11 deductions you (probably) can’t claim
The ATO has published a warning to the taxpayers on their website as the tax season unfolds, titled “Don’t be a dummy with your deductions” and followed up with an article titled “Pull up your socks and don’t claim them”. These publications come in the wake of the ATO Commissioner’s public comments about the apparently rampant over-claiming by individuals of car, laundry and other work-related expenses.
Part of the problem are the persistent tax myths about availability of certain tax deductions, and it is clear that the ATO is making a point to educate the public about these issues, and it is likely that more scrutiny will be applied to these deductions in the future.
ATO’s list of things you probably can’t claim on your tax return:
- Trips between home and work. Generally you can’t claim a deduction for these because they’re considered private travel.
- Car expenses for transporting bulky tools or equipment, unless:
- you need to use your bulky tools to do your job; and
- your employer requires you to transport this equipment; and
- there is no secure area to store the equipment at work.
- Car expenses that have been salary sacrificed.
- Meal expenses for travel, unless you were required to work away from home overnight.
- Private travel, so if you take a work trip that includes personal travel you can only claim the work-related portion.
- Everyday clothes you bought to wear to work (e.g., a suit or black pants), even if your employer requires you to wear them.
- A flat rate for cleaning eligible work clothes without being able to show how you calculated the cost.
- Higher education contributions charged through the HELP scheme.
- Self-education expenses when the study doesn’t have a direct connection to your current employment – your future or dream jobs don’t count.
- Private use of phone or internet expenses – only the work-related portion counts.
- Up-front deductions for tools and equipment that cost more than $300. However, you can spread your deduction claim over a number of years. That’s called depreciation.
In addition, the ATO has a number of guides to allowable deductions for specific industries and occupations, which you can access here.
This year the ATO will also be advising us the names of clients whose work-related expenses claimed in their 2016 tax return were high in comparison to others in similar occupations and income range in the prior year. These clients are more likely to have their deductions scrutinised by the ATO and we will be flagging with you if you fall into this category.
If you have any questions about what you can and cannot claim or the record keeping requirements, please contact your Ruddicks adviser.
The contents of this publication are general in nature and we accept no responsibility for persons acting on information contained herein. The content of this newsletter does not constitute specific advice and readers are encouraged to consult their Ruddicks adviser on any matters of interest. © Ruddicks 2017