The short answer is yes you can claim your handbag as a tax deduction. But don’t go shopping just yet! There are some important things to keep in mind.
The basic rule for claiming a handbag or briefcase as a tax deduction is that it must be directly connected with producing your income.
So what are the rules when claiming your briefcase or handbag as a tax deduction?
There are actually no hard and fast rules about what is or isn’t allowed. But, thinking along a spectrum helps.
If the bag being transported back and forth from home to work each day is a small clutch that holds a phone, a few cards and house keys, that is probably not going to cut it. The same goes for a bag that holds a change of clothes for a gym session afterwork. Those items are not work related, and therefore the bag that transports them is not an allowable deduction.
On the other end of the scale, think of an an office worker who works in a “hot-desking” environment. Their workplace requires them to transport a laptop or tablet to and from work each day. To protect their expensive piece of machinery, the worker purchases a backpack or modern handbag with a compartment specifically designed to protect laptop computers against damage.
That employee is far more likely to be able to claim the cost of their handbag as a tax deduction. This is because there is a clear connection between the purpose of their bag and their work activities.
Keep Your Records in Order
The first step to claiming your handbag or briefcase as a tax deduction is to keep your receipt. Snap a photo or get an electronic copy of the receipt sent to your email. If the bag costs above $300 you will need to depreciate it rather than claim the amount in full on your next tax return. You can save that receipt right into your Etax account so you don’t forget to claim it in July.
The other simple rule to remember is that you must have spent the money yourself. If an employer provides a company-branded laptop satchel free of charge, or reimbursed you for your purchase, then you can’t claim it as a deduction on your return.
The ATO has been very public in saying that it will be looking much more closely at work-related tax deductions. They say too many people claim deductions they are not entitled to.
This doesn’t mean you shouldn’t claim a handbag or briefcase as a tax deduction if you have a legitimate claim. But, if you’re not sure, always ask your tax agent for advice!