Employees guide for work expenses
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Part D - Substantiation requirements
Table of contents
To claim a deduction for a work expense, including the decline in value of a depreciating asset (see Decline in value under the capital allowance provisions ) you must substantiate it by getting written evidence. This evidence can be in paper or electronic form. For most work expenses you need a receipt or similar document from the supplier that shows all of the following:
- the name or business name of the supplier
- the amount of the expense or cost of the asset
- the nature of the goods or services that you purchased
- the date you purchased the goods or services
- the date the document was produced.
Example - valid receipt
Carla, who works on a construction site, buys a new pair of steel-capped boots from an online store. She gets a receipt by email that shows that she bought and paid $229 for the boots from Workwear Online on 23 January 2019, and that the receipt was generated on 25 January 2019, when the boots were posted. The receipt is suitable substantiation, as it has all the information required, even though it was in electronic form.
If you don't get, or can't get a receipt, you can provide other forms of evidence for your expenditure which might include bank statements, invoices, or purchase orders for example. Together, the other forms of evidence need to show all of the items of information described above that would be required on a receipt.
Example - alternative substantiation
Amy pays her annual professional association fees but does not get the receipt. She has the letter from the organisation showing the amount due and payable and a credit card statement that shows she paid the organisation the same amount for 'Professional fees' a few days later. The combination of documents are sufficient for Amy to substantiate her expenses.
Example - insufficient substantiation
Mark buys some tools from a hardware store but he does not keep the receipt. He paid with cash that he had withdrawn from an ATM that day. While he has bank records that show he made the withdrawal and the date the withdrawal was made, the bank statements do not show the name of the hardware store, the nature of the goods purchased or the cost of the tools he purchased. Mark has not substantiated the tools and he cannot claim a deduction for them.
- Law Administration Practice Statement PS LA 2005/7 Substantiating an individual's work-related expenses
As well as the original purchase documents that meet the substantiation requirements, you will need to keep additional records in respect of the depreciating assets you wish to claim. These records must show:
- the rate or effective life you used to work out the decline in value, and how you calculated it if you didn't use the Commissioner's rate
- the method you used to calculate the decline in value
- your work-related percentage and how you calculated it.
If you meet the criteria to claim overnight travel expenses ( accommodation , meals (food and drink) , or expenses incidental to the travel) as a work-related expense, generally you need to keep records for all of the overnight travel expenses you intend to claim. This can include receipts for meal purchases, accommodation and other incidental expenses.
The specific records you need to keep depend on a number of factors including whether:
- you receive a travel allowance
- the allowance is reported on your payment summary
- the travel allowance is to cover domestic or overseas travel
- you travel away from home for six nights or more in a row.
If the travel is longer than six nights away from home, you need to keep a travel diary, unless an exception applies.
A travel diary is a record of your work trip where you record the dates, places, times and duration of your activities and travel. The diary allows you to accurately calculate the work-related and private parts of the trip. You can only claim the work-related part of the trip.
There may be some exceptions from substantiation for your overnight travel expenses. Please refer to Exceptions for overnight travel for further information.
- For more information on how to keep a travel diary, see Travel diary .
Work-related car expenses have some additional requirements for substantiation and how you calculate your deduction. For information on these requirements see Car expenses .