ATO warning on claiming of expenses

Source: THE NORTHERN STAR

THE ATO will be focusing on unusually high work-related expense claims across all industries and occupations this year, taking a wider approach than in previous years.

Assistant Commissioner Adam Kendrick said the ATO’s ability to identify and investigate claims that differ from the norm is improving each year, due to enhancements in technology and the use of data.

“These enhancements mean that every return is scrutinised and it is becoming a lot easier to identify claims that are significantly higher than those claimed by people with similar occupations and employment income,” Mr Kendrick said.

In addition to focusing on work-related expense claims that are higher than expected, the ATO will also be paying particular attention to claims that have already been reimbursed by employers, and for private expenses such as travel from home to work.

Get it right

IT’S important for people claiming to carefully review deductions before lodging their tax return to avoid a delay in getting a return.

Mr Kendrick said there were three key points for people to remember when claiming work-related expenses:

Firstly, you must have spent the money yourself; second, it must be related to your job, and third, you must have a record to prove it.

When claiming work-related travel, it’s important to remember you cannot claim for a normal trip between home and work, unless: you use your car to carry bulky tools or equipment which you use for work and can’t leave on the work premises; your home is a base for employment or you have shifting places of employment (you regularly work at more than one place each day).

The ATO website has a series of videos to help with getting deduction claims right.

For more information, visit ato.gov.au/deductions or phone 132861.

Don’t be a dummy with your deductions

The Australian Taxation Office (ATO) is warning taxpayers to avoid incorrect claims for work-related expenses at tax time this year.

Assistant Commissioner Kath Anderson said the ATO is using real-time data to compare taxpayers with others in similar occupations and income brackets, to identify higher-than-expected claims related to expenses including vehicle, travel, internet and mobile phone, and self-education.

“It is important to know what you’re eligible to claim before lodging your tax return and to make sure you don’t claim more than you’re entitled to,” Ms Anderson said.

“Many taxpayers don’t have a good understanding of what deductions they can claim, and believe they can claim for items which they in fact can’t. Some taxpayers even think that you can make a standard claim of $300 without having spent the money. You don’t need receipts for claims up to $300 but you must have actually spent the money, and be able to show us how you worked out your deduction if asked.”

Ms Anderson said that deductions for work uniforms are also a common trap for employees at tax time.

“It’s a myth that you can claim everyday clothes, for example, black pants and a plain white shirt, even if you only wear them to work, and your employer says you have to. To legitimately claim your uniform, it needs be unique and distinctive, such as a uniform with your employer’s logo, or be specific to your occupation and not for everyday use, like chef’s pants or coloured safety vests.”

“It sounds like a small thing, but we aren’t talking about small sums of money here. There are 13 million taxpayers, so if everyone over claims even $100 that adds up to a lot.”

Ms Anderson said the ATO’s focus is on helping taxpayers get it right in the first instance, but the ATO is also on the lookout for red flags to find people who are doing the wrong thing.

“The ATO scrutinises every return. We have the technology and experience to detect non-compliance and we are continuing to catch taxpayers who are deliberately doing the wrong thing.”

Ms Anderson says there are three golden rules for taxpayers to remember to get it right.

“One – you have to have spent the money yourself and can’t have been reimbursed, two – the claim must be directly related to earning your income, and three – you need a record to prove it.”

The myDeductions tool in the ATO app can help make keeping records easier, and at tax time you can send your deductions to your tax agent or upload them directly to myTax. This year myDeductions is available to sole traders as well as individuals.

The ATO also publishes a range of information on its website to help taxpayers figure out which of their expenses are deductible.

“If you are using an agent, you can also talk to them to make sure the work-related expenses that you claim are right,” said Ms Anderson.

For more information about work-related expenses, visit ato.gov.au/deductions and to find out about myDeductions, visit ato.gov.au/mydeductions

11 deductions you (probably) can’t claim

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Here’s a list of things you probably can’t claim on your tax return:

  1. Trips between home and work. Generally you can’t claim a deduction for these because they’re considered private travel.
  2. Car expenses for transporting bulky tools or equipment, unless:
    • you need to use your bulky tools to do your job
    • your employer requires you to transport this equipment
    • there is no secure area to store the equipment at work.
  1. Car expenses that have been salary sacrificed.
  2. Meal expenses for travel, unless you were required to work away from home overnight.
  3. Private travel, so if you take a work trip that includes personal travel you can only claim the work-related portion.
  4. Everyday clothes you bought to wear to work (eg, a suit or black pants), even if your employer requires you to wear them.
  5. A flat rate for cleaning eligible work clothes without being able to show how you calculated the cost.
  6. Higher education contributions charged through the HELP scheme.
  7. Self-education expenses when the study doesn’t have a direct connection to your current employment – your future or dream jobs don’t count.
  8. Private use of phone or internet expenses – only the work-related portion counts.
  9. Up-front deductions for tools and equipment that cost more than $300. However, you can spread your deduction claim over a number of years. That’s called depreciation.

The ATO website has lots of information about what you can and can’t claim as a tax deduction, visit ato.gov.au/deductions

Tradie Tax Deductions: Claim everything you’re entitled to

Tradies work long and hard to meet tight deadlines, which often leaves little time or energy to think about finances and taxes. As a result many tradespeople pay too much tax, miss changes in legislation or suddenly find their cash flow is not as healthy as they thought.

Does this sound like you?

Stay in control

Apart from making sure you claim all the tax deductions you are entitled to, as we’ll discuss in a moment, we suggest getting into the habit of checking with your tax agent annually to make sure you’re up to date with legislative changes. Sometimes a business switches gear or changes direction which can affect it’s status legally and financially so it’s also important to know when your business structure is no longer cost effective tax wise.

Being organised with your expenses is an essential habit to get into. Keep a clear, itemised record of ALL of your expenses and consider investing in some accounting software to help you stay on top of it. (Etax Local can assist with subscriptions and set up of various popular products so feel free to get in touch for a chat if you are unsure.)

TIP: Photograph each receipt when you get it as many have a tendency to fade. This means any hard to read receipts can still be claimed and you have an electronic back up on your computer. YOUtax provide all clients with secure access to our Client Portal so securely uploading and storing your receipts and other personal documents is simple.
Don’t miss out

There are a great many tradie tax deductions you may be entitled to claim on your tax return. Unfortunately, a good number of tradies miss out on hundreds of them every year. This leaves their hard earned cash in the pockets of the ATO and that’s never a good thing.

So why are so many deductions missed? Because tradies, like many other occupations, simply don’t know these expenses can be claimed. In addition, expenses are often simply forgotten about. And that’s exactly why good record keeping is essential.

Tradie tax deductions for work related expenses are broad and span across equipment, tools, training, travel, clothing and more.

Common tradie tax deductions include:

Clothing (must have business logo)
Tools and equipment – purchase, lease or repairs
Technical instruments.
Protective items (hard hats, steel cap boots, safety glasses etc.)
Laundry/cleaning of work clothes
Sunscreen and sunglasses (if you work outside)
Tablet, computer and mobile phone expenses (work related portion only)
Work related software and computer accessories
Home office running expenses (if applicable)
Filing cabinets and bookshelves
Desks, chairs and lamps
Internet expenses (apportioned)
Training courses, (if directly related to your current role)
Professional libraries
Journals/Manuals
Car/vehicle expenses including parking, tolls, running expenses, fuel, km driven etc.
Travel expenses (between sites, to pick up equipment, to training courses or meetings)
Accommodation expenses when working away from home
Union fees
Insurances
Licenses, permits and certifications

Please note: The content of this post is meant for general information purposes only. Not all items mentioned can be claimed by all tradies. Purchase limits and allowances can affect claims as can certain circumstances. Your tax agent will advise you on what you can and can’t claim, in keeping with your own particular circumstances.
Keep it real!

The ATO are very good at spotting fraudulent or inflated claims and they’re getting better all the time. Powerful tools can check up on you, even your “private” details such as bank transactions. The consequences of being caught out can put you and your finances in hot water – so keep it real. Only claim for items you paid for and that are directly related to your work.

TIP: Don’t think that cash jobs are untraceable. The ATO may question tradie tax deductions that aren’t ‘reasonable’ for your income.

Transporting bulky tools to work?

Generally you cannot claim the travel costs for the journey between your home and your place of work. However if you are required to transport heavy goods and tools, you can. There are some rules that apply though so watch this ATO video to make sure you get it right.

Need more advice on tradie tax deductions or simply need to get your tax return sorted?
No problem, simply CLICK HERE to book an appointment with one of our friendly accounting team . Alternatively upload your documentation through our secure client portal for processing.

YOUtax understands there are many things you would rather be doing than your tax return.

Whether you’ve got a basic tax return with a single group certificate, or you’re at the other end of the scale with rental properties and complex investments… we can help you get it sorted, fast!

Take advantage of our national network of Members, for face-to-face appointments, or simply get in touch with our national head office. We’ll create your tax return in our system so you can login in to the secure client portal to securely upload your supporting documents and personal details. Once this is done, your accountant will get on with processing you return.

You can communicate with your accountant AND view and sign your tax return electronically at any time, wherever you are. Plus your documents are stored, safe and sound but accessible whenever you need them.

Choose YOUtax to prepare your individual tax returns this year and you’ll get:

Peace of mind in knowing your individual tax return was lodged by a CPA-qualified tax agent company with over years’ experience in taxation and accounting.

Double review on every return prior to lodgement to ensure you get the best possible refund and a compliant, trouble-free return.

Customer service – we can explain everything in detail and ensure you’re aware of your obligations and rights as a tax payer.

What are individual tax deductions?

If you’re an employee who is paid a salary or wages by your employer, you are classed as an individual by the ATO. Each year you are required to submit an individual tax return and the expenses you can claim on your return are called individual tax deductions.

As an employee you are eligible to claim expenses related to your particular profession. As an example, these may include exercise equipment if you’re a personal trainer, teaching aids if you’re a teacher and non-slip nursing shoes if you’re a nurse.

Aside from these occupation specific expenses, there are many other work related expenses that you may be able to claim as individual tax deductions.

Knowledge is everything
To ensure you’re getting the best possible refund and paying the least amount of tax, it’s important to know what individual tax deductions you might be entitled to claim and to keep good records each time you incur a work related expense.

Tax deductions can range from, motor vehicle expenses, work related mobile or internet costs, work related travel costs such as a flight to attend a seminar, the cost of uniforms and even charity donations.

So what individual tax deductions can you claim?
Below is a list of common individual tax deductions that you may be able to claim; some of them may be a surprise to you. But remember, you can only claim genuine expenses that you have a receipt or other evidence for. The ATO is very good at picking up on claims that don’t seem quite right and if you’re caught out you could be in for a very hefty fine.

PLEASE NOTE: Not everyone can claim all of the following expenses as individual tax deductions as some will be subject to you meeting specific criteria and in some cases being in receipt of allowances. Your tax agent will be able to advise what you personally can and can’t claim in keeping with your own particular circumstances.
Individual tax deductions you may be able to claim:
FEES
Accounting fees including tax return preparation
Professional membership fees
Union Fees
Income Protection
EDUCATION
Self-Education
Course fees including text books (note: HELP/HECS repayments are not tax deductible)
Professional libraries and work related magazines
EQUIPMENT
Calculators and electronic organisers
Computer related consumables
Computers and laptops
Internet usage (excluding connection fees)
Ipad & similar small electronic equipment
Phone – Home Office + Mobile + phone accessories
Software
Briefcases and carry-bags
Safety equipment – e.g. sunscreens, hard hats, harnesses, safety glasses
Sunglasses (if you work outside)
Technical instruments
Tools of trade
Decline in Value for depreciating assets (where cost exceeds $300)
TRAVEL
Tolls – where relevant to work related travel
Motor Vehicle Expenses-e.g. fuel
Parking Fees
Public transport fares
General travel expenses, including flights, taxis etc.
Accommodation and meals (if away from home overnight)
HOME OFFICE
Desks chairs and other office furnishings
Home Office running costs
Stationery
Postage
CLOTHING
Protective clothing
Uniforms (with logo)
Laundry of work uniform or protective clothing
MISCELLANEOUS
Gifts
Charity Donations
Individual tax deductions receipts

REMEMBER: You can’t claim an expense if you have no proof, so remember to keep a logbook (if required) and get a receipt for every expense. Even if you’re not sure you can claim it, keep the receipt safe and ask your tax agent.

Getting in the habit:
Being organised with your expenses is a good habit to get into. Keep a clear record of your expenses, such as an excel sheet or even a note pad if you prefer. Keep your receipts all in the same, safe place and split them into months so they are easier to provide at tax time. Separate envelopes or folders is the simplest way to separate them – just write the month on the outside and you’ll easily keep track.

TIP: Photograph each receipt when you get it as many have a tendency to fade. This means any hard to read receipts can still be claimed and you have an electronic back up on your computer. YOUtax provide all clients with secure access to our Client Portal so securely uploading and storing your receipts and other personal documents is simple.

Need more advice on individual tax deductions?
No problem, simply contact us today by calling 07 5321 9217 or click here to book an appointment directly with one of our friendly accountants. Alternatively, upload your documents securely through our Client Portal for processing.