Regional Business Forum 2019

The ATO is Watching You

Now more than ever, it is crucial for individual taxpayers to ensure they are completing their tax returns correctly.

Armed with an additional $130m of funding from the Federal budget, the Australian Taxation Office (ATO), from 1 July 2018 will be increasing their compliance activities targeting individual taxpayers.

The ATO are making it very clear that they will be closely examining claims for work-related car expenses this tax time as part of a broader focus on work-related expenses.

The ATO is particularly concerned about taxpayers claiming for things they are not entitled to, such as private trips, trips they didn’t make, and car expenses that their employer paid for or reimbursed.

“Over the 25 years I have been working in the accounting industry, 2018 has seen an unprecedented volume of communication from the ATO in relation to work-related expenses.”

Assistant Commissioner Kath Anderson said each year approximately 870,000 people claim the maximum amount under the cents-per-kilometre method. The ATO is concerned that some taxpayers mistakenly believe that this is a “standard” deduction they are entitled to, without needing to provide any evidence of having travelled that distance, or even having undertaken any travel at all.

“Unless you have a work-related need to travel while performing your job, you won’t be able to claim a deduction. For example, travelling from home to work is not deductible for most people.”

She said the cents-per-kilometre method of calculating deductions for expenses is to simplify record-keeping, not to provide a free ride.

“It’s true that claims of up to 5,000 kilometres using the cents per km method don’t require a log book,” Ms Anderson said. “However, you still need to have done the kilometres as part of your job and be able to show how you calculated your claim, for example by keeping a diary of places you have had to drive to for work, and how often.”

The Assistant Commissioner said that the ATO’s ability to identify claims that are unusual has improved due to enhancements in technology and data analytics. “We compare taxpayers to others in similar occupations earning similar incomes. Our models are especially useful in identifying people claiming things like home to work travel or trips not required as part of your job,” Ms Anderson said.

She points out that taxpayers should be reminded before they make the claim that this year the ATO might actually check with their employer.

The ATO also made a commitment earlier this year to focus on 'other' work-related expenses, after $7.9 billion in claims were recorded last year between about 6.7 million Australian taxpayers.

Our recent Salary and Wage Earner seminar series has finished, however we are offering FREE information on how to ensure you maximise your claims and meet your record substantiation obligations.  Please don't hesitate to CONTACT one of our taxation specialists today.

This publication is issued as general advice.  The contents are not a substitute for specific advice and should not be relied upon as such.  Accordingly, whilst every care has been taken in the preparation of this publication, no responsibility is accepted for persons acting on this information.

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