Claiming work-related expenses can reduce your tax bill — but only if you can prove the claim. A recent case shows how quickly deductions can disappear when the evidence isn’t there.

The Administrative Review Tribunal (ART) recently upheld an ATO decision to disallow a taxpayer’s work-related deductions totalling more than $61,000. The taxpayer was a full-time engineer who worked from home two days per week. In his 2023 tax return he claimed substantial deductions for a range of expenses including:

• Car expenses
• Travel expenses (including taxi and Uber fares)
• Clothing
• Home office costs

The ATO reviewed the claims and rejected most of them. The taxpayer challenged the decision, but the ART ultimately supported the ATO’s position. The main issue wasn’t necessarily the type of expenses claimed — it was the lack of proper records to substantiate them.

For example:

Car expenses
The taxpayer produced logbooks, but they were not contemporaneous and did not match independent records such as vehicle service records.

Travel expenses
Ride-share and taxi claims could not be verified because the documentation did not show key details such as dates, times or destinations. In addition, it was unclear which expenses had already been reimbursed by the employer.

Home office expenses
The taxpayer provided estimates of business use but no supporting evidence of the actual utility expenses. The tribunal also found the proposed business-use percentage was not reasonable.

Because the claims could not be properly substantiated, the tribunal agreed the deductions should be disallowed. The lesson is simple: if you claim a deduction, you must be able to prove it. Keeping clear records — including invoices, receipts, logbooks and supporting calculations — is essential to supporting work-related expense claims.

If you’re unsure what records you should be keeping for deductions such as car expenses, travel or home office costs, it’s worth reviewing your approach before lodging your next tax return. A little preparation now can prevent costly disputes later.

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