Chris Jordan, Australia’s Tax Commissioner, has warned that the Australian Tax Office (ATO) is about to crack down on people claiming work-related expenses
Jordan stated that a recent check into work-related expenses has uncovered a large number of wrongful claims. He also warned that 100% of the claims that were taken before the Administrative Appeals Tribunal were won by the tax office.
The areas the ATO is believed to be specifically targeting this year will be any tax deductions related to cars, travel, clothing, internet, cell phones and self-education that appear to be higher than expected.
The ATO will determine what is higher than expected by looking at claim amounts in comparison with peers in similar jobs, earning similar incomes, according to Assistant Commissioner Kath Anderson.
Australians claim roughly $23 billion in work-related expenses each year for tax deduction purposes. The largest portion of this is attributed to car expenses, which account for roughly $8 billion in claims per year.
If you are claiming car expenses related to work travel, it cannot include trips between the office and home, unless your home is considered a base office and the same employer required you to travel to a different office location as well. The ATO has also stated you will need to prove you worked on multiple sites each day and used your vehicle for bulky tools or equipment in order to claim car expenses.
Each year Australians also claim roughly $7 billion in home office costs, tools, equipment and other assets related to work. These expenses are only deductible if they are directly related to earning an income. In addition, only a portion of home costs can be claimed if you’re running a home office.
In order to claim a work-related expense as a deduction, you will need to be able to prove you spent the money yourself and were not reimbursed for the expense by your company. You will also need to show the expense is directly related to you earning income. Finally, you must have records to prove the expense, such as receipts showing what was purchased and how much it cost.
At Pherrus Financial, we offer in-depth business taxation compliance services to help you ensure you meet the ATO tax requirements and that your business is always in compliance with the latest regulations.
If you claim any personal expenses as being work-related, one of our experienced professionals can help you make sure that the expense does meet the criteria to qualify, and that you have any necessary paperwork required to support the claim.
Pherrus Financial even offers complete tax return services. We can complete your entire return for you, no matter how complicated it is, and ensure that it is completed correctly, and in compliance with the regulations.
If the ATO contacts you about work-related expenses, our ATO audit specialists can help provide advice and recommendations to make the whole audit process as painless and stress-free as possible.
Contact one of our expert tax consultants today to learn more about how we can help you prepare for any potential ATO audit requests and make sure that you’re work related expense claims are always in compliance with regulations.