Tax Office Substantiation Rules for Everyone

Substantiation Rules define how deductions claimed by employees and self-employed persons and partnerships for certain employment related and business expenses need to be substantiated.

This applies to expenses such as:

  • Work Clothes
  • Travelling Expenses
  • Telephone Expenses
  • Motor Vehicle Expenses
  • Trade or Business Subscriptions

You will have to be able to produce receipts, invoices or other documentary evidence which shows the date, the amount spent and the nature of the expenses.

For individual items costing less than $10 and totaling less than $200 for an Income Year, a diary can be kept rather than having receipts. Taxpayers will be able to claim expenses based on running records and diaries for phone calls, laundry and light and power usage.

Receipts are not required where records have been lost due to circumstances beyond the taxpayer’s control.
Receipts are not required for fuel for motor vehicles. However, it is best to keep them, especially if your use of fuel is unusually high.

Note: A valid receipt must show: 

  • the date the expense was incurred; the date it was prepared by the supplier;
  • the natural or business name of the supplier; 
  • the amount of the expense; and
  • the nature of the expense or service paid for

If total employment related expenses claimed (including car and travel) do not exceed $300, no substantiation will be required. (Note – motor vehicle expenses claimed on a cents per kilometre basis are not included in this total)

Substantiation claims do not apply to claims within the limit of reasonable Domestic Travel and Overtime Meal Allowances (paid under the terms of an award). Claims exceeding allowances which are excessive will be subject to substantiation.

Relevant documentation must be kept for at least 5 years for employees and 5 years for self employed persons after the date of lodgement of Tax Returns. A new log book for a motor vehicle needs to be done every 5 years.

Personal Superannuation Contributions can be claimed but the rules are quite detailed. Bring in as much paper work as possible to enable your claim to be correctly calculated.

There are continuing changes being made to conditions enabling work related expenses to be claimed. You should make sure you understand these changes