Work-Related Expense Claims

With the end of the financial year literally around the corner the ATO is busy issuing warnings to taxpayers on several fronts.

Firstly, they have warned that they are looking closely at cryptocurrency trading profits.  If you want more information on this, please follow the link https://www.bcvfs.com.au/cryptocurrency-and-taxation/

They have also warned taxpayers that work-related expense claims are on their radar, and they will be looking closely at those who worked from home but continue to claim for things like car, travel and clothing expenses.

Tim Loh, the assistant commissioner at the ATO, said it was important for people not to simply copy and paste last years deductions, without evidence.  For example, for those frontline workers whose jobs require them to wear gloves, face masks and use hand sanitiser, they must have paid the upfront cost themselves if they are going to claim the deduction.  They cannot claim the expense personally if these items have been provided by their Employer.

Tim Loh also advised that the ATO will by sympathetic to taxpayers who have simply made a mistake when claiming deductions but will take firm action where they see people deliberately claiming things they are not entitled to.

Last year the ATO saw a decline in the value of work-related expenses for cars, travel and self-education and they expect 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 office sometimes, they cannot claim the cost of travel from home to work, as these are still private expenses.

The ATO also advised that they are still allowing people to claim a fixed rate of 80 cents per hour for all expenses incurred because of working from home.  This makes it easier than trying to calculate costs for specific expenses.  However, they noted that personal expenses like tea, coffee and toilet paper are ineligible expenses, as are expenses incurred for home schooling.

Taxpayers are not generally able to claim rent, mortgage interest, or rates & taxes just because they are working at home.  This situation does not make your home a place of business for tax purposes.  In those specific circumstances where you can claim these expenses, you need to be aware that claiming occupancy expenses could see you end up paying capital gains tax when you sell your house.  Best advice is to seek professional guidance from your Accountant if you are not sure what you can and cannot claim.

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