The Australian Tax Office (ATO) has sounded a warning to individuals that it will be closely monitoring work-related expense claims this financial year.
The department says that it is individuals, and not corporates, who are on the watch list this year, with dubious work-related expenses under the microscope.
ATO Commissioner Chris Jordan said over $22 billion was claimed for work related expenses in FY 2014-15, and although individuals over-claim by small amounts, the impact is likely to be bigger than the $2.5 billion in unpaid corporate tax.
The ATO continues to use real-time data to monitor individuals and uses this data to compare individuals with peers in the same profession and with the same income bracket to identify suspicious claims, particularly for laundry, car costs, travel and education expenses.
So when doing your tax this year, remember the ATO’s three golden rules for claiming expenses:
- – You have to have spent the money yourself and not be reimbursed by your employer for it
- – The claim must relate directly to your ability to earn an income
- – You need to be able to prove you spent the money
With that in mind, here are MWM’s top tips when it comes to tax time…
- Keep good records and save your receipts
Instead of wasting your time (and your accountant’s) come tax time, keep good records and save your receipts in a logical manner throughout the year.
If you drive a lot for work, it’s important you keep a logbook of your trips. MWM’s app makes it easy for you to do this.*
This will save you time and effort when it comes to doing your tax.
It will also ensure your butt is covered if you’re ever queried by the ATO on your expense claims.
- Declare your income properly
It’s vital you declare all forms of your income, or you’ll risk a knock on the door from the taxman.
This includes your employment income, super pensions, government payments, investment income, business/trust income, foreign income, crowdfunding income and any discounted shares under employee share schemes and the like.
- Visit your accountant
It can seem more convenient to do your tax yourself but it’s really important that you visit your accountant to help you with this process.
Your accountant will be able to identify opportunities where you can claim legitimate expenses and any areas that raise a red flag.
Call MWM Advisory on 07 5596 9070 today.