What Receipts/Invoices do I need?

It’s tax time again, particularly for individuals. It is always good to remind ourselves of what receipts and invoices (called substantiation in the tax law) that you must have. Note that this article focuses on individuals who are not conducting a business.

The first thing (although basic) is that you must have ‘incurred’ the expense during the period 1 July 2023 to 30 June 2024 if you want to claim a deduction for the expense in your tax return for the year ended 30 June 2024. The tax law uses the word ‘incurred’ to identify what can be claimed. This does not mean (only) paid. It can include where you have received an invoice for something dated during the year ended 30 June 2024 and the amount has not been paid as at 30 June 2024.

The tax law says that a valid substantiation document is from the supplier of the goods or services and must set out:

• • The name or business name of the supplier; and
  • The amount of the expense, expressed in the currency in which it was incurred; and
  • The nature of the goods or services; and
  • The day the expense was incurred; and
  • The day it was made out.

It is always best to have a receipt or invoice for work-related expenses you want to claim. Nevertheless, this is not always required under the tax law.

If your work-related expenses claim is $300 or less, you do not need to have receipts or invoices to prove to the Tax Office you spent the money. If your claim is greater than $300, you must have sufficient evidence to prove every dollar of the claim.

Broadly, bank statements and credit card statements are not enough for the Tax Office. This is because these statements are not issued by the supplier of the item that you purchased and do not contain all of the information that the substantiation law requires. In disputes with the Tax Office over whether you have actually incurred an expense, bank and credit card statements can be useful. However, it is recommended that you do not rely on these.

Expenses incurred in relation to overtime meal allowances can also be deductible without substantiation. If you received an overtime meal allowance from your employer that was paid under an industrial law, award or agreement and you spent less than what the Tax Office considers a reasonable amount, you do not need a receipt. Nevertheless, if you have a receipt, all the better.

You may be able to claim the costs of laundry, dry-cleaning and repair of certain types of work-related clothing. This must be occupation-specific (not conventional), protective, a compulsory uniform or a registered non-compulsory uniform.

With regard to laundry expenses, the Tax Office will allow a deduction of $1 per load if the wash only includes work-related clothing as mentioned above or 50 cents per load if there is a mix of personal items with the work-related clothing.

If you are working from home and want to make a claim using the revised fixed rate method, you must have kept detailed records of when you worked at home. An estimate of the hours you worked is not enough for Tax Office purposes. The amount of hours you have recorded as working from home is multiplied by 67 cents to compute your claim.

There are, of course, many other items that can be claimed as a tax deduction if the costs are related to earning your income. Talk this over with your tax agent – but expect your tax agent to ask you whether you have proof that you spent the money.