November Newsletter – AAT rejects taxpayer’s claims for work-related expenses

In a recent decision, a taxpayer’s claims for various work-related expenses were rejected by the Administrative Appeals Tribunal (AAT).

The taxpayer was employed as a traffic controller in the 2020 income year.  In his income tax return for that year he claimed $9,800 in work-related deductions, including for car expenses (using the cents per km method), travel expenses, clothing expenses and self-education expenses, as well as supplemental deductions.

The ATO disallowed all of the deductions, and the taxpayer then appealed to the AAT.

The AAT agreed that all of the taxpayer’s claims for work-related expenses should be disallowed, largely because the taxpayer failed to substantiate these expenses, whether by way of receipts/bank statements or any other form of evidence.

Also, in relation to the claim for car expenses, the AAT noted that the taxpayer had been using company vehicles at least some of the time.

The AAT also noted that there had generally been “no attempt to apportion work use against private use. . . Even if I could satisfy myself of some apportionment, the amount would likely be so insignificant that it would not result in any real deduction in taxable income.”

To claim a deduction for work-related expenses

Documentation published by the ATO gives the following statement when working out if you can claim a work-related expense;

To claim a deduction for work‑related expenses:

• you must have spent the money yourself and weren’t reimbursed
• the expense must directly relate to earning your income
• you must have a record to prove it (usually a receipt)

If the expense was incurred for both work and private purposes, you only claim a deduction for the work-related use.

You can’t claim a deduction if:

• you don’t keep records of your work-related expenses
• someone else (such as an employer) pays for the expense or reimburses you for it.

To find out which expenses you can and can’t claim as an office worker you can use the links below to the ATO information pages;

• Office worker expenses A-F
• Office worker expenses G-O
• Office worker expenses P-S
• Office worker expenses T-Z

If you need help to work out if you can or can’t claim a deduction, please feel free to give us a call.

Note: The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.

Publication date: 14 November 2024