Car claims this tax time
driven to scrutinise car claims this tax time
The Australian Taxation Office (ATO) has announced that it will be closely examining claims for work-related car expenses this tax time as part of a broader focus on
Assistant Commissioner Kath Anderson said over 3.75 million people made a work-related car expense claim in 2016–17, totalling around $8.8 billion.
work related expenses.
Each year around, 870,000 people claimed the maximum amount under the cents-per-kilometre.
It’s legitimate to claim for 5,000 kilometres if you did actually do them as part of earning your income. However, the ATO is concerned that some taxpayers mistakenly believe that this is a “standard” deduction they are entitled to, without needing to provide any evidence of having travelled that
Claims of up to 5,000 kilometres using the cents per km method don’t require a log book. However, you still need to have done the kilometres as part of your job and be able to show how you calculated your claim, for example by keeping a diary of places you have had to drive to for work, and how often.
The ATO’s ability to identify claims that are unusual has improved due to enhancements in technology and data analytics. They compare taxpayers to others in similar occupations earning similar incomes. Their models are especially useful in identifying people claiming things like home to work travel or trips not required as part of their job.
Unless you have a work-related need to travel while performing your job, you won’t be able to claim a deduction. For example, travelling from home to work is not deductible for most people. There are a few
The ATO is advising taxpayers that they may request proof that you were required to undertake the travel for work. A good way to check that your travel claim relates to your work is to ask yourself, “Did my employer require me to do that travel as part of my duties, or did my employer require me to transport bulky tools or equipment to and from work?”
The ATO is warning taxpayers to not double-dip.
You can’t claim expenses you didn’t pay for, including when your employer provided the vehicle or reimbursed your expenses, including under a salary sacrifice arrangement or novated lease.There are three golden rules for taxpayers to remember to get it right:
- You have to have spent the money yourself and can’t have been reimbursed
- The claim must be directly related to earning your income, and
- You need a record to prove it