ATO’S warn­ing against in­cor­rect tax de­duc­tions

Chinchilla News - - NEWS -

IN­COR­RECT tax de­duc­tions for work-re­lated car use are put­ting many Aus­tralians on a col­li­sion course with the Aus­tralian Tax­a­tion Of­fice.

The lat­est ATO data shows that al­most one-quar­ter of tax­pay­ers claim car de­duc­tions de­spite many not be­ing en­ti­tled to do so.

The ATO is is­su­ing a fresh warn­ing as its tech­nol­ogy be­comes more so­phis­ti­cated at catch­ing cheats.

Even the 5.4 mil­lion peo­ple who al­ready have lodged re­turns this year risk get­ting caught if they made dodgy car claims.

“There’s on­go­ing ev­i­dence that peo­ple are mak­ing mis­takes in their work-re­lated car ex­penses,” ATO as­sis­tant com­mis­sioner Kath An­der­son said.

She said the high­est num­ber of work­ers claim­ing car-re­lated de­duc­tions were man­agers, sales and mar­ket­ing em­ploy­ees, teach­ers, of­fice work­ers and car­ers.

Many claim travel be­tween home and work, which is gen­er­ally not de­ductible. Some claim car use for trans­port of bulky tools when their tools are not bulky enough.

Oth­ers are po­ten­tially pock­et­ing il­le­gal de­duc­tions of up to $3300 by us­ing the pop­u­lar 66c per kilo­me­tre claim for travel up to 5000km that does not re­quire a log­book.

They are claim­ing right up to the limit with­out show­ing how they cal­cu­lated it.

“We have found that in a few cases peo­ple have con­sid­ered it an en­ti­tle­ment,” Ms An­der­son said.

“There’s no such thing as a free pass when it comes to de­duc­tions.

“Peo­ple might think they have a few fold­ers to carry and that qual­i­fies as bulky tools, when in fact that’s not the case.”

Tax spe­cial­ist An­drea Michaels, the man­ag­ing director of NDA Law, said there were “some old wives tales about what you can and can’t claim”.

“Peo­ple think that for pick­ing up mail on the way to work they can claim their car but they can’t,” she said.

Ms Michaels said in­no­cent mis­takes would prob­a­bly re­sult in hav­ing to pay back the debt plus in­ter­est, but know­ingly false state­ments — such as claim­ing for use of an em­ployer’s car — “put you into a 75% penalty regime, plus in­ter­est, and their in­ter­est rates are pretty high”.

“If you are a cleaner and us­ing your car, they will know the av­er­age car ex­penses for a cleaner, and if you are out­side the av­er­age that will flag an au­dit.”

The lat­est de­duc­tions data shows that more than three mil­lion peo­ple made work-re­lated car ex­pense claims in 2015-16.

The ATO un­der­took 450,000 re­views of tax re­turns and peo­ple were forced to pay back $1 bil­lion.


DRIV­ING THE MES­SAGE HOME: Be sure to claim only what you are en­ti­tled to when mak­ing ve­hi­cle-re­lated tax de­duc­tions.

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