The Australian Tax Office (ATO) has confirmed that in 2021, about 8.4 million Australian taxpayers filed claims on almost $19.8 billion in work-related expenses. Assistant Commissioner, Tim Loh, noted that these were a lot of deductions and that the tax body wanted to ensure taxpayers got their claims right the first time, only claiming what they were entitled to.
He encouraged taxpayers to remind themselves of the rules when claiming different types of work-related expenses, highlighting that claims depended on such factors as individual circumstances, type of job, and supporting documentation for the claim. He added that while there were cases of genuine mistakes that could be made during filing, the ATO had identified people that had tried to gain an unfair advantage by claiming false or incorrect expenses, with many claiming expenses twice. This is the double-dipping issue that the tax body is warning against.
Loh said that the ATO used sophisticated data analytics to monitor lodgement of incorrect information and that if detected, the taxpayer could find themselves being audited or penalised for purposefully providing said false information.
The ATO highlighted several scenarios where double-dipping mistakes were most recurrent. They noted that about a third of taxpayers made claims for working from home expenses last year, a trend they expect to persist into this tax season.
It was found that people would often apply the working from home shortcut method to claim working from home expenses and double-dip by also making separate claims for such expenses as a rise in mobile phone and internet costs, and depreciation in the value of equipment and furniture. The ATO verified that the working from home shortcut method already incorporated these expenses as it was all-inclusive.
Another case of double-dipping was established from car expenses. Many taxpayers were found to make claims on work-related car expenses using the cents per kilometre method. They would then double-dip by also claiming separately for car insurance, fuel expenses, and registration. The cents per kilometre rate is another all-inclusive calculation that incorporates depreciation in value, insurance, maintenance, repairs, fuel costs and registration.
Those using the logbook method to calculate their claims should also be aware they may be more scrutinised by the ATO to ensure the calculations correctly reflect their circumstances coming out of the pandemic. The ATO also found that some taxpayers were making claims when already reimbursed by their employers. Taxpayers and tax professionals should review guidance on how to handle home office expenses and other deductions on the ATO website.
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