One of the most commonly used tax deductions is getting special attention from the ATO this year, as millions of Australians claim right up to the receipt-free threshold.
The tax office said it will be paying “close attention” to claims for work-related car expenses in processing 2017 returns.
In the previous tax year, some three million taxpayers made claims for car expenses, totalling more than $8 billion.
A “significant” portion of those, the ATO said, were right at the limit of where detailed records were required. This has raised alarm bells, prompting officials to dig deeper this year to ensure claims are legitimate.
“While it’s true that you don’t need written evidence for claims of up to 5,000 kilometres per year, you do need to be able to show that you were required to use your car for work, and how you calculated your claim,” ATO assistant commissioner Kath Anderson said.
“While we have no issue with people using the cents per kilometre method, and we expect that most claims at this threshold may be legitimate, we are reminding people that there’s no such thing as a ‘free pass’ when it comes to deductions.”
Ms Anderson noted several points of confusion among taxpayers for what they can and cannot claim with work-related car expenses.
“If you make a claim for transporting bulky tools, you need to be able to prove you were required to take these items to work, and that there was no safe place to store them,” she said.
“It is also important to make sure you don’t double-dip. In other words, you cannot claim expenses that have already been paid by your employer, including salary sacrificing arrangements.
“One – you have to have spent the money yourself and can’t have been reimbursed, two – the claim must be directly related to earning your income, and three – you need a record to prove it.”