We all get a little nervous at the thought of a tax audit; even the most squeaky clean of us would rather avoid a visit from an Australian Taxation Office (ATO) auditor. As such, wouldn’t we all love to know exactly whom the ATO has in its crosshairs this year?
Unfortunately, this year, the ATO is taking a much broader approach when it comes to the type of taxpayers that they will be targeting for review. Most years, the ATO tends to target a specific industry, like plumbers or teachers or marketing professionals. This year, however, it doesn’t matter whether you’re a waiter, or a CEO, you could be on the ATO hit list.
Instead of targeting specific industries or professions, the ATO has decided to place an increased focus on people who claim excessive work-related expenses. They’re also paying particular attention to those who are claiming for expenses for which their employer has already reimbursed them and excessive claims for self education and business related travel claims from employees.
In light of this little we thought we’d give you a brief refresher on the types of items (and in what circumstances) you can claim as a work-related expense.
You can only claim the cost of travelling between work and home in a select group of circumstances, in any other circumstance this travel is considered as a private expense that cannot be claimed. You can claim this expense if:
- You’re required to carry bulky equipment and it cannot be safely stored at work premises.
- You’re house is a base of employment and you are required to travel to different work or client sites on a regular basis.
These expenses can only be claimed if you own and maintain the vehicle. For more information, visit Travel and Accommodation Expenses.
You can only claim for meals if you are forced to travel overnight or are paid an overtime meal allowance. All other meals are considered a private expense. Keep all receipts related to overnight travel to back up your claim and if you’re paid an allowance make sure you include it on your tax return.
Claiming home office expenses is a great way to add to your tax return. If you work at home for even a portion of the day you can claim certain expenses but you have to know the rules. The ATO allows individuals to claim $0.45 per hour for the time they undertake work activities at home. This allowance covers the cost of power and heating as well as the chair and desk. Other expenses such as stationery, equipment purchases etc can also be claimed separately. When claiming expenses such as depreciation on a computer it is important to claim the depreciation based on the work/private percentage usage. For more information, visit Home Office Tax Deductions.
Phones and Internet
You can only claim for business related calls and internet expenses and if you make this claim it’s a good idea to keep invoice records and examples as to how you apportioned you’re the expense between business and private usage. This is another example where you need to be careful about claiming for things you are reimbursed for, its pretty easy to find out if the phone you’re using was purchased for you by your employer and its even easier to find out who is footing your internet bill.
Educating yourself in order to improve your wage or move up in your industry is a claimable expense. If you educate yourself in order to get another job or for private interest, this is not claimable. ATO will be looking for people who make claims in this area so make sure your self-education is covered under tax law. For more information, visit Self Education Claims.
Conventional clothing that you wear for work is not tax deductible. Even if your employer requires you to wear a blue, pin-stripe Hugo Boss suit to work everyday you cannot claim this.
You can only claim for clothing that has a logo or clearly defines you as an employee or is protective in nature. Specific rules apply to uniform claims in specific prefessions such as the defence force, nursing, police etc. For more information, visit Uniform Expenses.
So, before you start gleefully tallying up all those work expenses you should make sure that they really are work expenses or contact us to discuss.
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