If you’re planning to submit a tax return claim for mobile phones, rental deductions, cars, travel, and internet expenses? Then, be mindful that the ATO will be paying closer attention this year!

According to an article released on ABC this year, three of the biggest themes the ATO have chosen to focus on this year are for people who are not declaring all of their income, and people who are over-claiming rental and work-related expenses.

Why Are They Doing This?

Overall, there is a growing concern that people are treating their allowances as a free perk, without them actually having paid out for the expense in the first place.

In the 2017-2018 tax year, over $16.5 billion was claimed in work-related expenses. Of this amount, $6.2 billion was for work-related car expenses. Out of the 7 million individuals that claimed these car expenses, 2.8 billion of these claims were for the maximum allowance.

In the same period, there were almost half a million people who claimed a combined figure of $900 million in self-education costs. A total of $1.5 billion was claimed for clothing expenses that related to people’s employment. Finally, a total of 6 million people claimed $6.5 billion in other work-related expenses, such as internet and mobile phone usage.

According to the Assistant Commissioner,

‘’the ATO is concerned that people are intentionally making false claims in order to get a bigger refund.’’

Details of Eligible Allowance Amounts for Expenses

  • For general work-related expenses, people are able to claim up to $300 in a given tax year.
  • They can claim up to $150 for laundry of work items.
  • For travel, a tax return can be claimed for any distance of up to 5,000 KM, without there being any need to provide a receipt.

The ATO is deploying significant analytical evidence that will evaluate more than 500 million individual transactions on a yearly basis. This information will compare different taxpayers claims directly with others in similar employment, earning similar amounts.

They also intend on tripling the number of audits they are set to perform in 2019 on rental claims too. Here’s why.

In 2017-2018, over 2 million Australians claimed almost $50 billion in rental deductions. After auditing just 1500 people over the same period, more than $1.3 million in fines were handed out.

Aside from the above, another common occurrence that the ATO has raised as a concern is the fact that many people are now earning incomes through share-economy services, such as Airbnb, Airtasker, and Uber; and they are still not fully declaring their income to the tax office.

Current ATO Advice

The ATO has advised people to make sure they keep a record of their expenses. Because of the increase in audits that are now going to be carried out, individuals need to be able to prove how they arrived at their figures and how they have worked out their claims. If a claim if going to be made, then the individuals concerned will need to be able to clearly demonstrate that they have a reasonable basis for this cost.