We’re a little over a month away from the end of this year’s tax filing season, and as many get to doing one of their least favourite tasks, the Australian Taxation Office (ATO) is sending out a handy reminder: check your deductions carefully.
The news comes as the ATO looks to help Australian taxpayers claim deductions properly, especially after Australians have work claims in excess of $21 billion, with a record $7.9 billion claimed by taxpayers for “other work-related expenses” including those working from home.
As telecommuting increases and more employees embrace an environment that allows them to work where they sleep, Assistant Commissioner Kath Anderson warns that people may be claiming what they’re not legally entitled to, a matter which can lead to an audit later on down the track.
“There is mounting evidence that many taxpayers don’t know what they can and cannot claim. In particular, we are seeing some taxpayers claiming expenses they never paid for, expenses their employer reimbursed, private expenses and expenses with no supporting records,” said Ms Anderson.
“Claims for the work-related portion of expenses like phone, internet, depreciation of your computer, printing and stationery are all allowed,” she said.
The key point here, however, is “depreciation”, with many a taxpayer reportedly trying to claim the entire amount of internet and mobile phone bills, among others, with the documentation needed to show what you’re claiming.
“If working from home means sitting in front of the TV or at the kitchen bench doing some emails, it’s unlikely that you are incurring any additional expenses. However, if you have a separate work area, then you can claim the work-related portion of running expenses for that space,” said Ms Anderson.
That means you won’t be able to claim the entirety of your phone, internet, electricity, or anything else you thought might be able to give you a bigger tax return and in turn pay some of that credit card off, even if you think you can get away with it. And if that is something you’re feeling, just remember, the ATO has the power to not only check with your employer, but also run a full audit.
As such, the ATO is encouraging taxpayers to keep notes about what they use, taking record and receipts. Anderson says that while detailed receipts aren’t necessary for phone and internet claims of up to $50 per year, you still need to show how you arrived at your claim.
“This tax time we expect to disallow a lot of claims where the taxpayer hasn’t kept records to prove that they legitimately incurred the expense and that the expense was related to their work,” she said.