Work Related Deductions & Substantiation

“I just have to have the documentation to prove my work related deductions.” Wrong. If you don’t have the substantiation you don’t have a deduction. Subsection 900-15(1) states…

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To claim a work expense as a deduction you need to pass two tests. The first is the normal deduction rules and the second is you have written evidence. If you are a tax agent and someone who is an employee asks if they can claim a deduction for a work expense, your answer should end with “but only if you have written evidence that proves the expense. No substantiation, no deduction.”

Put simply, without paper and electronic evidence, that shows the name of the supplier, amount of the expense, what was purchased, when it was purchased and the date the document was produced, then the expenses is non-deductible.

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In a recent Ruling, the Commissioner covers the specific exceptions and relief from substantiation provided in Division 900.

The first exception is where the total of work expenses is $300 or less. However, to claim this exemption records must be kept showing how the amount of the claim was calculated – taxpayers cannot just claim $300 without some record of what they spent the $300 on.

The second exemption is where the total of laundry expenses is $150 or less. Just like before, records must be kept showing how the claim was calculated.

The third exemption is where an allowance is received for travel expenses or overtime meal expenses that is less than the amount considered reasonable by the Commissioner. While the normal record keeping rules do not apply, some form of records must be kept showing how the amount of the claim was calculated and that it was incurred.


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