Higher-than-expected tax deductions relating to cars, travel, clothing, internet and mobile phones, and self-education expenses are among the top claims the tax man will be keeping a close eye on this tax time.
Each year the Australian Taxation Office targets work-related expense deductions due to the large value of claims made by the majority of more than 13 million Australians lodging tax returns every year.
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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.
In 2015-16 Australians claimed about $23 billion of work-related expense deductions – and as the agency has noted, there's a lot of over-claiming.
"This tax time, the ATO is looking at higher than expected work-related expense claims by comparing taxpayers with their peers in similar jobs, earning similar amounts of income," Assistant Commissioner Kath Anderson said.
"While larger than usual claims might be legitimate, it may cause the ATO to ask further questions and check with your employer."
Car expenses
The most common work-related expense claims are for car expenses, which amount to more than $8 billion in claims each year.
The ATO says trips between home and work cannot be claimed unless your home was a base of employment and you were required to travel to a different workplace to work for the same employer.
You also must show you regularly worked at more than one site each day before returning home (for example, a tradesperson) and you had to use your car to carry bulky tools or equipment.
Bulky goods transport
"To get a deduction for carrying bulky tools it is not enough to simply choose to carry bulky tools or equipment, such as ladders, wheelbarrows and cement mixers, to work," Ms Anderson said.
To claim this deduction, you need to show your employer required you to transport all the tools or equipment to work (that is, you did not carry them as a matter of choice or convenience).
You also need to show the equipment was essential to earning your income (that is, without the equipment, you couldn't earn your income), and there was no secure area to store the equipment at work and the equipment was bulky and difficult to transport.
Travel – meals and accommodation
More than $2 billion of work-related travel expenses are claimed each year. Taxpayers can only claim costs for accommodation and meals if they are required to work away from home overnight, and petrol and parking for their car for work trips.
"You can't claim a deduction for any private component of work-related travel," Ms Anderson said. "Receiving an allowance from your employer does not automatically entitle you to a deduction. If you receive a travel allowance amount on your payment summary you must declare it as income, and you can only claim for the expenses you actually incur."
Internet and mobile phone
Taxpayers are not entitled to claim mobile phone and internet use that is for private purposes.
The ATO will focus on the apportionment between private and work use.
"We allow a claim of up to $50 for work-related mobile phone and internet use without the need to provide detailed records," Ms Anderson said.
"However, you still need to be able to demonstrate that you spent the money and were required to incur these costs for your job."
Clothing
"A lot of people are claiming for their work clothes when they aren't meant to be," Ms Anderson said.
You may be entitled to claim a deduction for work clothing if you purchased it and it is uniform, such as those with company logos and protective gear. Basically, it must be clothing that would not be worn outside the workplace.
"You can also claim the cost of laundering these items but you must use a reasonable basis to calculate your expenses," Ms Anderson said. "You can't claim the cost of purchasing or laundering plain clothing, such as black pants or white shirts, or clothing that doesn't meet the above requirements even if your employer requires you to wear them."
Self-education
Claims for self-education expenses – which amount to about $2 billion annually – must be related to current employment, not future or desired employment.
"You cannot claim a deduction for courses that do not have a strong connection with your current employment or a course that might help you get new employment – even if it is your dream job," Ms Anderson said. "You might be able to claim a deduction for work-related education expenses if your studies directly relate to your current job, such as upgrading your qualifications or improving specific skills."
Home office and work equipment
Each year more than $7 billion in home office costs and tools, equipment and other assets are claimed. Deductions for tools, equipment or other assets can only be made if they are used to earn income.
Accessories such as a bag used specifically for work to transport a laptop, papers or other work-related items in doing your job can be claimed.
If you were required by your employer to work from home, you can only claim a percentage of your running expenses for your home office.
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