ATO turns fo­cus to car ex­penses

The Weekly Advertiser Horsham - - Understand­ing Your Tax -

The Aus­tralian Tax­a­tion Of­fice is again mak­ing work-re­lated car ex­penses a key fo­cus dur­ing tax time.

This fol­lows warn­ings by the ATO last year that work-re­lated car ex­penses would face greater scru­tiny.

As­sis­tant Com­mis­sioner Karen Foat said more than 3.6-mil­lion peo­ple made a work-re­lated car ex­pense claim in 2017–18, to­talling more than $7.2-bil­lion.

“We are still con­cerned some tax­pay­ers aren’t get­ting the mes­sage that over-claim­ing will be de­tected and if it is de­lib­er­ate, penal­ties will ap­ply,” she said.

“While some peo­ple do make le­git­i­mate mis­takes, we are con­cerned many peo­ple are de­lib­er­ately mak­ing dodgy claims in or­der to get a big­ger re­fund.

“We see tax­pay­ers claim­ing for things like pri­vate trips, trips they did not make, and car ex­penses their em­ployer paid for or re­im­bursed them for.

“Do­ing the wrong thing is not vic­tim­less. When you claim a re­fund you are not en­ti­tled to, you are steal­ing from the whole com­mu­nity and dis­ad­van­tag­ing those who do the right thing.”

Ms Foat said one in five car claims are ex­actly at the max­i­mum limit that

does not re­quire re­ceipts. She said un­der the cents-per-kilo­me­tre method, tax­pay­ers do not need to keep re­ceipts, but they do need to be able to demon­strate how they worked out the num­ber of kilo­me­tres they trav­elled for work pur­poses.

“While some claims of ex­actly 5000 kilo­me­tres are le­git­i­mate, we have found many peo­ple are un­able to show how they have ar­rived at this amount, and as a re­sult they have had their claim re­duced or dis­al­lowed in full,” she said.

Ms Foat said the ATO’S so­phis­ti­cated an­a­lyt­ics com­pared tax­payer claims with oth­ers earn­ing sim­i­lar amounts in sim­i­lar jobs.

“Where the ATO iden­ti­fied ques­tion­able claims the of­fice would con­tact tax­pay­ers and ask them to show how they have cal­cu­lated their claim,” she said.

“In some cases, where fur­ther scru­tiny is war­ranted, the ATO might even con­tact em­ploy­ers to con­firm whether a tax­payer was re­quired to use their own car for work-re­lated travel. Sim­ply driv­ing be­tween work and home is not enough to war­rant a de­duc­tion.

“You must have a work-re­lated need to travel while per­form­ing your job, like trav­el­ing from site to site or be re­quired to trans­port bulky tools.”

There are three golden rules for tax­pay­ers to re­mem­ber to get it right when it comes to car ex­penses: • Gen­er­ally, trips be­tween home and work can­not be claimed, un­less you are re­quired to trans­port bulky equip­ment. • Do not ‘dou­ble dip’ by claim­ing car ex­penses paid for or re­im­bursed by your em­ployer. • Make sure you keep records to prove how you worked out your claim.

“While some claims of ex­actly 5000 kilo­me­tres are le­git­i­mate, we have found many peo­ple are un­able to show how they have ar­rived at this amount, and as a re­sult they have had their claim re­duced or dis­al­lowed in full” – Karen Foat

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