If you engaged in a little "creative licence" while lodging your tax return last year, it's time to start worrying: the Australian Taxation Office (ATO) is still sifting through everyone's work-related expenses for 2017 and it reckons a lot of them smell fishy. A whopping $7.9 billion was claimed by Australian taxpayers for "other work-related expenses" last year.
Consequently, Australians are now officially "on notice" to have their receipts ready for inspection.
"Other work-related expenses" are often entirely legitimate and can include things like mobile phone and internet costs, home office equipment, union fees, tools and overtime meals. However, they need to be for work purposes only. If your expenses are for both work and private use (such as a mobile phone) you can only claim a deduction for the work-related portion.
In a statement on the ATO website, Assistant Commissioner Kath Anderson warned that the ATO is paying close attention to ‘other’ work-related expenses this year with an aim to ensure people are not over-claiming. The organisation is now using sophisticated systems and analytics to ensure wrongdoing doesn’t fly under the radar.
Anderson said other work-related expenses would only be approved if they met the following "three golden rules":
Firstly, you must have paid for it and not been reimbursed, secondly, it must be directly related to earning your income and not a private expense, and thirdly, you must have a record to prove it.
Many taxpayers make legitimate claims, but we are also seeing errors in some claims, and some taxpayers are making risky or outright false claims.
After recent revelations that one in five of Australia's largest companies have paid no tax for the past three years, it might seem unfair for the ATO to come after "the little guy".
However, as Anderson notes; "These might not always be big amounts, but together they add up. Plus, no matter how small, it’s not ok for someone to expect the rest of us to pay for their private expenses." Seems legit. </sarcasm>
If you want to reduce your tax bill, you need to claim as many legitimate deductions as you can. While most people know about travel expenses and charitable donations, there are many additional deductions you might be able to claim. Some of these items may surprise you - from video game consoles and Netflix subscriptions to pet dogs and sex toys.