Clothing deductions hung out to dry

August 2018

The Australian Taxation Office is closely examining work-related clothing and laundry expense claims of taxpayers submitting their 2017-18 tax returns.

It's an oldie but a goodie, however, the ATO is zeroing in on work-related clothing and laundry expenses in the 2017-18 tax returns of Australians.

With claims up nearly 20% over the past five years, the ATO is looking for mistakes and deliberate over-claiming.

Common mistakes and eligibility

Common mistakes 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.

 "Around a quarter of all clothing and laundry claims were exactly $150, which is the threshold that requires taxpayers to keep detailed records. We are concerned that some taxpayers think they are entitled to claim $150 as a 'standard deduction' or a 'safe amount', even if they don't meet the clothing and laundry requirements," Assistant Commissioner Kath Anderson said.

While this particular announcement focuses on clothing related expenses, it has been clear for some time now that the ATO is paying very close attention to work related expenses in general.

As with any deduction, any claims for work-related clothing and laundry expenses should be substantiated with evidence such as receipts or other documentation. Even small deduction amounts have come under scrutiny from the ATO and have been challenged because of lack of evidence to support the claim.

What can I claim?

You can only claim a deduction for the cost of buying and cleaning:

  • Occupation-specific clothing - for example, the checked pants a chef wears.
  • Protective clothing – fire-resistant and sun-protection clothing, safety-coloured vests, non-slip nurse's shoes, rubber boots for concreters, steel-capped boots, gloves, overalls, and heavy-duty shirts and trousers, and overalls, smocks and aprons you wear to avoid damage or soiling to your ordinary clothes during your income-earning activities, and
  • Unique, distinctive uniforms – clothes that are designed and made for the employer and not publicly available - like shirts with the company logo.

However, just because your employer requires you to wear a suit, it does not mean you can claim the cost of the suit or its cleaning.

If you are claiming any work-related clothing expenses, ensure you retain your receipts and can demonstrate that it is a legitimate expense.

Talk to us on 02 9957 4033 for more information.

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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