ATO to crack down on travel, clothing claims for home-based workers

Aussies who continue to claim deductions for these items — despite working from home — will find themselves on the ATO’s radar this tax time.

The Australian Taxation Office is on the lookout for anyone trying to claim hefty working-from-home expenses while also maintaining or increasing claims for things like car, travel or clothing expenses.

The ATO had to shift focus last year on getting stimulus benefits out the door as quickly as possible but warns it will return its attention to overclaiming work-related expenses this tax time, noting the pandemic had changed people’s work habits.

“We know many people started working from home during Covid-19, so a jump in these claims is expected,” assistant commissioner Tim Loh said.

The ATO is on the lookout for people claiming substantial travel expenses despite working from home during the pandemic. Picture: iStock

“But, if you are working at home, we would not expect to see claims for travelling between worksites, laundering uniforms or business trips.

“You can’t simply copy and paste previous year’s claims without evidence.”

The ATO’s data analytics will also be on the lookout for claims where someone’s deductions are much higher than others with a similar job and income.

Last year, the value of car and travel expenses decreased by nearly 5.5 per cent, but there was a 2.6 per cent rise in uniform and laundry claims, driven by frontline workers’ first-time need for products like hand sanitiser and face masks.

ATO assistant commissioner Tim Loh warns firm action will be taken against people deliberately making claims they’re not entitled to.

“We know some of these unusual claims may be legitimate. So, if you explain your claim with evidence, you have nothing to fear,” Mr Loh said.

“We also want to reassure the community that we will be sympathetic to legitimate mistakes where good faith efforts have been made.

“However, where we spot people deliberately claiming things they’re not entitled to, we will take firm action.”

There’s a simple formula for working-at-home expenses rather than listing specific costs such as power bills. Picture: iStock

WORKING FROM HOME EXPENSES:

The temporary shortcut method for working-from-home expenses is an all-inclusive rate of 80 cents per hour for every hour worked from home.

Keep a record such as a timesheet, roster or diary entry that shows the hours you worked.

If you want to claim part of an expense more than $300, such as a desk or computer in future years, you need to keep your receipt.

PERSONAL PROTECTIVE EQUIPMENT:

If your duties require physical contact or proximity to customers or clients, or your job involves cleaning premises, you may be able to claim items such as gloves, face masks, sanitiser or antibacterial spray.

This includes industries like healthcare, aviation, hair and beauty, retail and hospitality.

You’ll need to have purchased the item for use at work, paid for it yourself and not been reimbursed. You also need a record, preferably a receipt, to support your claim.

CLOTHING, SELF-EDUCATION AND TRAVEL EXPENSES:

The value of claims for work-related non-PPE clothing and self-education fell last year as a result of travel restrictions and limits on the number of people who could gather in groups, a trend the ATO expects to continue in 2021 tax returns.

Employees who work from home due to Covid-19 but sometimes need to travel to their regular office cannot claim the cost of travel from home to work, as these are still private expenses.