Substantiation of work-related expenses

The ATO had initially held that the taxpayer was not entitled to claim a range of work-related expenses that had been shown as deductions in his tax returns.

A number of problems with these claims became apparent during the course of this case, some of which are summarised below:

  • The taxpayer indicated that substantiation of many of the expenses claimed was not available due to a relationship breakdown
  • The taxpayer conceded that he had mistakenly attempted to claim some capital items
  • The taxpayer could not prove that travel expenses were related to his work
  • The taxpayer conceded that no uniform was required for his work despite claiming clothing expenses
  • Self-education expenses were claimed but the taxpayer could not provide any documents substantiating either the expenses claimed or that the courses were actually held
  • Claims for deductions in relation to occupancy expenses for the taxpayer’s residence were included, but there was no evidence that the property was used to carry on a business
  • The taxpayer had attempted to pass off a work diary from the 2013 year as relating to the 2014 year
  • The taxpayer had failed to include cash allowances in his tax return

As well as confirming that most of the expense claims should be disallowed, with the exception of some very limited claims which could actually be substantiated, the Tribunal also considered whether the discretion in Subdivision 900-H ITAA 1997 (about relief from the effects of failing to substantiate) could be exercised. The Tribunal indicated that the taxpayer could not rely on this discretion as the facts of the case did not suggest that the taxpayer was incapable of organizing their affairs following the marriage breakdown.

Any concerns over this issue? Come and speak to us with any work-related expenses deduction inquires you may have Tax Ideas Accountants & Advisers   Tel: (02) 8318 1545


Posted in Case Studies, News & Events.