ATO warning on expenses claims as tax time looms

Tax time looms: the Australian Tax Office is reminding taxpayers they need to have appropriate records to claim a deduction.
Tax time looms: the Australian Tax Office is reminding taxpayers they need to have appropriate records to claim a deduction.

Taxpayers have been urged to make sure they have appropriate records when claiming expenses on their tax this year. 

As the end of financial year approaches, the Australian Tax Office (ATO) is warning taxpayers they will be paying close attention to claims for ‘other’ work-related expenses when processing tax forms.

Assistant Commissioner Kath Anderson said last year 6.7 million taxpayers claimed a record $7.9 billion in deductions for “other work-related expenses”.

“It’s a significant amount of money and Australians expect us to ensure that people are not over-claiming,” Ms Anderson said.

Legitimate ‘other work-related expenses’ can include home office, union fees, mobile phone and internet, overtime meals and tools and equipment.

However, Ms Anderson said they are only deductible if they meet the three golden rules.

“Firstly, you must have paid for it and not been reimbursed, secondly, it must be directly related to earning your income and not a private expense, and thirdly, you must have a record to prove it,” she said.

As tax time looms, taxpayers are being reminded they need to have appropriate records to be able to claim a deduction.

“Many taxpayers make legitimate claims, but we are also seeing errors in some claims, and some taxpayers are making risky or outright false claims,” Ms Anderson said.

“Substantiation will be a key focus area for the ATO this year.

“It’s important that you have a record of the expense and can demonstrate how you calculated your claims. Every year we disallow lots of claims because there is no evidence to prove the expense. Yet it’s so easy to keep an electronic record.”

Ms Anderson advised that to make tax time easier, taxpayers can use tools such as myDeductions in the ATO app to save and store accurate information about their deductions during the income year, which they can upload to their myTax return or provide to their tax agent.

To find out more about what deductions you can legitimately claim this tax time, visit: ato.gov.au/deductions