ATO: Get your deductions right
If you are an employee you may be able to claim a deduction for some costs related to your job. There are rules that you need to check and records you need to keep.
PT1M8S 620 349Australians with rental properties and work-related expenses such as cars, mobile phones, broadband and travel will be the focus of the Australian Taxation Office at tax time.
During the past year the ATO has contacted more than 100,000 rental property owners to inform them about their entitlements or ask them to clarify claims made. This included letters to more than 1000 holiday-home owners suggesting that they review their claims before lodging their next tax return.
Each year, more than 650 million pieces of data are reported to the ATO by third parties.
"Since 1 July 2014, we have amended over 10,000 assessments relating to income and deduction claims made by rental property owners," assistant commissioner Graham Whyte told Fairfax Media.
Each year ATO contacts about 350,000 taxpayers about errors or omissions in their returns.
This year common deductions related to work and rental property would be under watch.
About 8.5 million Australians claim $19.7 billion in work-related expenses each year. Photo: Karl Hilzinger
The ATO raised $950 million in liabilities from reviews-audits of these types of deductions last financial year and expects to raise about the same again this year.
"We're trying to help people get it right," Mr Whyte said. "We want people to claim what they are entitled to – no more no less."
More than 2 million Australians own rental properties.
Claiming your mobile phone for work when you use it for personal purposes? The ATO may come after you. Photo: Glenn Hunt
Assistant commissioner Adam Kendrick said the biggest mistake when it came to rental property deductions was people claiming repairs and maintenance they were not entitled to claim.
Work-related claims leap
Each year about 12.4 million Australians claim more $30 billion in total deductions against their income.
The ATO will continue to monitor the biggest deduction claimed by Australians – work-related expenses. About 8.5 million Australians claim $19.7 billion in work-related expenses each year.
Mr Kendrick said three key rules applied for all work-related claims. "You have to have spent the money yourself, it must be related to your job, you must have a record to prove it."
Claims made for work-related car travel were a big focus. About $8 billion is claimed each year.
The ATO would be contacting employers of workers to check their claims. "We will verify with their employer how much the employee uses the car for work, and whether they travel [to their destination] straight from home," Mr Kendrick said.
General work-related travel was also under watch. Mobile phone and broadband expenses for work and personal needed to be clearly distinguished.
The ATO would also be reviewing income taxpayers were earning from renting out their homes or driving cars in sharing-economy services such as Airbnb and Uber, and cross-checking it with banks.
Each year, more than 650 million pieces of data are reported to the ATO by third parties including banks, employers, health insurers, state and federal agencies and overseas treaty partners.
Move to prevent ATO system collapse
This year the ATO expects the majority – about 70 per cent – of Australians lodging will so do with the help of a tax agent and the rest will self-lodge online.
The e-Tax system will no longer exist, but all Australians will be able to use myTax if they want to self-lodge.
The ATO would be giving taxpayers real-time information about errors as they lodge.
This was being done with the help of analytics that gives the taxpayer a "nearest neighbour" comparison of their claim against average claims made based on their occupation and location.
"As you are working through your return, if the system notices that you are outside of the norm, it will prompt you so that can you review your claim," Mr Whyte said.
If people still made claims above the average, it was more than likely they would be contacted by the ATO.
Mr Whyte said the ATO has invested in preventing the system from collapsing this tax time.
Last year it collapsed under the weight of traffic, leaving frustrated users unable to lodge their tax returns and turning to social media to express their discontent.
The ATO was now using external consultants to advise them on their IT systems and the agency was running tests of its systems under heavy loads to avoid outages, Mr Whyte said.
CPA Australia head of policy Paul Drum said: "Hopefully, the ATO's proactive approach in implementing measures, including running parallel systems, will mitigate the threat of system disruption."
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