The tax deductions Australians are too afraid to claim revealed

Hard-working Australians are missing out on hundreds of dollars in unclaimed tax refunds because they’re worried about being audited. SEE WHAT YOU CAN CLAIM

Exclusive: Hard-working Australians are missing out on hundreds of dollars in unclaimed tax refunds out of fear of being audited by the tax office.

“Didn’t keep the receipt”, “concerned the ATO would disallow the claim” or “didn’t think the claim was allowable” are just some of the reasons nervous taxpayers are giving for not making a claim.

Sixty-six per cent of workers do not understand what they can and can’t claim on a tax return leaving them hundreds of dollars out of pocket.

These are the findings of a national survey of 1500 adult full-timers carried out for H&R Block in May looking into lost tax deductions.

The survey reveals we’re a nation of conservatives when it comes to making a claim with 40 per cent of Australians saying they would not claim on anything they were not 100 per cent sure should be part of their deductions.

Many workers do not understand what they can and can’t claim on a tax return.

Further to this, 43 per cent said they skipped a claim because they were unsure whether it was compliant.

Only 1 in 20 (5 per cent) taxpayers describe themselves as “risk-takers” and are among the younger generation.

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More than one in 10 (11 per cent) of 18-34-year olds say they claim on items that you “maybe shouldn’t” compared with only one per cent of 55-74-year olds.

Previous research has shown the average Australian misses out on an estimated $426 of unclaimed tax each year – or $1.65 billion nationwide.

The shock survey revealed we are a nation of conservatives when it comes to tax returns.

ATO figures show about two million taxpayers are audited every year.

“Our treatment strategy incorporates a range of engagement activities including letters, pre-issue reviews and post-issue audits, and interactions with agents and individuals,” an ATO spokesperson said.

In the last financial year, the ATO prosecuted eight individuals for criminal offences resulting from false or misleading claims or false documents for work-related expense claims, with eight individuals currently before the court.

In addition, the ATO has more than 50 individuals at different stages of investigation.

As at 26 August, the ATO had received more than 7.2 million lodgements, an increase of 16 per cent on the previous year or more than one million more.

A total of $10 billion has been refunded to Australian taxpayers (as at August 15), a rise of more than $2 billion from this time last year, with most returns being processed in under two weeks.

Car expenses can be claimed if you use your vehicle to travel between work locations.

More than four million refunds have already been sent out, compared to more than three million refunds this time last year.

The ATO says if your claim is legitimate then you won’t get into trouble.

“Taxpayers who are only claiming what they are entitled to and are worried about being audited needn’t fear,” an ATO spokesperson said.

“We do sometimes ask for more information on claims but if you are only claiming what you are entitled to and you have kept a record (like a receipt) to support your claim, you don’t have anything to worry about.”

H&R Block’s director of tax communications Mark Chapman said tax law is a minefield but follow one simple rule and you can’t go wrong.

“Understanding all the deductions you are entitled to can be difficult – the law is complex and the potential to get into trouble with the ATO if you wrongly claim something can make doing your tax return yourself stressful,” he said.

“But it’s important to remember that if you’ve paid for something as part of your job, you’ve not been reimbursed by your employer and you’ve got the paperwork – like a receipt or invoice – to prove that you spent the money, you should be able to claim a tax deduction.”

LOST TAX DEDUCTIONS

The percentage of Australians who missed out on a tax entitlement on specific items because they thought they were not entitled. Followed by a description of the entitlement of claim.

Mobile phone calls and data: 24 per cent. If you make or take work-related calls on your personal mobile phone).

Internet/wi-fi costs: 28 per cent. If you use your home internet for work-related

purposes)

Work-related calls can be claimed as a tax deduction.

Car expenses: 20 per cent. If you ever use your car to travel between work

locations or to travel to a second job. Remember travel to and from home to work is

not applicable

Laundry or dry cleaning of uniforms: 21 per cent. For any items with a company logo

Work bag: 20 per cent. If you are required to carry goods, laptop or papers to your place of work.

Public transport expenses: 15 per cent. If you ever use public transport between work locations or to travel to a second job. Remember travel to and from home to work is

not applicable

Overnight accommodation if you have been required to work away from home NOT paid for by your employer: 11 per cent. Does not include any accommodation paid for by your employer.

Source: Digital Edge Omnibus 2019 on behalf of H&R Block

FIVE SURPRISING THINGS YOU CAN CLAIM

Income Protection Insurance: If you pay for insurance premiums against loss of income, those amounts are tax deductible. But be careful; that doesn’t include life insurance, critical care insurance or trauma insurance. It also excludes policies paid for out of your superannuation contributions.

Social functions: As a general rule, the ATO won’t let you claim tax deductions for a night out. The exception is where attending the function is actually part of your work. An example would be where a journalist attends a function that they will later report on through their media outlet; in that case, a deduction can be claimed.

Gym memberships are one of the five surprising things you can claim.

Gym memberships: The ATO takes quite a hard line around deductions relating to personal health and fitness but there are a few people who are entitled to claim gym memberships, typically those who require a level of fitness well above the norm. Examples might include professional sportspeople and those defence force personnel who perform duties designed to keep them in tip-top shape, such as members of the special forces.

An apartment in another city: If you’re required to work away from home by your employer and you choose to rent or buy an apartment rather than relying on hotels or motels, you can claim a deduction for the work-related costs relating to the apartment, including either rent or interest on the mortgage, depending on whether you rent or buy.

Cost of overseas conferences, even if you stay on afterwards for a break. If you attend a conference overseas that is related to your current job and paid for personally, the costs associated with attending the conference should be deductible. That could include airfares, hotels and meals. Better still, you could even stay on afterwards for a short break provided the additional time overseas is merely incidental to the time spent at the conference or you couldn’t catch an earlier flight home.