ATO Assistant Commissioner, Kath Anderson, has announced a crackdown on work-related expense claims this tax time. The increased scrutiny comes as a result of the first ever research into the income tax gap for individuals.
The study estimated an $8.7 billion discrepancy between the revenue the ATO actually collects and the amount that would be collected if all taxpayers were fully compliant.
“We are a bit concerned taxpayers are making mistakes or deliberately over-claiming their work-related expenses,” Ms Anderson said.
“We have got particular focus on it because with so many people claiming, they may only be small amounts they are getting wrong but together that is potentially adding up to a lot of money.”
In the 2018 Federal Budget, the government committed $131 million to improve compliance in the work-related expense area. Data analytics will be used to detect deductions which are unusual or abnormally high relative to others in the taxpayer’s occupation or profession.
The ATOs “golden rules” for getting your expense claims right
To claim a work-related deduction:
- The expense must directly relate to earning your income.
- You must have paid for the expense yourself and weren’t reimbursed from your employer.
- You must have a record to prove the expense.
Remember, if the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.
What can you claim as a work-related expense?
Employees (including casuals) can claim work-related expenses in the financial year expenses are incurred. You may be able to claim a deduction for expenses that directly relate to your work, including:
- car expenses (including fuel costs and maintenance)
- travel costs
- clothing expenses
- education expenses
- union fees
- home computer and phone expenses
- tools and equipment expenses
- journals and trade magazines
Claiming deductions for specific industries and occupations
You may be able to claim deductions for expenses that relate to specific kinds of work. The ATO have issued a suite of tax rulings for these employees to help you correctly claim the work-related expenses you are entitled to. You can access information on these occupations here.
Record keeping for work-related expense claims
You must be able to substantiate your claims with written evidence if the total amount of deductions you are claiming is greater than $300. The records you keep must prove the total amount, not just the amount over $300.
The $300 limit does not include car and meal allowance, award transport payments allowance and travel allowance expenses as there are special written evidence rules for these types of claims.
If the total amount you are claiming is $300 or less, you don’t need written evidence but you still need to be able to show how you worked out your claim.
We want to help you claim everything you are entitled to. Keeping good records helps you and your tax adviser:
- maximise your allowable deductions
- provide the required evidence in the event of a tax audit
- avoid exposure to adjustments and penalties
If you would like further advice regarding your work-related expense claims, or need assistance with setting up a record keeping system, please contact a member of our team on 07 3831 1055 or [email protected].
DISCLAIMER: The information on this website and the links provided are for general information only and should not be taken as constituting professional advice from Hall Browns Accountants. You should consider seeking the appropriate legal, financial, or taxation advice to check how the website information relates to your unique circumstances.