ATO tax return: Inflation is no excuse for claiming too many business travel deductions

Australians struggling with the soaring cost of living have been warned this is no excuse to do so on their tax returns, with the ATO watching closely.

Australians struggling with the soaring cost of living have been warned that this is no excuse for claiming too many work-related deductions on their tax returns.

Australian Taxation Office assistant commissioner Tim Loh told the ABC that any taxpayer considering overclaiming this year could potentially be subject to review or audit.

Each year, around 8.5 million Australians claim about $20 billion in work-related expenses, an average of $3,000.

In addition to dodgy work-related expenses, Mr Loh said the taxman would also target Covid-related claims, rental deductions and people trying to hide or minimize cryptocurrency investments.

Work-related travel expenses are expected to drop with more people working from home during the pandemic.

“What we’re seeing from people is people are continuing to claim current travel costs at pre-pandemic levels,” Loh said.

“We saw a slight drop last year. But we expect current travel costs to come down quite significantly, because if you’re working from home, you can’t be in two places at once. The other thing we focus on is laundry expenses. Of course, if people were working from home, [they would have not been] wearing their uniform.

To claim things like rapid antigen tests, the worker must have paid for it themselves, not been reimbursed by their employer, and it must have been for work-related purposes.

“So if you’re determining if you can go with your friends to Byron Bay, that won’t be a deductible expense for that quick test,” Mr Loh said.

The ATO has previously warned that from July, people working from home must keep accurate records in order to claim home office expenses next year as the popular 80 cent shortcut method comes to an end.

To be eligible for the Shortcut Method this year, taxpayers must have worked from home and incurred additional operating expenses as a result, and have a record of the number of hours worked from home.

This can be in the form of a timesheet, list or diary.

“It’s rarely the best method for calculating your work-from-home expenses in terms of the deduction amount, but it has the great virtue of simplicity,” Mark Chapman, director of tax communications at H&R Block, told News.

“It consolidates all homework deductions – heating, cleaning, depreciation, cell phone use – into one penny per hour.”

Mr Loh said that for someone who works full-time from home for 48 weeks a year, the total deduction using the shortcut method could be around $1,500.

For those who wish to obtain a larger deduction using the fixed rate or actual cost method, the ATO warns to claim only the percentage of expenses used for business purposes.

“For example, for laptops, your cell phone and internet expenses, you can claim a deduction for that if you used it for business,” Loh said.

“We see people trying to claim 100% of expenses when [they] for part of the time can [have been] use the Internet for private purposes.

Maria D. Ervin