Oh no - don't tell me it's time to get the shoe box out
again. Afraid so. With the calendar ticking over to the
new financial year, it's time to start hunting around for all those
receipts and pieces of paper you'll need for your tax return. The
super-organised keep everything in nice neat bundles so it's all
ready to go. But for most of us, tax time is a frustrating hunt to
chase up what we've spent and work out what expenses we can
claim.
Work-related expenses are among the most commonly claimed tax
deductions, which means they also come under extra Tax Office
scrutiny. It says this year it will pay particular attention to
claims for motor vehicles, self-education and travel.
It will also be writing to more than 380,000 nurses (including
midwives and carers), chefs and medical practitioners as these
occupations have been identified as having high claims, increased
numbers of people claiming and many making claims for the first
time.
It will be warning them about common mistakes for work-related
expenses, such as nurses claiming deductions for self-education
expenses when there is an insufficient connection between the
education and their current work, and chefs claiming transport
expenses between home and work while carrying equipment such as
knives or where no public transport is available.
Medical practitioners are under the spotlight for claiming
private travel expenses, such as trips where they are accompanied
by family or friends, and entertainment expenses, such as business
lunches and attending social events or industry promotions.
So how do I get it right? The Tax Office says
there are basic rules. First, you must have incurred the expense in
the year you are claiming for. Second, the expense must be
work-related and if the expense has been reimbursed by your
employer, it can't be claimed.
If your work-related claims total less than $300, you don't need
written evidence, though you may be asked how you worked out your
claim. Once your claims hit $300, you need written evidence for the
full amount.
This evidence needs to show five key things: the name of the
supplier, what you bought, how much you paid, when the expense was
incurred and the date of the document.
Hold on a minute. Not all my records are this thorough.
What can I do if they don't show all these things? You
have some leeway. For instance, if the record doesn't show exactly
what you bought, the Tax Office says you can write this on the
document before you lodge your return. You can also use electronic
records and a combination of records to provide the information. So
you could, for example, use your credit card statement or a BPay
reference number to prove that an invoice has been paid.
For small expenses - up to $10 each - and expenses where you
couldn't get a receipt, such as tolls or parking meters, you can
write down the details yourself, so long as your records show the
required information and the total of your small claims is not more
than $200.
You need to keep this information for five years from when you
lodge your tax return, unless the claim is disputed, in which case
you must keep the records until the dispute is settled.
There are special rules for some expenses, such as work-related
travel expenses and home offices. And where expenses are incurred
for a mix of private and work use, they will need to be apportioned
accordingly.
Why is the Tax Office focusing on self-education, travel
and cars? They are areas where it is easy to slip up. For
example, self-education expenses are only deductible where they
relate to your current employment. You can't claim if you're
studying to get a different or better job.
Car expenses can be claimed according to four different methods,
each with their own rules and record requirements. Common mistakes
with travel expenses include claiming for travel between home and
work and not keeping records such as a travel diary (where it's
required) to show your trip was for work purposes. The Tax Office
has information on these and other types of claims and guides for
different professions, at www.ato.gov.au.