Work expenses, such as car, travel, uniform, laundry and self-education, amount to 57% of total claims by individuals. Some 6.7 million taxpayers claimed $8.8 billion in 2001, an increase of nearly 11% on 2000.
While some of this is related to goods and services tax (GST), we are working with tax agents and industry representatives to better understand this increase. We have also selected 135,000 taxpayers from different occupations and asked them to confirm these deductions.
ATO Audit Activity
The ATO's action for the 2003 tax year is to write to selected taxpayers in June indicating the focus the ATO have on this area and that taxpayers will need to be careful when making claims. The letter also details some of the common errors and for some taxpayers they will be required to complete and lodge an additional rental schedule, which provides more details on claims made, which will be reviewed by the ATO audit staff. Taxpayers who use Tax Agents and those who do their own returns will be targeted.
This activity will be across various occupation categories and the case selection Is from 2002 tax returns particularly where a large increase in claims is evident.
Work related expenses - Common Errors
- Motor vehicle claims made using logbook method when there is no logbook.
- Clothing being claimed when qualifying conditions are not met.
- Self education claims made when there is no work connection at the time the expense is incurred.
- Students receiving AUSTUDY or ABSTUDY payments incorrectly claiming self education expenses against those payments.
- Taxpayers incorrectly calculating depreciation and not apportioning deduction claims between business and private use. This applied particularly to home computer and mobile phone claims.
- Claims made for meal expenses when no overtime meal allowance received.
- Claims when there is no connection to current employment income.
- Ongoing FID claims. FID was abolished with effect from 1 July 2001.