The 2013/2014 financial year is nearly over, and that means it's time once again for our annual Tax Week series of posts. The big issue to bear in mind this year? The Australian Taxation Office (ATO) will be carefully checking claims for usage of computers and phones for work purposes.
Home office picture from Shutterstock
In previous years, the ATO has singled out particular occupations for additional auditing; in 2012, for example, IT professionals and plumbers were singled out. This year, rather than concentrating on specific occupations, it has decided to focus more generally on work-related expenses (which total $19.5 billion a year, statistics fans).
Three categories are being particularly checked: overnight travel, transporting bulky tools and equipment, and work-related usage of computers, phones or other gadgets. We imagine the last one is going to have the biggest impact on most Lifehacker readers.
If you need to use your phone or computer for work, you are entitled to claim that cost against your taxable income. Similarly, if you need internet access at home for work purposes, you can claim part of your ISP costs.
However, the claim needs to be proportional: if you use your technology for both work and private purposes (which is the case with most mobile phones), you need to apportion the costs between them. That's the case even if your phone bill is a flat-rate deal: you still need to divide what you pay. The ATO recommends keeping a diary for at least four weeks to establish your usage patterns for both personal and private use.
The ATO's announcement of the 2013/2014 crackdown highlights common mistakes people make with deductions of this kind:
- Not being able to demonstrate that the service in question was needed for work purposes.
- Not being able to prove what proportion of the usage was for work. If you're audited and can't provide evidence, the entire claim is likely to be disallowed.
- Lodging a claim for expenses which have been reimbursed by an employer.
The lesson? Make sure you can demonstrate why a claim is relevant, and don't claim more than you're entitled to.
Reminder: For specific tax advice relating to your individual situation, consult a registered professional.