ATO assistant commissioner Graham Whyte spoke to the media last week to talk about what the ATO is checking up on and what to watch out for when lodging your tax return this year.
Claims for telephone and internet are under scrutiny, as well as car and travel claims and claims for self-education expenses.
These examples are on the hit list being targeted by the Australian Taxation Office this year. The ATO has warned people to keep receipts and ensure their deductions are legitimate.
However, while he stressed these deductions would be monitored closely, the tax office’s message wasn’t about catching people but rather warning them to claim properly in the first place.
“Generally speaking, if you claim a deduction you need to remember the three golden rules,” he said.
“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.”
He said certain expenses were under the spotlight this year as rules had changed and the ATO would be checking up on those deductions.
For example there were changes in calculating car expenses this year and people must use a logbook or the cents per kilometre method to support their 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,” he said.
“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,” Mr Whyte said.
He said new sophisticated technology would alert the ATO officers checking them if anything stood out, which is why receipts were vital.
Many people mistakenly believe that you need to have an invoice or receipt to claim a tax deduction, but this isn't true. Many things can be used to subsantiate a deduction, such as an email or a bank or credit card statement, or in some cases even a diary note.
Talk to us about your particular deductions for guidance about what records you need.
You can claim that portion of your telephone and internet costs which relates to work.
For example if you're expected to use your mobile for work, you could identify those calls which relate to work or you could apportion the bill on a percentage basis by working out the number of work calls as a percentage of the total calls.
Similarly, if you use your home internet or mobile data for work, you need to work out the percentage of data traffic used for work as a percentage of total data for the bill. There are programs or apps you can download to monitor your data traffic.
These caluclations might seem like a pain, but if you face an audit, you will be glad you took the time.
There are two methods for claiming car expenses.
Using the log-book method requires you to keep a log book for 12 weeks and record all travel to determine the proportion of your car that is used for work. This percentage is then applied to all running costs such as fuel, insurance, registration, repairs and depreciation.
Using the cents-per-kilometre method simply requires calculating or recording the kilometers you travelled in the year for work.
Travel costs (such as bus or airline tickets) for work trips are also deductible.
You can claim all study costs such as tuition fees, textbooks, stationery, tutors fees and internet but only if you are studying for a qualification related to your current job, or one that will earn you an advancement on your current job.
You also can't claim for fees deferred through the HELP or fee-HELP systems.
We are taxation experts and can help you figure out all the deductions you're entitled to and how to keep appropriate records. If you're ready to talk, you can contact us here, find out more about your Income Tax services here or book an appointment here.
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