Don’t Fall for the Myths — What the ATO Says About Laundry, Car Claims and “Easy” Deductions

There is no shortage of “tax tips” circulating online suggesting that certain deductions, such as “$150 for laundry” or “5,000 km for car use”, can be claimed automatically. While these claims are often presented as simple and risk free, they are frequently misunderstood or taken out of context.

The reality is that the Australian Taxation Office applies clear, principle based rules when assessing work related deductions. Misinterpreting these rules can result in incorrect claims and potential amendments upon review.

WHAT THE ATO ACTUALLY REQUIRES?

To claim a work related expense, the ATO requires that:

• The expense is incurred personally and not reimbursed

• It is directly related to earning assessable income

• It is appropriately substantiated, unless a specific exception applies

• 
  

While limited concessions exist where formal  receipts may not be required, these do not remove the requirement to  demonstrate that a claim is legitimate.

Laundry Claims — Not as Simple as They See

The commonly quoted “$150 laundry claim” is often misunderstood.

Taxpayers may claim the cost of washing, drying, and ironing eligible work related clothing, excluding dry cleaning, up to $150 per year without written evidence.

However, eligibility is strictly limited to:

• Occupation specific clothing

• Protective clothing

• Recognised uniforms

Everyday clothing, including standard business attire, does not qualify.

Importantly, even where receipts are not required, there must still be a reasonable basis for the claim. This may include a diary, calculation, or other record demonstrating how the amount was determined.

Motor Vehicle Claims — The 5,000 km Misconception

The cents per kilometre method allows eligible taxpayers to claim business use of a vehicle up to a maximum of 5,000 kilometres per year, using a flat rate set by the ATO. However, this is not an automatic entitlement.

Taxpayers must still be able to demonstrate how the business kilometres were calculated. Acceptable methods include diary records, appointment logs, or other contemporaneous evidence. Estimates or arbitrary figures are not sufficient.

In addition, the cents per kilometre method is all inclusive. It already factors in fuel, maintenance, depreciation, and other running costs, meaning these expenses cannot be claimed separately.

The Myth of “No Records Required”

A common misunderstanding is that claims below certain thresholds do not require any form of substantiation.

While it is true that receipts may not be required in limited circumstances, such as laundry up to $150, the broader substantiation rules still apply. Taxpayers must be able to demonstrate:

• The expense was incurred

• It was work related

• The method used to calculate the claim is reasonable

In practice, this means maintaining some form of record, even if informal.

---

WHY THESE MYTHS PERSIST?

Much of the confusion arises from oversimplified interpretations of ATO guidance. Thresholds and concessions are often reduced to headline figures, without reference to the underlying conditions.

As a result, what are intended to be practical administrative concessions are misinterpreted as automatic deductions.

The ATO’s approach remains consistent. Claims must reflect genuine expenses incurred in the course of earning income and must be supported by a reasonable basis.

---

THE BOTTOM LINE

aundry and motor vehicle deductions can be valid and appropriate when applied correctly. However, they are not simple claims that can be applied without consideration.

To remain compliant:

• Ensure the expense is genuinely work related

• Confirm it has been personally incurred

• Maintain a reasonable record of how the claim was calculated

• Apply the correct method and avoid duplication of claims

Relying on informal tax shortcuts may seem convenient, but it increases the risk of error and potential adjustment.

A disciplined, evidence based approach, aligned with ATO guidance, remains the most effective way to ensure both compliance and confidence in your tax position.

For the full, authoritative guidance from the ATO, you can read their ruling here: ATO guidance on work-related deductions.

As always, If you would like clarity around your specific circumstances or guidance on how to apply these rules correctly, we encourage you to contact our office. Alternatively

Disclaimer: The information provided in this video is intended for general informational and educational purposes only. It does not constitute financial, taxation, legal, or other professional advice. You should not rely on this content as a substitute for tailored advice specific to your personal or business circumstances.

While every effort has been made to ensure the accuracy of the information presented, no guarantee is given regarding its completeness, correctness, or timeliness. The creator of this content, along with any associated individuals or entities, expressly disclaims any and all liability for loss or damage that may result from reliance on this information.

Before making any financial, investment, or business decisions, it is strongly recommended that you consult a qualified professional who understands your unique situation and goals.