Ballgowns, Jimmy Choos and diamond rings are some of the luxury items accountants have seen working women try to claim as tax deductions.
Try as these women might, though, it is unlikely you will ever be able to claim any of these items on your tax return.
But an official from the Australian Taxation Office is on the record as saying women’s handbags could be claimable items in the same way men’s briefcases are.
Did I hear you scream “Yes!”?
Before you run off to invest in Prada or Louis Vuitton, you need to understand the context in which this may be the case.
Essentially, you can claim a deduction for anything (providing the ATO has not already ruled out that type of expense) if you meet these three conditions:
1. you incurred the expense while doing your job;
2. the expense is not private (personal);
3. you can produce receipts or other written evidence.
Other things to consider are: If the expense is only partly work-related, you can only claim some of that expense. If the item costs more than $300, you can only claim for the depreciation of that item over its lifetime.
Using the handbag scenario, you could reasonably claim the cost or depreciation of a handbag if you specifically went out and bought that handbag to fit your laptop, tablet, mobile and other items needed to do your job, such as pens, forms and promotional material.
If you already own the handbag, and you occasionally throw a few work-related items in it, or you occasionally put your tablet in it for a work meeting, no deduction is likely to be available as its primary use is to carry personal items.
If you pass the first hurdle, but also carry personal items in the handbag, you need to reduce the deduction to account for private usage. And this is where it can get a little dubious because you need to be able to back up your claim.
How do you determine the private use of a handbag? Do you tip the contents out and separately weigh the work-related and private items to come up with a percentage split?
The ATO’s position on this is not clear, but whatever basis you use to apportion private and business use needs to be reasonable.
Creating a handbag logbook is not necessary (it’s bad enough using one for your car) but you do need to come up with a reasonable basis for your claimed division of work and private usage.
The news is not so good for ballgowns and Jimmy Choos.
The ATO considers all clothing to be private in nature and not deductible, unless it is protective, occupation-specific (like a nurse’s uniform) or branded with your company’s logo.
Alas, that may rule out the ballgown, Jimmy Choos and the diamond ring. Yes, even if you need them to maintain a certain professional standard or attend awards nights.
Feature Slider Image: Danielle Castano of Stylesnooperdan
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