Trying to Claim Netflix in Your Tax Return? The ATO Is Watching You

Trying to Claim Netflix in Your Tax Return? The ATO Is Watching You
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The end of the financial year is coming up quick folks, and as we’ve already discussed, tax season is likely to look a little different. From extended hours working from home to the complexities of crypto investments, there’s a lot to keep in mind this year, and the ATO says a “copy and paste” job of your last tax claim will not cut it.

Here are the key points to keep in mind.

The ATO is cracking down on certain tax claims

Last year, Assistant Commissioner Tim Loh noted in a statement that the ATO is expecting a bump in claims, but that Aussies need to keep in mind that the shift in work culture means some traditional claims may no longer make sense.

“We do expect the current travel expenses to go down quite significantly because if you’ve been working from home, you can’t be at two places at once,” he told ABC News.

Loh also pointed to laundry expenses as a questionable claim, saying if you’ve been working from home you won’t have needed to wear a uniform.

Double-dipping your expenses is another thing Loh warned the ATO would be on the lookout for.

“While some people make genuine mistakes, we do see people trying to gain an unfair advantage by claiming incorrect or false expenses. A mistake that we often see in tax returns is people claiming expenses twice,” he said in an ATO statement.

Claiming car and travel costs is one thing that the ATO has seen a rise in as people try to use the cents per kilometre method as well as claiming separate expenses like registration and insurance.

“You must choose your preferred method when calculating car expenses, the cents per kilometre or the logbook method. Just because there is a dip in the road, doesn’t mean you can double dip your car expenses,” Loh warned.

The same goes for work-from-home expenses. Individuals can use the 80c shortcut method that the ATO introduced during the pandemic (which is still in effect until June 30), but then can’t separately claim internet bills or the like as well.

The ATO outlined this in its statement:

A common mistake we see is people using the working from home shortcut method to claim their working from home expenses and then double dipping, claiming additional amounts in their return for expenses such as their mobile phone and internet bills, as well as the decline in value of equipment and furniture.

When the working from home shortcut method is used to claim working from home expenses, it is all-inclusive.

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Another thing you shouldn’t be claiming? Netflix. (Unless it really is for your work).

Loh told ABC News that claiming 100% of something like your phone or internet bill when you’ve also been using it privately for things like streaming TV shows or calling your parents, isn’t acceptable.

“We see people try to claim 100 per cent of the expense when [they] for some of the time may [have been] using the internet for private purposes.”

Similarly, if you have a legitimate work reason for using a streaming service like Netflix but also use it privately, you shouldn’t claim 100% of the subscription costs.

Ray Jaramis, head of Financial Wellness at Employment Hero, shared some more insight, saying the ATO has “benchmarks and averages for certain claims,” and the organisation will crosscheck “your claims with comparable claims from people in similar occupations”.

Be honest, and “don’t surrender to the temptation of copying and pasting your previous year’s tax return,” he warned.

Most of us will have different claims this year because, simply, the world was remarkably different last year. Submitting a carbon copy of last year’s tax return [generally] won’t be a fair reflection on how you worked last year, so just don’t do it, Jaramis added.

This goes for everything from working style to crypto investments.

Hold onto your receipts

The above being said, the ATO is aware that many people may genuinely have considerably different tax returns due to the pandemic. On this point, Loh simply stated that it’s important you keep receipts on hand and hold onto any relevant evidence surrounding unusual purchases.

It’s always worth chatting with your accountant if you’re unsure; they’ll be able to offer some guidance.

Car depreciation is another area that has been flagged in the lead-up to tax time.

On this, Jaramis shared that, “it’d be reasonable to think that most of us used our car less last year than we have in previous years. If you have used your car a lot, just make sure your records reflect it.”

Honest mistakes are not the end of the world, but be diligent

The statement from the ATO specified that genuine errors will be considered, but excessive claims will not be overlooked.

On this point, Jaramis added that while your accountant is there to help you file your tax return, it’s important to understand that “using a tax accountant does not absolve you of all responsibility”.

“You can’t simply put your hands up and say ‘over to you, accountant’. You have a responsibility to know what you’re claiming and to confirm the details of your income tax return before they lodge it for you,” he said.

For some additional detail on what you can and can’t claim, check out the ATO’s occupation and industry guides here.

This article on the ATO and tax season has been updated since its original publish date.

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