Related Posts:
- Tax Deduction Occupation Checklist
- Claiming Travel Allowances
- Claiming Work Clothes, Uniforms, and Overalls
- Claiming Overtime Meal Allowances
- Travel Between Work & Home
- Claiming A Deduction For Superannuation Contributions
- Claiming Work-Related Expenses
Already flagged by the Australian Taxation Office (ATO), work-related tax deductions have come under intensive scrutiny in recent years. The announcement of the pandemic in March 2020 offered a temporary reprieve from ATO audit activity. This post will help clients think about the types of deductions they can claim in their tax returns. It also sets out details on how you go about claiming work-related tax deductions, together with explaining the rules.
Targeted Occupations for 2021:
Occupations attracting ATO attention in 2101 tax returns include:
- Truck drivers – claiming overtime meal allowances and travel allowances for long-distance drivers;
- Trades – claiming tools and car expenses;
- Disability support care workers – claiming car expenses, phone and travel costs.
The links to related posts at top of this page will direct you to answers to specific questions.
Targeted Tax Deductions:
Types of deductions attracting attention include:
- Car expenses
- Travel expenses
- Work form home
- Telephone and internet deductions
- Meal allowances
- Tools and equipment.
- Uniforms, laundry, and PPE.
The links to related posts at top of this page will direct you to answers to specific questions.
Post COVID Scrutiny of Tax Returns:
The ATO temporarily reduced audit/review activities post the pandemic announcement to focus on stimulus claims. However, they recently announced a return to their normal review program for 2021 tax returns.
Approximately 8.5 million people claimed nearly $19.4 billion in work-related expenses in their 2020 tax returns. The ATO expects those numbers to spike in 2021 due to changes in peoples’ work habits. Accordingly, the ATO will be monitoring the following claims:
- Excessive work from home expenses
- Car expenses are expected to be less due to less travel between work sites
- Replacement of uniforms and associated laundry is expected to be less
- Business-related travel should also be lower.
There is now more emphasis on tax professionals to be “guardians of the system.” Educating clients is a high priority. However, we are experienced in maximizing tax refunds for clients. We are also cautious not to place clients at risk. Accordingly, we always take time to ask questions and explain relevant regulations. Some recommendations for preparing your tax return are as follows:
- Review the basis on which work-related deductions are claimed and how it relates to your income-earning activities.
- Receipts, logbooks, and even a letter from your employer outlining how or why the particular expense relates to your income.
- Concerning allowances received, It may be appropriate to review awards and enterprise agreements to help identify if a related deduction applies.
- Maintain a diary, logbook, or other records (e.g., spreadsheet summary) outlining where and when you incurred work-related expenses and or travel.
- Invoices, receipts, and even banking records can establish evidence of a work-related expense.
Accordingly, we direct clients to the above links to related posts at top of this page. They will direct you to answers to specific questions on work-related tax deductions.