The do’s and don’ts of submitting work related claims

Work Related Car Expense Claims

The Australian Tax Office has announced that it would be closely examining claims for work-related car expenses as part of a broader focus on work related expenses.

Unfortunately, there have been cases where taxpayers have made mistakes on their claims or have submitted false work-related car expense claims, which has led to stricter measures being enforced.

The ATO is concerned that taxpayers believe under the cents per km method, that 5,000 kilometres is a standard deduction they are entitled to without needing to provide any evidence of having travelled that distance, or even having undertaken any travel at all. Taxpayers are reminded you still need to have done the kilometres as part of your job, they cannot be for trips like home to work travel or other private trips and you must be able to show how you calculated your claim, for example by keeping a diary of places you have had to drive for work and how often.

The ATO’s ability to identify claims that are unusual has improved due to enhancements in technology and data analytics.

Follow these three “golden rules” when submitting car claims:

  1. Only claim when you paid for the expense yourself, and you weren’t reimbursed;
  2. It’s directly related to earning your income – your employer required you to make those trips as part of your job; and
  3. You have a record to support your claim. 

Home Office Claims

The ATO has indicated that they are concerned about the level of claims for home office expenses.

Areas of concern:

  • Claiming 100% of internet and mobile phone expenses.
  • Claiming occupancy costs.

Where items are used both, for work or business purposes and private purposes (e.g. use of a mobile phone, car or home computer), it is necessary to apportion deductions so that is only claimed for the business portion of the expense.

Follow this link for the ATO occupation-specific guides to help you understand what work-related expenses you can and can’t claim.

Laundry Claim

If you are claiming $150 or less for clothing and laundry;

Make sure your claim is for suitable clothing (occupation-specific, protective or uniform). You can’t claim for plain or conventional clothing, even if your employer requires you to wear it, and also if you only wear it to work.

You may be asked to demonstrate how often you wore your suitable clothing (e.g., evidence that you worked three shifts a week for 48 weeks in a year).

Remember

The ATO have advised they now scrutinise every return and they have sophisticated analytics to identify unusual claims, including comparing taxpayers to others in similar occupations earning similar income. If a red flag is raised, they will investigate. It might be as simple as checking with your employer to check if you were required to wear uniforms or protective clothing or travel for work.

Contact your NKH advisor for more information.