While more people than ever worked from home last financial year and the Australian Taxation Office (ATO) made things easier for those claiming home office expenses, don’t expect those changes to lead to an easy ride on dodgy expense claims.
The ATO has issued taxpayers a stern warning and claims it will not be taking it easy on tax returns this financial year.
The tax office has its sights set on work-related expenses showing signs that they have just been copy and pasted from previous years.
One of the key items the ATO will be scrutinising this year is car and travel claims, with a significant decrease in those claims expected in this year’s tax returns.
ATO assistant commissioner Tim Loh noted that the pandemic had significantly changed work habits in 2020/21 and it was expecting to see work-related expenses reflect these changes.
“We know many people started working from home during COVID-19, so a jump in these claims is expected,” Mr Loh said.
“But, if you are working at home, we would not expect to see claims for travelling between worksites, laundering uniforms or business trips.”
Last financial year, the value of car and travel expenses decreased by nearly 5.5 per cent. However, there was a slight increase of around 2.6 per cent in clothing expenses.
With uniform and laundry claims significantly lower, the ATO said that this increase was driven by frontline workers’ first-time need for things such as hand sanitiser and face masks.
“While it’s good to see most people have been doing the right thing, our data analytics will be on the lookout for unusually high claims this tax time,” Mr Loh said. “Particularly where someone’s deductions are much higher than others with a similar job and income.
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“We will also look closely at anyone with significant working from home expenses, that maintains or increases their claims for things like car, travel or clothing expenses.
“You can’t simply copy and paste previous year’s claims without evidence,” he said.
“But we know some of these unusual claims may be legitimate. So, if you explain your claim with evidence, you have nothing to fear.
“We also want to reassure the community that we will be sympathetic to legitimate mistakes where good faith efforts have been made. However, where we spot people deliberately claiming things they are not entitled to, we will take firm action,” Mr Loh said.
How COVID-19 has changed work-related expenses
Working from home expenses
The temporary shortcut method for working from home expenses is available for the full 2020-21 financial year. This allows an all-inclusive rate of 80 cents per hour for every hour people work from home, rather than needing to separately calculate costs for specific expenses.
All you need to do is multiply the hours worked at home by 80 cents, keeping a record such as a timesheet, roster or diary entry that shows the hours you worked.
Remember – the shortcut method is temporary. If you want to claim part of an expense over $300 (such as a desk or computer) in future years, you need to keep your receipt.
Personal protective equipment (PPE)
If your specific duties require physical contact or close proximity to customers or clients, or your job involves cleaning premises, you may be able to claim items such as gloves, face masks, sanitiser, or antibacterial spray.
This includes industries such as healthcare, cleaning, aviation, hair and beauty, retail and hospitality.
To claim your PPE, you’ll need to have purchased the item for use at work, paid for it yourself, and not been reimbursed. You also need a record to support your claim – a receipt is best.
Clothing and laundry, self-education, car and travel expenses
In 2020, the ATO saw a decrease in the value of work-related expenses for cars, travel, non-PPE clothing and self-education as a result of the introduction of travel restrictions and limits on the number of people who could gather in groups. The ATO expects this trend to continue in the 2021 tax returns.
If an employee is working from home due to COVID-19, but needs to travel to their regular office sometimes, they cannot claim the cost of travel from home to work as these are still private expenses.
To find out more about what you can and can’t claim, the ATO has created nearly 40 occupation and industry guides. Visit ato.gov.au/occupations for more information
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