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PKF Australia

Accountants and Business Advisers

ATO cracking down on your work-related expenses

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Darren Shone

Partner

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ATO cracking down on your work-related expenses

Did you know that the ATO scrutinises every tax return? This year, the ATO is cracking down on taxpayers claiming incorrect ‘other’ work-related expenses. It’s important to make sure you don’t claim more than you are entitled to! The ATO uses 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.

Four quick points to remember when claiming work-related expenses

To claim work-related expenses, keep in mind these four points:

  1. You must have spent the money yourself.
  2. You were not reimbursed for the money spent.
  3. The expense must be directly related to earning your income.
  4. You must have a record to prove it.

Work expenses reimbursed to you by your employer are not deductible in your personal income tax return. The ATO can seek information from your employer if it suspects you have claimed as a deduction an expense for which you have already been reimbursed.

Tip: If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.

11 deductions you (probably) can’t claim

  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 (e.g. a suit), 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. Upfront deductions for tools and equipment that cost more than $300. However, you can spread your deduction claim over a number of years, which is called depreciation. ■

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