2017/18 Tax Update: Employee denied deductions for work-related expense claims

Further to our earlier update advising the ATO would be increasing its scrutiny on work related expenses, the Administrative Appeals Tribunal has recently denied a taxpayer's deduction for work-related expenses.

The taxpayer was a photographer who had sought to claim travel expenses and other purported work-related expenses. At the time of the travel, he had been travelling with his family and, in the circumstances, the Administrative Appeals Tribunal determined that the travel expenses were primarily incurred for the purposes of a family trip or holiday and were therefore private and domestic in nature and, accordingly, non-deductible.

In addition, the taxpayer had relied on bank statements in the absence of invoices and receipts. The Administrative Appeals Tribunal noted that "evidence of the mere transfer of funds, be it by way of bank transfer or by any other means, is not sufficiently informative of the actual character of an expenses" and denied the deduction of those expenses.

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As the end of financial year approaches, additional care should be taken as you evaluate what expenses can be legitimately claimed as a deduction in your tax returns. If you are unsure about whether an expense can be claimed or what documentation you may require to evidence that expense, please do not hesitate to contact us.