As tax season approaches, the Australian Taxation Office has sent out a warning to taxpayers to not claim deductions for expenses that are commonly misconstrued as work-related.
“Many taxpayers don’t have a good understanding of what deductions they can claim, and believe they can claim for items which they in fact can’t,” said ATO assistant commissioner Kath Anderson.
“It’s a myth that you can claim everyday clothes, for example, black pants and a plain white shirt, even if you only wear them to work, and your employer says you have to.”
Anderson warned that the ATO used “real-time data” to scrutinise “every return” by analysing average expenses for each occupation and income bracket and identifying “higher-than-expected claims”, including “vehicle, travel, internet and mobile phone, and self-education”.
“We have the technology and experience to detect non-compliance and we are continuing to catch taxpayers who are deliberately doing the wrong thing.”
The assistant commissioner also said that there is a misconception that $300 can be automatically claimed, even if the taxpayer hasn’t spent that much on work expenses.
“You don’t need receipts for claims up to $300 but you must have actually spent the money, and be able to show us how you worked out your deduction if asked,” she said.
Anderson said there are “three golden rules” for work-related deductions: “One – you have to have spent the money yourself and can’t have been reimbursed, two – the claim must be directly related to earning your income, and three – you need a record to prove it.”
Here are 11 deductions the ATO says “you (probably) can’t claim”:
1. Trips between home and work. Generally you can’t claim a deduction for these because they’re considered private travel.
2. Car expenses for transporting bulky tools or equipment, unless:
• you need to use your bulky tools to do your job
• your employer requires you to transport this equipment
• there is no secure area to store the equipment at work.
3. Car expenses that have been salary sacrificed.
4. Meal expenses for travel, unless you were required to work away from home overnight.
5. Private travel, so if you take a work trip that includes personal travel you can only claim the work-related portion.
6. Everyday clothes you bought to wear to work (eg, a suit or black pants), even if your employer requires you to wear them.
7. A flat rate for cleaning eligible work clothes without being able to show how you calculated the cost.
8. Higher education contributions charged through the HELP scheme.
9. Self-education expenses when the study doesn’t have a direct connection to your current employment – your future or dream jobs don’t count.
10. Private use of phone or internet expenses – only the work-related portion counts.
11. Up-front deductions for tools and equipment that cost more than $300. However, you can spread your deduction claim over a number of years. That’s called depreciation.