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This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.


ATO Puts Spotlight on Work Claims

Those who work from home or use their own car for their job could face heavy scrutiny of work-related expenses over the next year in a new tax office crackdown, accountants warn.

Statistics showing a surge in tax deductions from the 2005-06 financial year totalling more than 27 billion- an 18.8 per cent jump from the previous year- have put the ATO on high alert, according to the head of accounting network AccountantsRus, Adrian Raftery. The body, which represents more than 60 independent accounting firms across Australia, said that those people who stretched their work-related expenses beyond their industry’s standards might face questions.

“There was only a 3.5 per cent increase in income (last year) but there was an 18.8 percent increase in deductions”, Mr Raftery said. “Those who are claiming too much- compared with their industry average- will be picked up.”

People with home offices or those who claim expenses from using their own car or travel extensively, as part of their employment, may also be in the ATO’s sights. “Car expenses probably make up half of total work-related expenses and with the logbook method you could have a $13,000 or $14,000 deduction for your car based on high lease costs and petrol increasing.”

Also coming under the ATO radar could be taxpayers with uniform expenses of more than $300 or those who take up work-related self-education. “Self-education is pretty popular and they can be expensive, like a master’s course,” Mr Raftery said. “Someone can easily spend $10,000 a year in self-education costs and that will contribute as well to the blowout and the ATO may want to see that there’s a direct nexus between what they’re studying and their (work goals).”

With more people completing their own tax online using the ATO’s free e-tax service, more workers may be unaware of deduction limits and the potential for greater scrutiny. “There’s been a fair increase in the number of people using e-tax and they can play with the figures themselves a little bit more and they may not be totally in tune with what to claim” Mr Raftery said.

The comments follow last week’s release of tax office statistics showing the discrepancy between deductions and income – as well as some  warning commentary by tax commissioner Michael D’Ascenzo for workers to “take particular care” with claims. “I’m pretty confident there will be more audit activity by the ATO and if they do pick those who claim too much and are dodgy, they’ll have to pay penalties” Mr Raftery said. “It’s going to be anyone who claims more than 5 per cent of their assessable income who should expect some interaction with the ATO.”

Mr Raftery said taxpayers should pay close attention to precise record-keeping. “They need to have great record-keeping and keep all of their receipts and if they are claiming their car, make sure they keep a logbook. And a logbook needs to be maintained for 13 weeks and that lasts for five years- and in that five years if their job description changes and they’re office-bound, they’ll need to do another logbook.”

LISA MACNAMARA, The Australian
March 29, 2008


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