Yes, you can claim often claim your handbag for work as a tax deduction, as well as your other work bags. 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, handbag or laptop bag 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.
When your work bag claim is likely to be questioned:
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. Neither is a bag that holds a change of clothes for a gym session after work.
Those items are not work-related, therefore the bag that transports them is not an allowable deduction.
When claiming work bags on your taxes is likely to be OK
Think of an office worker who works in a “hot-desk” environment. Their workplace requires them to move from desk to desk, across offices, taking everything with them that they need to do their job. This is likely to include stationery, a laptop, tablet, a work phone and other items. These must be kept with them wherever they go, including to and from work. To protect this equipment, the worker purchases a backpack and/or a large 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 work bag purchase, then you can’t claim it as a deduction on your return.
Caution Required
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!
