Every tax season the ATO has a specific set of targets, and this year it’s work-related expenses.
The crackdown comes as the tax office implements a new technology which allows it to compare similar individuals to see whether they are over-claiming.
It’s first year that the tax office will check taxpayers’ deductions in real-time as they complete their online returns, moving the focus from specific jobs to specific employees.
To ensure you don’t get caught out this tax time, Business Insider has pulled together a list of items the ATO will be targeting.
“If you claim a deduction you need to remember the three golden rules,” says ATO assistant commissioner Graham Whyte.
“One, make sure you spent the money yourself and were not reimbursed. Two, make sure it’s related to your job and three, you need a record to prove it.”
Here they are.
There’s been a change in the rules for calculating car expenses, and you can now only use a logbook or the cents per kilometre method to support your claims.
“It’s important to remember that you can only claim a deduction for work-related car expenses if you use your own car in the course of performing your job as an employee,” Whyte says.
“Most people can’t claim the cost of travel between home and work because this travel is private.”
This also includes a focus on the transportation of bulky tools. The ATO says carrying unnecessary equipment is not an eligible claim, if there is equipment already supplied. People will be required to pay back any claims found to be illegitimate.
Deduction claims that are higher than expected
The ATO will be looking into deduction claims are higher than expected, in particular those claiming car expenses – including those already mentioned for transporting bulky tools, as well as deductions for travel, internet and mobile phone, and self-education.
“If your claims are substantially higher than others in similar occupations, earning similar amounts of income, a message will appear, asking you to check them,” Whyte says.
“The ATO will take a closer look at any unusual deductions and contact employers to validate these claims, so it’s worth getting things right at the start.”
This includes allowance not necessarily giving rise to a deduction such as deductions claimed by individuals, despite them having already been paid by the employer. For example, if a worker claimed travel allowance despite being paid a travel allowance in their payment summary, the claim for travel expenses will be disallowed because the employee did not spend any money.
Car and uniform expenses
You can claim a deduction for the cost of buying and cleaning occupation-specific clothing, protective clothing and unique, distinctive uniforms, but need to have written evidence that you purchased the clothing and diary records or written evidence of your cleaning costs.
If you received an allowance from your employer for clothing, uniforms, laundry or dry-cleaning, make sure you show the amount of the allowance on your tax return.
This includes the costs of washing, drying and ironing eligible work clothes, or having them dry-cleaned. Again, you must have written evidence, such as diary entries and receipts, for your laundry expenses.
Mobile phone expenses
If you use your own phones or internet for work purposes, you may be able to claim a deduction if you paid for these costs and have records to support your claims.
If you also use it for them for personal use, you will need to work out the percentage that reasonably relates to your work use.
To do this you need to keep records for a 4-week representative period in each income year to claim a deduction of more than $50, and evidence that your employer expects you to work at home or make some work-related calls.
If your employer has provided you with a phone or internet for work use and is billed for the usage then you are not able to claim a deduction.
You may be able to claim a deduction for self-education expenses if your study is work-related or if you receive a taxable bonded scholarship. In some circumstances you have to reduce the amount of your claim by $250.
For example, a retail sales assistant cannot claim a deduction for self-education expenses of $5,165 for course fees relating to a Bachelor of Arts degree. The degree does not directly relate to the assistant’s current job, and there was no requirement to undertake further education.