Car claims in the crosshairs

Ovens & Murray Advertiser - - NORTH EAST REGIONAL EXTRA -

THE Aus­tralian Tax­a­tion Of­fice (ATO) is warn­ing tax­pay­ers that they are pay­ing close at­ten­tion to claims for work-re­lated car ex­penses this tax time.

As­sis­tant Com­mis­sioner Kath An­der­son wants tax­pay­ers to avoid get­ting tripped up by mak­ing claims that they can’t jus­tify, cit­ing ‘stan­dard’ claims as a com­mon er­ror.

“Some peo­ple think they are en­ti­tled to a ‘stan­dard de­duc­tion’ for car ex­penses, us­ing the cents per kilo­me­tre method, but this is not the case.

“While it’s true that you don’t need writ­ten ev­i­dence for claims of up to 5000 kilo­me­tres per year, you do need to be able to show that you were re­quired to use your car for work, and how you cal­cu­lated your claim.

“Over 3 mil­lion peo­ple made a work-re­lated car ex­pense claim in 2015–16, to­talling around $8.5 bil­lion.

“A sig­nif­i­cant pro­por­tion of th­ese claims were right at the limit that does not re­quire de­tailed records,” she said.

“While we have no is­sue with peo­ple us­ing the cents per kilo­me­tre method and we ex­pect that most claims at this thresh­old may be le­git­i­mate, we are re­mind­ing peo­ple that there’s no such thing as a ‘ free pass’ when it comes to de­duc­tions.”

Ms An­der­son said the ATO wants peo­ple to claim what they’re en­ti­tled to, no more and no less.

Car ex­penses in­curred in per­form­ing your du­ties as an em­ployee are gen­er­ally de­ductible, but tax­pay­ers usu­ally can’t claim trips between home and work un­less they’ve got a good rea­son, such as car­ry­ing bulky tools or equipment to work.

“If you make a claim for trans­port­ing bulky tools, you need to be able to prove you were re­quired by your em­ployer to take th­ese items to work, and that there was no safe place to store them.

“It is also im­por­tant to make sure you don’t dou­ble-dip.

“In other words, you can­not claim ex­penses that have al­ready been paid by your em­ployer, in­clud­ing salary sac­ri­fic­ing ar­range­ments,” she said.

Ms An­der­son said there are three golden rules for tax­pay­ers to re­mem­ber to get it right.

“One – you have to have spent the money your­self and can’t have been re­im­bursed, two – the claim must be di­rectly re­lated to earn­ing your in­come, and three – you need a record to prove it.”

The myDe­duc­tions tool in the ATO app can help make keep­ing records eas­ier, and at tax time you can send your de­duc­tions to your tax agent or upload them di­rectly to myTax.

The app is par­tic­u­larly use­ful for peo­ple who use their car for work, as it helps them track trips us­ing GPS, point-to-point or the odome­ter method.

This year myDe­duc­tions is avail­able to sole traders as well as in­di­vid­u­als.

Ms An­der­son said tax­pay­ers who are con­fused about what they can claim a de­duc­tion for should talk to their tax agent or visit the ATO web­site.

For more in­for­ma­tion about work-re­lated car ex­penses, visit ato.gov.au/car­ex­penses and to find out about myDe­duc­tions, visit ato. gov.au/myde­duc­tions.

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