Tamworth accountants warn taxpayers of ATO blitz at tax time

Tamworth accountants are warning taxpayers to watch their claims on things like home office, union fees, mobile phone and internet, overtime and tools and equipment.

PKF accountant Evan Brownsmith said there’s a misconception that claiming standard amounts, meaning below the threshold for needing a receipt, means people are at little risk of being audited.

“That’s not true, you have to incur an expense to claim a deduction,” he said.

“It stands out like a sore thumb if you’ve claimed 5000 kilometres on the dot, $300 for work-related expenses and $150 for laundry – if you can’t come up with a reason why you’ve claimed that you will be hit with penalties.

“There’s a lot of misinformation about what you can and can’t do over the watercooler or at the pub, what they’ve done or got away with - that in itself creates an expectation that it’s more complicated than it needs to be.”

Under audit, taxpayers will need to be able to prove they spent the money themselves, that the expense was directly related to work and there’s a record to show it.

Car expenses can add up, what most taxpayers don’t know is that you can claim a deduction when you drive between separate jobs on the same day – for example driving from a job as a childcare worker to a job as a waiter. Driving to and from client’s houses from the office is another claimable deduction.

Tamworth’s Stephen A Maher & Co accountant Stephen Maher said the ATO usually looks for a record of one month of driving and uses that as a basis for the whole year.

“You can claim services, fuel, tyres, registration, insurance and depreciation on the vehicle itself,” he said.

Usually there’s not a big case for claiming the cost of driving between home and work, but trips carrying bulky equipment for work is deductible if the employer requires the equipment for work [more than 20kg] or there’s no place to store it.

At tax time, deductions can be claimed for the cost of hiring, mending, cleaning or buying certain uniforms unique to the job. 

But, these items need to have a logo that’s distinctive to the employer, or protective and necessary for work.

“Just because you’re a tradie and you get a logo on your shirt, doesn’t make it a deductible uniform,” PKF accountant Mr Brownsmith said.

“It would need to be an item of protective clothing or something that’s registered as a uniform logo.”

Business suits, while snazzy, can’t be claimed under tax.

Travelling for work doesn’t automatically entitle the taxpayer to a deduction, unless it can be proved that the money was spent by the person claiming, the person was away overnight and the travel was directly related to work.

This applies if work requires overnight travel [not to the office], but somewhere like a conference, and includes meals, accommodation, fares and incidental expenses not covered by the boss.

But, PKF accountant Mr Brownsmith said this is an area where taxpayers need to be careful.

“One of the main ones the ATO looks at is blurring the lines between what’s work-related and what’s private,” he said.

“Claiming a lot of meals and entertainment is a big one.”

For those that prefer to work from home, it’s possible to claim a percentage of the costs of running a home office.

This includes phone calls, internet, electricity for heating, cooling and even lighting costs.

Plus, taxpayers can claim the depreciation of office equipment – printers, faxes and laptops included.

Generally rent, insurance, rates and mortgage interest can’t be claimed under home office expenses.

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For those who educate themselves, in courses directly related to work like sales courses for a sales person – tax deductions are available.

But, not for job seekers looking to undertake courses that might help them get a new job.

Mr Brownsmith said tax time has been made simpler with online services like MyGov or ETax.

“The risk is obviously if you’re audited and found to have done the wrong thing you’re going to be liable for what you should have paid,” he said.

“If you’re found to have acted dishonestly, or you’ve been reckless in the way you’ve claimed deductions you can cop penalties of 20 to 50 per cent.”

Taxes are due to be lodged by October 31 if done individually, through a tax agent it can be as late as May 15.