End of financial year AGAIN already!
How quick do 12 months fly.
One could be forgiven for thinking the ATO has nothing better to do but chase small dodgy claims from the little guys rather than going after those big tech guys.
Regardless of this, the ATO is very clear on what you can and can’t claim.
In the ATO’s words:
“When completing your tax return, you're entitled to claim deductions for some expenses, most of which are directly related to earning your income.”
What is a work-related claim?
you must have spent the money yourself and weren't reimbursed
it must directly relate to earning your income
you must have a record to prove it.
I’ve written about this in my previous blogs; how lenient is the ATO with tax claims and end of financial year tax planning.
Some of the more commonly accepted work claims include:
Vehicle and travel expenses
Clothing, laundry and dry-cleaning expenses
Home office expenses
Tools, equipment and other assets
Other work-related deductions
BUT the simple rule is that these expenses must have been incurred in the process of earning an income and must be substantiated.
With the advent of the sharing economy which include services such as AirBnB, Uber & Uber Eats, GoCatch, Deliveroo etc, opens up another area of potential targeting by the ATO for incorrect and/or fraudulent claims. For information on tax and sharing economy, visit The Sharing Economy and Tax page.
Some of the more common work place expenses that you need to be mindful of include:
Claims for work-related clothing, dry cleaning and laundry expenses. The ATO has indicated that it will check taxpayers who take advantage of the exemption from keeping receipts for less than $150 spent on laundry expenses.
Deductions for home office use, including claiming for “occupation” costs like rent, rates and mortgage interest, which are not allowable unless you’re running a business from home.
Overtime meal claims
Union fees and subscriptions
Mobile phone and internet costs, with special attention on people who are claiming the whole (or the majority) of the bill for their personal mobile as work related.
Motor vehicle claims where taxpayers use the 68cents per kilometre rate for journeys up to 5,000km. The ATO believes too many taxpayers are automatically claiming the entire 5,000kms irrespective of the actual amount of travel they have undertaken.
Other claim areas to be mindful of are:
Repairs to rental properties.
Holding costs (e.g., interest) for properties being repaired, renovated or constructed.
Travel claims in relation to residential properties.
Depreciation claims for assets in rental properties
Claiming the correct amount AND the allowed category can be very confusing for many business owners – if in any doubt, this is where you MUST speak with your accountant and know for sure what you can and cannot do.
Aperture Accounting, 1300 273 788