ATO driven to scrutinise car claims this tax time
THE Australian Taxation Office (ATO) has announced that it will be closely examining claims for workrelated car expenses this tax time as part of a broader focus on work related expenses.
Assistant Commissioner Kath Anderson said over 3.75 million people made a work-related car expense claim in 2016–17, totalling around $8.8 billion.
“That’s a lot of money and Australians expect us to ensure people are not over-claiming,” Ms Anderson said.
“While most people want to do the right thing, we know the rules can be a bit tricky for some and we are seeing a lot of mistakes.
“We are particularly concerned about taxpayers claiming for things they are not entitled to, like private trips, trips they didn’t make, and car expenses that their employer paid for or reimbursed.”
There are two ways to calculate a deduction for car expenses – the cents per km method which is limited to claims for work-related travel up to 5000 kms, and using a log book to determine the workrelated percentage of actual expenses incurred.
Each year around, 870,000 peo- ple claimed the maximum amount under the cents-per-kilometre.
“It’s legitimate to claim for 5000 kilometres if you did actually do them as part of earning your income. “However, we are concerned that some taxpayers mistakenly believe that this is a “standard” deduction they are entitled to, without needing to provide any evidence of having travelled that distance, or even having undertaken any travel at all,” Ms Anderson said.
“It’s true that claims of up to 5000 kilometres using the cents per km method don’t require a log book. “However, you still need to have done the kilometres as part of your job and be able to show how you calculated your claim.”
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.”
For more information about work-related car expenses, visit ato. gov.au/carexpenses and to find out about myDeductions, visit ato.gov. au/mydeductions
TAKE THE WHEEL: Be scrupulous with your car related deductions this tax time.