Time to look sharp

If you claim work expenses on a tax return, make sure you can explain them, writes

Anthony Keane

WORK- related deductions are in the Australian Taxation Office’s firing line this year, prompting a warning for employees to be careful about last- minute claims.

The final week of the financial year is a popular period for tax- deductible purchases, but the ATO has warned on several occasions in recent months that it will keep a close eye on workrelated claims for mobile phones, home office, travel, clothes and self- education.

Its latest target is clothing, after finding that last year half of all taxpayers made claims for uniforms or protective clothing – despite there being strict rules about what clothes can be claimed.

H & R Block director of tax communications Mark Chapman said uniform expenses had become an issue, particularly around the $ 150 that workers were able to claim without receipts.

“The ATO is concerned people are claiming that irrespective of whether they’re entitled to claim or not,” he said.

“Home office expenses is another one in their sights. They think people are claiming an excessive proportion of household bills.”

New research by Officeworks has found that clothing, laundry and dry cleaning are the most common deductions forAustralians, but it also found that 10 per cent of employees were not doing tax returns – missing out on hundreds of millions of dollars of legitimate deductions.

“They told us they don’t understand tax – which might be a contributing factor for people not bothering doing their return,” said Officeworks head of technology Sandy Young. “The research also told us that people just don’t have enough time. “But perhaps if they better understood their tax situation and what they could claim, they would make doing their return more of a priority.” Mr Young said there were many free online tools, calculators and guides on websites such as ato. gov. au to help people understand what to claim, or they could speak with a tax agent. Etax. com. au senior tax agent Liz Russell said work expense claims must be related to your current job. “Online courses are a quick and easy last- minute deduction you can claim ahead of the end of financial year, but you need to be able to demonstrate that the course has a sufficient connection to your existing occupation, is a requirement for your job and improves the skills and knowledge you need to do your job,” she said.

Ms Russell said the ATO had many ways to verify that deductions were legitimate.

“Its sophisticated datamatching technology can compare your claims against other taxpayers in similar occupations who are earning a similar income, and if your tax deductions are wildly out of sync, you can expect the ATO to come knocking,” she said.

“The good news is that the ATO doesn’t expect you to keep receipts for every single small- ticket item or service. If the total claims don’t exceed $ 300, you’re not required to have any written evidence.”

But you must still be able to explain how the claim relates to your job.