WHAT IS THE ATO TARGETING FOR THE 18/19 FINANCIAL YEAR?

Tax time is fast approaching and the ATO have released a list of deductions that they are focusing on to ensure that individuals are not making incorrect claims.  Tax compliance for individuals has been a hot topic in recent years after it was revealed that there was an $8.7 billion tax gap in the 14/15 year between what the ATO collected and what they should have collected if all individuals were tax compliant.  There has also been $130.8m set aside for ATO compliance in the most recent budget to target individual tax payers and their tax agents to ensure tax compliance.

So what is the ATO focusing on for the 18/19 financial year?
 

Motor Vehicles

Vehicles continue to be under the ATO spotlight and any work travel should be documented, with the reason for the travel and distance travelled noted.  Simply claiming the 5,000km threshold when it cannot be justified will more than likely land you in hot water.

As a part of this, the ATO will also be focusing on tax payers claiming travel to and from work (which is considered private travel) and car expenses for transporting bulky tools (your employer must require you to transport the tools and you must not be able to safely store the equipment at work).

Private use of phone or internet expenses 

Only the work use of your personal phone or internet expenses can be claimed.  The ATO are cracking down on false claims by asking the individual to justify the work use of their phone or internet by providing a 4 week record of your business and personal use.

False Laundry Claims 

As was the case in 17/18, the ATO will be paying close attention to false laundry claims.  Only workers required to wear protective clothing, a uniform, or occupation specific clothing can claim a laundry deduction.  General work clothes do not fall under this.  Furthermore, if you wish to claim the $150 laundry deduction, then you must be able to show how you calculated the cost.

Self-Education Expenses –

When claiming self-education expenses, there must be a direct connection between the study and your current employment.  Studying expenses for a future job cannot be claimed as a tax deduction.

The ATO is also focusing on those individuals who claim course fees that are being paid via HECS/HELP scheme.

Tools 

The ATO is on the lookout for individuals who claim an up-front deduction for tools and equipment over $300.  These items should be depreciated over a number of years.

Private Travel

Work trips that involve personal travel are common, but it is important to remember that only the work portion of the trip is deductible.  For example, airfares for a conference should not be fully claimed if you stay after the conference for a holiday.

What do you need to do to ensure you are tax compliant??

All individuals should be aware that it is essential that the deduction directly relates to your job, to ensure that you are not reimbursed for the expense and make sure you have detailed records.  The ATO are using sophisticated data matching, industry standards and more sophisticated technology to help single out tax payers who are over claiming, so only claim expenses that you are eligible for.

MBH Tax and Accounting can assist with the lodgement of your individual tax return, plus the tax returns for your business or SMSF. If you need to book in for an appointment please contact our office here.

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