Employment, Personal Income Tax

Tax Deductions Claimed Without Receipts

(Last Update: April 2021)

8 Minute Read

We often receive enquiries from personal tax clients wishing to maximise their tax position, but the biggest problem is not maintaining a record of their expenses
however you can claim eligible tax deductions without receipts.  

In order to claim a tax deduction, an expense must be related to your source of income and substantiated by a record such as a tax invoice
however there are special rules relating to record keeping for work-related deductions which do not require substantiation.  

These work-related deductions are costs, paid or incurred in relation to earning your salary and wages. We will discuss the Income Tax Deductions Claimed Without Receipts.  

1. Small Total of Expenses

Had you paid for any expenses relating to your salary and wages? If so, you may have work-related deductions to claim. 

There is no requirement to substantiate your work-related deductions if the amount is less than $300 including your claim for Laundry Expenses (see below).

Small Tools, Equipment and other assets used exclusively or proportionately in your capacity as an employee would be allowable deductions.

Home Office Expenses in relation to maintaining a home office for self-study or remote work.

Books and Periodicals related to your field of work. 

Mobile Phone, internet and home phone expenses incurred in relation to your employment capacity. 

Overtime Meals paid while working overtime. 

Seminars, conferences and education workshops in relation to your field of work. 

Union Fees and Subscriptions to Associations in relation to your employment. 

Note if the total work-related deductions exceed $300, you need to substantiate all the expenses I.e not just the amount over $300. 

2. Laundry Expenses

Costs paid for Laundry in relation to ‘work related clothing’ can be claimable. This includes payments or costs incurred washing, drying or ironing clothes, dry cleaning.  

The ATO deems the following three categories of clothing as Work-related clothing: 

1. Occupation-specific Clothing
(Chef’s Hat, Medical Scrubs). 

2. Protective Clothing (Fire/Sun resistant, non-slip, safety-coloured and heavy-duty clothing). 

3. Work Uniforms (clothing that is unique to your organisation including your employer’s logo permanently). 

Ordinary or conventional clothing such as jeans and shorts used for exclusively for work are specifically non-deductible. 

The ATO deems the following rates a reasonable basis for calculating laundry in relation to your work-related clothing however only up to $150 threshold: 

• Tax Deduction of $1 per load of work-related clothing only, and 

• Tax Deduction of $0.50 per load of private and work-related clothing

Taxpayer should still keep details of the number of washes and type of clothes in each wash. 

3. Travel and Overtime Meal Allowance Expenses

Does your Employer pay you a Travel or Overtime Meal Allowance?

You can deduct an amount against a travel and overtime meal allowance paid by your employer if the amounts is reasonable without keeping receipts or a diary record.

Overtime Meal Expenses

Deductible Overtime Meals include the cost of Food and Drink consumed when working overtime.

If you consume meals on overtime, you could be eligible for a tax deduction however if you don’t keep receipts, the ATO deems an allowable deduction of $30.00 per meal for the 2019 Financial Year. 

Travel Expenses

Which Travel Expenses are eligible for claims without receipts? Costs of Accommodation, food and drink, incidentals when travelling away from home overnight. 

When Travelling Overseas, Accommodation expenses still need the normal substantiation such as retaining receipts and a travel diary when away from home for 6 or more nights in a row.

Eligible work-related travel could mean you can claim a tax deduction even if you don’t keep receipts or a diary record, the ATO allows a reasonable amount but this will vary depending on the destination and your annual salary.

 Example: A Taxpayer living in Melbourne was required to travel to Sydney for work and had a salary for less than $122,040.
 This would allow up to $319.05 per day (breakdown below) to be claimed without receipts.

• $188 for Accommodation, 

• $111.35 for Meals (Breakfast, Lunch and Dinner),

• $19.70 for Incidentals. 

But what if you had only spent $110 for Accommodation? You would be in higher refundable position if you chose to claim your accommodation under the ATO’s rate of $188 than you would be to claim under the actual method.  

4. Car Expenses

There are currently two methods of claiming your car expenses against your salary and wages with the first being the Logbook Method and the second being the Cents Per Kilometre method.

1: Logbook Method:
 This method allows you to claim a portion of your car expenses such as Fuel, Registration, Repairs and Depreciation based on a pattern of use established by your Logbook record. 

2: Cents Per Kilometre: 
Calculated using a reasonable estimate of your work kilometres travelled, multiplied by the ATO’s current rate (2019: 68 cents) per kilometre.
This rate includes an estimate of the running cost such as fuel, registration, servicing and depreciation. 

There is no requirement to substantiate but the business/work kilometres travelled need to be reasonable.  

Question: Would it seem reasonable for a Fast-Food worker to claim 5,000 work kilometers travelled? Most would agree this is unlikely however if for example the worker was also required by his employer to collect inventory from other stores and were located in rural locality which may suggest a more reasonable scenario.

How long should you keep your records? 

This depends on the type of record such as PAYG Payment Summaries must be retained for two years.

Work-related deductions supported under the above reasonable basis must be kept for 5 years from the date of lodgement. 

Care should be taken to ensure that the correct period is identified, for example, a record relating to a purchase of shares will generally be required to be kept from the date of purchase until 5 years after the sale has occurred. 

What happens if I don’t keep adequate records and I am audited? 

The ATO may disagree with your original claim, your assessment may be amended to disallow the tax deduction. 

Should the reason for disallowed claim be due to lack of records, the penalty could be as much as 20 units which is currently $170 per unit ($3,400 total) and would be due to be paid in full within 14 days following receipt of the notice. 

The above penalty would also not include any amounts payable in relation to the disallowed tax deduction resulting from the ATO audit. 

 John, a Fast Food worker, receives a tip from his co-workers to maximise his tax refund by claiming car expenses under the Cents per Kilometre method as they “won’t check anything”.  

• John claims 5,000 kilometres in his 2019 Income Tax Return resulting in a tax deduction of $3,400. 

• Based on his marginal tax rate of 19% + Medicare Levy, he receives $1,173 as a cash refund. 

• Subsequently the ATO identifies John’s income tax return as “higher” compared to other Fast Food workers and audits his work-related car expense. 

• The ATO finds his basis for claiming the Cents per Kilometre is unreasonable. He does not have any records or information to reasonable support his claim. 

• As a result of their findings, the ATO issues an amended assessment reversing the claim for Cents per Kilometre. 

Despite the above hypothetical scenario, John could find himself having to urgently find $1,173 to repay the ATO, not including any penalties for making no effort to keep records or failure to take care with his return.

As the Australian Tax system is a self-assessed it is prudent that your Income Tax Return is prepared correctly and highly recommend consulting with a registered tax agent to assist with filing your 2019 Income Tax Return.

Disclaimer: This page contains general information only and has been prepared without taking into account your circumstances, objectives, or financial situation.

We recommend that you consider whether this information is appropriate and always seek professional advice in relation to your circumstances.

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