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What the ATO will catch you for in your tax returns

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With weeks before the end of the financial year and people looking at where they can claim deductions, the Australian Tax Office is warning Australians that they will clamp down on overinflated work-related expenses this tax time.

Drawing on their experience from last year, ATO believes that car and travel expenses will go down in people’s claims but working from home expenses may rise. Last year, car and travel expenses contracted by 5.5 per cent. Assistant tax commissioner Tim Loh said that while some claims are expected to increase, car and travel claims are unlikely to be among them.

In a warning issued to taxpayers, Mr Loh said, “If you are working at home, we would not expect to see claims for travelling between work sites, laundering uniforms or business trips. Our data analytics will be on the lookout for unusually high claims this tax time, particularly where someone’s deductions are much higher than others with a similar job and income.”

Mr Loh said the ATO will be looking closely at anyone with significant working-from-home expenses that maintains or increases their claims for things like car, travel or clothing expenses.

“You can’t simply copy and paste previous year’s claims without evidence,” Mr Loh warned.

“But we know some of these unusual claims may be legitimate. So, if you explain your claim with evidence, you have nothing to fear.”

“However, where we spot people deliberately claiming things they’re not entitled to, we will take firm action,” Mr Loh said

In 2020, around 8.5 million Aussies claimed nearly $19.4 billion in work-related expenses. But due to travel restrictions, the ATO saw a decrease in the value of work-related expenses for cars, travel, non-PPE clothing and self-education and the trend is expected to continue in this financial year.

taxes working-from-home ato
Source: Canva

In spite of the use of personal vehicles to commute to work instead of public transport, the ATO has warned: “If an employee is working from home due to COVID-19, but needs to travel to their regular office sometimes, they cannot claim the cost of travel from home to work, as these are still private expenses.”

For those looking to claim working-from-home expenses, similar rules as last financial year apply.

They can claim an all-inclusive rate of 80 cents per hour for every hour people work from home, rather than needing to separately calculate costs for specific expenses.

All you need to do is multiply the hours worked at home by 80 cents, keeping a record such as a timesheet, roster or diary entry that shows the hours you worked.

“Remember, the shortcut method is temporary,” the ATO said.

“If you want to claim part of an expense over $300 (such as a desk or computer) in future years, you need to keep your receipt.”

The other area where legitimate claims can be made are for Personal protective equipment (PPE). Industries this will apply in include industries like healthcare, cleaning, aviation, hair and beauty, retail and hospitality.

If specific duties require physical contact or close proximity to customers or clients, or your job involves cleaning premises, you may be able to claim items such as gloves, face masks, sanitiser or anti-bacterial spray.

“To claim your PPE, you’ll need to have purchased the item for use at work, paid for it yourself, and not been reimbursed. You also need a record to support your claim — a receipt is best,” the ATO said.

READ ALSO: How getting an insurance payout can be a full-time job


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Pawan Luthra
Pawan Luthra
Pawan is the publisher of Indian Link and is one of Indian Link's founders. He writes the Editorial section.

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