WORK-related tax deductions will receive extra attention this year as the Australian Taxation Office targets employees making suspicious claims.
For the first time, the ATO will be checking peoples deductions in real time as they complete their online tax returns, and warning taxpayers if they seem unusually high.
However, that doesnt mean that people should avoid claiming work-related expenses, and now is the time to start organising things and making last-minute tax-deductible purchases.
Electronic items, books and magazines, tools and equipment are among things to consider this month, and remember that anything costing under $300 can be deducted instantly in full.
DONT BE SHY
You should claim everything you are entitled to no more, no less, says ATO assistant commissioner Graham Whyte.
Generally speaking, if you claim a deduction you need to remember three golden rules. One, make sure you spent the money yourself and were not reimbursed, Whyte says.
Two, make sure its related to your job and, three, you need a record to prove it.
There are plenty of ATO guides available to help people cut through the confusion of work-related deductions, including several occupation-specific guides at ato.gov.au.
DONT BE GREEDY
Whyte says the ATO will be paying extra attention to people whose work-related deductions are higher than expected, focusing on car expenses, travel, internet and phone, and self education. Its online my Tax lodgement system is its first line of defence.
If your claims are substantially higher than others in similar occupations, earning similar amounts of income, a message will appear asking you to check them, Whyte says.
The ATO will take a closer look at any unusual deductions and contact employers to validate these claims, so its worth getting things right at the start.
H & R Block director of tax communications Mark Chapman says statistics show that work-related claims have been rising, and the ATOs systems can now instantly compare your deductions with your previous claims and typical claims by other taxpayers like you.
In some cases, the ATO might even tell you before you lodge that youll be audited if you continue to file the claim.
BIG CLAIM AREAS
Chapman says the big three areas for work-related deductions are cars, clothing and home office expenses. Make sure your home office claims are correct and can be substantiated, he says.
Accounting firm UHY Haines Norton managing partner Michael Coughtrey says home office expenses including mortgage interest can be fully tax-deductible where the office is a place of business. However, claiming for mortgage interest means youll probably pay capital gains tax on a portion of your home when it is later sold.
Where the home office is merely a convenient place to do tasks that could be performed at the main work location, only a portion of occupancy costs such as light, power and airconditioning will be deductible, he says.
Make sure you can substantiate claims for phones, computer use and internet access, Coughtrey says.
Expenditure on clothing is not tax deductible unless it forms part of a compulsory corporate wardrobe or there are exceptional circumstances, he says.