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The $150 tax mistake landing 6 MILLION Aussies in trouble

·2-min read
A composite image of pedestrians in Sydney, Town Hall and a woman on the phone while looking at a document. Images: Getty
This common tax claim could land 6 million Australians in big trouble. Images: Getty

The Australian Tax Office is taking aim at Australian taxpayers making illegitimate workplace claims.

The illegitimate claims for work-related clothing and laundry expenses total nearly $1.5 billion, with six million people fudging their tax returns.

That figure is around half of all taxpayers, Assistant Commissioner Karen Foat said, arguing it’s unlikely that many people are required to wear occupation-specific clothing at work.

“You must have spent the money you are claiming on buying or cleaning eligible clothes. While you don’t need receipts for claims up to $150, we can ask how you calculated your claim. We may even ask your employer if you have a required uniform,” Foat said.

“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,” she added.

She said retail workers may claim the clothes because their employer requires they wear a certain colour or range, while office workers may believe they can claim them because they only wear them into the office.

“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.”

She said the ATO will flag claims made for clothing expenses by office workers, and also scrutinise overly large claims made by those who do need to purchase occupation-specific clothing, like chefs or construction workers.

And, she added, while Australians may believe they can claim a small amount back, the amount adds up.

“No matter how small, it’s not ok to expect other Australians to pay for your dodgy claims. 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.”


What can happen?

The ATO will likely disallow the claim, but workers may also be hit with penalties.

An advertising manager who claimed $1,845 on her clothing and laundry expenses for clothing purchased at fashion stores argued to the ATO that she was required to wear those clothes to company functions.

However, the spending was deemed non-deductible and the worker’s claim was disallowed and she was also served a penalty for failing to take reasonable care.

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