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ATO cracks down on false claims

Each year, the ATO cracks down on certain hotspots to ensure everyone is paying their fair share of tax. This year, it’s claims for “other” expenses.

This tax return season, the tax office is shining the spotlight on false work-related deductions so it’s important to ensure that any work-related expenses you are claiming are legitimate expenses in earning your income.

We can advise you on what’s claimable and what’s not. Allowable claims can include home office expenses, mobile phone and internet bills, and work equipment.

But the tax office believes many of the more than six million Australians who claim this type of deduction are over-claiming. Many people don’t understand what qualifies as a work-related expense and many others don’t keep the receipts required as evidence.

Here’s a simple way to distinguish a dodgy claim from a bona fide one. To claim work-related expenses, you must satisfy these four points:

  • You must have spent the money yourself
  • You were not reimbursed for the money spent
  • The expense must be directly related to earning your income
  • You must have a record to prove it – paper or electronic receipts are acceptable

Accounting software such as Xero makes it easy to keep track of your receipts electronically.

Remember too that if your expenses are for both work and private use you can only claim a deduction for the work-related portion.

Wondering what kind of claims don’t make the grade with the ATO?

One example is a salesman who tried to claim $5,400 worth of “secretarial” payments to his seven-year-old son who sometimes ran upstairs to the study when the phone was ringing, answered the phone and then handed it to his father.

The same man also tried to claim as deductible “stationery” a Dora the Explorer pencil case, heart and star-shaped stickers, crayons and art brushes.

You have to give him points for trying.

We’re approaching peak tax return season so we suggest you make an appointment sooner rather than later to discuss yours. Our 2018 tax return checklist will help you get prepared.

Contact us today to book in your tax return.

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