Topics on work-related expense claims (2)

Understanding the New ATO Rules for Work-Related Expense Claims

The Australian Taxation Office (ATO) has introduced a new ruling, TR 2019/D4, focusing on work-related expense (WRE) claims. This draft ruling clarifies when an employee can deduct a work-related expense. Here's a breakdown of what you need to know in simpler terms:

1. Qualification for Deduction: To claim a work-related expense, it must meet two criteria:

   • It should be eligible for a deduction, usually under S8-1.
   • The employee must provide written evidence to substantiate the expense under Division 900.

2. Golden Rules for Deductibility: The ruling emphasizes three key rules:

   • Incurred: The expense must be paid or reimbursed by the taxpayer, not by someone else.
   • Deductible: It must be incurred in earning assessable income, meeting specific criteria outlined in S.8-1.
   • Substantiated: The expense needs to be backed up with written evidence, unless exceptions apply.

3. Employer Requirements: The ruling discusses whether an expense becomes deductible solely because the employer requires it. It's clarified that an employer's demands don't determine deductibility.

Tax Tip: Pay attention to employer requirements, but remember they don't automatically make an expense deductible.

Example Situations:

• Even if an employer doesn't require it, a worker attending a course related to their job can still claim education expenses.
• Conversely, some expenses might not be deductible despite employer instructions, like uniforms required by a restaurant or career development courses suggested by an employer.

This ruling provides clarity on what can be claimed as work-related expenses. It's essential to understand these rules to ensure compliance and maximize deductions while filing taxes.

For questions, reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment with our live calendar.