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Work related tax deductions

Work Related Deductions

Testing the boundaries of work-related expenses

Case study: The case in discussion involves an Australian Navy employee. It concerns the claim deduction this employee made for work-related clothing and other expenses.

The ATO denied this claim. The primary reason for its decline was that the cost claimed has very little to do with the taxpayer’s employment income. This question relating to the connection and necessity of the fitness equipment to perform duty was taken with the taxpayer at sea with the Navy and the Fitness leader on board.

Disallowing this claim, the ATO contended that the equipment was not a primary requirement for the performance of taxpayer’s duties in the Navy.

On further analysis, evidence collected from the Department of Defence indicated that the Navy usually provides all training equipment. Only under circumstances where some equipment may not be available can the member purchase an item if authorized and be reimbursed for it later. It was evident that the taxpayer involved has purchased equipment for the Navy’s benefit and not to derive his accessible income.

At this point, the taxpayer was only considered as an electronic technician in the Navy and not as a Fitness leader. So, even if the taxpayer had not purchased the items, he would still have made the same income, and hence the purchase was not made to benefit his own accessible income. This is a case that strongly suggests that the expenses must be firmly and strongly related explicitly to work when claiming work-related expenses.

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Note: This article contains general information and has not considered your particular circumstances. Before you decide based on this advice, you should consult with an adviser whether any action is appropriate to your financial circumstances. In addition, the examples provided on this site are only for illustrative purposes.


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