ATO Crackdown on 'other' Work Related Expenses
Do you claim other work-related expenses such as telephone, stationary, internet and home office costs?
BEWARE one of the Australian Taxation Office focus areas for the coming financial year will be work related expenses.
On 20th February 2018, the ATO assistant commission said that 6.7 million taxpayers claimed a record $7.9 billion in deductions for 'other work related expenses'.
Legitimate other work related expenses can include home office, union fees, mobile phone and internet, tools, meals and equipment. However they are only deductible if they meet the ATO's three golden rules:
- You must have paid for it and not been reimbursed
- It must be directly related to earning your income and not a private expense
- You must have records to prove it.
For Example many people claim mobile phone costs for work but did you know if you are asked to prove your deduction, the ATO will ask for:
- A letter from your employer confirming you are required to use your own mobile telephone for work purposes and details of any allowances and/or reimbursements paid, including the name and contact details of the person making that statement.
- An explanation of how you calculated your claim
- One itemised bill with the outgoing private and outgoing work-related calls clearly and distinctly marked and tallied OR a diary covering a representative four-week period showing the work-related and private use of the service
Do you have all this information at the ready if an ATO audit comes along?
It is more important than ever to make sure you keep all your receipts and proof of how it relates to your work. Which is why the ATO has provided a myDeductions app that makes it easier to save and store accurate information about your deductions.
If you have any questions about what records you need to keep for tax deduction claims please contact us to discuss the record keeping requirements.