Warning On Work-Related Expenses

The Commissioner has clearly indicated that the ATO will be targeting deductions claimed by individuals for work-related expenses this year. The ATO has released a guide called “Don’t be a dummy with your deductions” which is intended to serve as a warning to taxpayers for the 2017 income year.

The guide sets out 11 deduction items that are often claimed but probably shouldn’t be. They are as follows:

1. Travel between home and work – generally you can’t claim a deduction for these as they are considered private travel.
2. Car expenses for transporting bulky tools and equipment; unless you need to use your bulky tools to do your job, your employer requires you to transport this equipment and there is no secure area to store the equipment at work.
3. Salary packaged car expenses.
4. Meal expenses while travelling; unless you were required to work away from home overnight.
5. Private travel - travel that includes a private component; if you take a work trip that includes personal travel you can only claim the work-related portion.
6. Clothing - everyday clothes you bought to wear to work (e.g. a suit or black pants), even if your employer requires you to wear them.
7. Cleaning costs for work clothes - a flat rate for cleaning eligible work clothes without being able to show how you calculated the cost.
8. Self-education costs - self-education expenses when the study doesn’t have a direct connection to your current employment – your future or dream jobs don’t count.
9. Phone expenses – only the work-related portion counts.
10. Internet expenses - only the work-related portion counts.
11. Tools and equipment - 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.

To get your deductions right you need to satisfy the following rules:

• you must have spent the money and were not reimbursed;
• it must be directly related to earning your income and not of a private nature and;
• you must have a record to prove it.

You are not automatically entitled to claim standard deductions. Exceptions to keeping written evidence makes things simpler (for example using the cents per kilometre method for car expenses), but you still need to have spent the money, be able to show that you were required to use your car for work, and how you calculated your claim.