Employer’s requirements and the deductibility of work related expenses (WREs)
Some employees may wonder whether a work related expense (or ‘WRE’) becomes deductible merely because their employer specifically requires the employee to incur the expense.
Importantly, the ATO’s recent draft ruling on the deductibility of work-related expenses reiterates that an employer’s requirements do not determine the question of deductibility.
Specifically, a number of examples contained in the draft ruling confirm that a work related expense may be deductible without an employer requiring the expenditure. For example, a taxpayer incurring expenditure in relation to a course directly connected to their current employment (without their employer’s specific support) may still be in a position to claim self-education deductions.
Alternatively, expenses may be non-deductible despite an employer’s specific directions, such as a restaurant requiring its waiters to dress in ‘black and whites’, or support such as where an employer encourages a dental practice receptionist to undertake a ‘Certificate in Dental Assisting’ so as to open up a new career opportunity.
The main requirements for you being able to claim a deduction are:
- that the expense must be incurred
- that it must be incurred in gaining or producing assessable income which
- involves consideration of all the facts and circumstances of the expense and its connection to income-earning activities
- means in the course of gaining or producing assessable income, and
- requires a proper understanding of the relevance of employer requirements , and
- that an amount is only deductible to the extent incurred in gaining or producing assessable income.
Just because your friend may be able to claim some expenses, it does not necessarily mean you can as well as your situation may be completely different.
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