophisticated data analytics that can identify unusual claims by benchmarking taxpayer claims to others in similar jobs.
“We don’t ignore incorrect claims just because they are small, because small amounts add up,” she said.
“The ATO will be taking strong action this tax time to protect honest taxpayers who are claiming the right amount – no more and no less.”
Small business owners who want more information about work-related expenses can click here.