ATO turns focus to car expenses
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