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Changes to Substantiation of Work Related Expenses

The ATO have issued a new practice statement to clarify the types of records that are acceptable as proof for work-related expenses.

Previously, the taxpayer was required to obtain a document from the supplier of the relevant goods or services, which set out:

  1. the name or business name of the supplier
  2. the amount of the expense, expressed in the currency in which it was incurred - or the cost of the asset
  3. the nature of the goods or services - or asset
  4. the day the expense was incurred - or asset was acquired, and 
  5. the day it is made out.

Now, where the details of (3) and (4) are missing from the document, the taxpayer is permitted to write the missing details regarding the nature of the goods or services on the document before they lodge their tax return. It also provides for the taxpayer to use alternate reasonable evidence, such as a bank statement, to show when the amount was paid.

Types of alternate reasonable evidence include documents such as:

  1. bank statements
  2. credit card statements
  3. internet-generated bank or credit card statements
  4. BPAY reference numbers, combined with bank statements
  5. BPAY reference numbers, combined with tax invoices
  6. internet generated receipts
  7. email receipts
  8. paper copies of receipts
  9. electronic receipts
  10. electronic copies of receipts

These types of evidence or combinations of these types of evidence will be taken to be appropriate evidence of an expense, where they contain sufficient information and the principles outlined in the relevant Practice Statement are adhered to.

Note: For the majority of EFTPOS transactions, a bank statement alone would not be sufficient evidence to substantiate a claim. This is because bank statements do not generally show a cash withdrawal separately from the amounts associated with the item(s) purchased in the transaction, nor do they usually show the nature of the items purchased.

In these cases, the EFTTOS receipt would be needed, as this shows the breakdown of items purchased versus cash withdrawal. In situations where the taxpayer did not obtain or retain the receipt for an EFTPOS transaction, the taxpayer will generally need further evidence showing the amount of the item purchased.

This article is not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this article. All information is subject to change without notice. We and each party providing material displayed in this article disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of the information or material in this article. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.

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