Taxpayers are being put on notice by the ATO, which will be paying close attention to claims for ‘other work-related expenses’ this year.
Ensuring you have appropriate records, and sound advice, will be more important than ever for your next tax return.
Last year 6.7 million taxpayers claimed a record $7.9 billion in deductions for ‘other work-related expenses’, and the ATO seems a little dubious about that figure.
“It’s a significant amount of money and Australians expect us to ensure that people are not over-claiming,” ATO Assistant Commissioner Kath Anderson said.
What exactly are ‘other work related expenses’?
Legitimate ‘other work related expenses’ can include home office, union fees, mobile phone and internet, overtime meals, and tools and equipment.
However, the ATO says they’re only deductible if they meet the three golden rules.
“Firstly, you must have paid for it and not been reimbursed,” says Anderson.
“Secondly, it must be directly related to earning your income and not a private expense.
“Thirdly, you must have a record to prove it.”
But I’m a small fry, they don’t care about me…
Think again.
The ATO has sophisticated systems and analytics to ensure that wrong-doing doesn’t fly under the radar.
“If a claim raises a red flag in the system, we will investigate further,” Anderson warns.
“This year we have reached over 1 million taxpayers to support correct reporting and address non-compliance around work-related expenses. So far these activities have resulted in adjustments of over $100 million.”
Hang on, isn’t tax time still months away?
Yes, but you’re incurring these kinds of expenses now, so it’s important to remember the three rules above to ensure you can claim a legitimate deduction (and to make both our jobs easier!).
That’s because Anderson is also warning that substantiation will be a key focus for the ATO this year.
“It’s important that you have a record of the expense and that you can demonstrate how you calculated your claims,” she said.
So how can I best record my expenses?
To make tax time that much easier, you can use tools such as the ATO myDeductions app, which enables you to save and store accurate information about your deductions throughout the income year.
The information can then be provided directly to us come tax time.
We also have a deductions list which you can download here.
We are always more than happy to run through what you can and can’t claim, ensuring you get a great tax return this financial year. If you have any questions just give us a call on 03 8609 9226.
See you in July!
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