Australian Taxation Office warns workers about over-claiming

EMPLOYEES are getting themselves into hot water with the Australian Taxation Office by over-claiming deductions for work-related expenses.

WORKERS are getting themselves in hot water with the Australian Taxation Office by over-claiming deductions for their phones, internet use, home office and other work-related expenses.

The ATO is delivering an early warning to taxpayers — months before tax returns are due — in response to a record $7.9 billion of deductions last year for “other work-related expenses”, a category that covers all work costs other than car, travel, clothing and self-education.

It has emailed 1.3 million of the 6.7 million taxpayers who last year claimed these deductions, and since July 2016 has adjusted $100 million of incorrect work-related claims.

“It’s not OK for someone to expect the rest of us to pay for their private expenses,” said ATO assistant commissioner Kath Anderson.

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She said a big issue was people claiming 100 per cent of costs for expenses such as phone or internet use when they should instead be apportioned between work and private use.

“Some people are claiming home office expenses when they’re not working from home.”

The ATO is contacting both individual taxpayers and tax agents, is using hi-tech analytics to spot false claims and is talking with employers.

ATO assistant commissioner Kath Anderson says people are over-claiming deductions.

“We are seeing mistakes in this particular item and we are seeing them in both self-prepared returns and returns prepared by tax agents. The agent can only work with what the individual tells them,” Ms Anderson said.

Tax specialist and Deakin University associate professor Adrian Raftery said ATO penalties could be up to 75 per cent of the shortfall amount plus an interest charge of 8.72 per cent.

Dr Raftery said many taxpayers did not know what they were able to claim, or understand the personal versus private use component.

“More and more people are lodging returns themselves through the ATO so they don’t have agents saying they shouldn’t be claiming that,” he said.

“Don’t feel threatened by the ATO when they make these catch-all statements, because if you legitimately have a claim and are working it out correctly, claim it.

“By all means go right to the boundary, but don’t go over it.”

Ms Anderson said the ATO’s analytics tools compared people’s deductions with those in similar occupations earning similar incomes to spot questionable claims.

“People think we have no way of knowing, when in fact we can if we need to,” she said.

“We want people to claim what they are entitled to, and there are some circumstances where people have 100 per cent work-related use of a phone.”

@keanemoney

NO DEDUCTION FOR YOU!

Unusual and incorrect claims for work-related expenses:

• A salesman paid his young son to answer his phone and tried to claim a tax deduction for it;

• An employee tried to claim a tax deduction for bringing a sandwich maker to the staff kitchen;

• A teacher tried to claim the full cost of their Foxtel subscription because they wanted to keep up to date with what students were watching;

• One taxpayer claimed the cost of having a guard dog even though it was a maltese terrier.