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JULY 2021 | FIND SURF COAST
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Work-Related Expenses On Ato Radar Amid Spike In People Working From Home ACCOUNTANT By Warren Strybosch
It is tax time again and accounting firms are busy sending out tax checklists or making contact with their clients to start the process of completing last year’s financial returns. This year, the Australian Tax Office (ATO) has announced that they will be taking particular note of work-related expenses, especially those associated with working from home. Last financial year over 8.5 million people claimed nearly $19.4 billion in work-related expenses and it is expected this to be significantly larger for 2021. Australian Taxation Office assistant commissioner Tim Loh says the COVID-19 pandemic has changed people’s work habits, so he expects their work-related expenses will reflect this. “We know many people started working from home during COVID-19, so a jump in these claims is expected,” Loh said. “But, if you are working at home, we would not expect to see claims for travelling between worksites, laundering uniforms or business trips.”
more tax from his income. The ATO rang to discuss why this particular client had more tax withheld compared to his counterparts at the same university. After a brief explanation and having to send in documents to verify the tax withheld was legitimate, the ATO processed the return. You see, everyone else within the organisation had elected the tax-free threshold and so this particular client’s income and tax withheld figures did not match everyone else and set off a flag to the ATO to investigate. Many accountants are now asking for proof e.g., invoices or receipts, when it comes to certain expenses. Other accountants are asking clients to sign an expense declaration if receipts cannot be produced. At the end of the day, you are responsible for any claims you make to try and reduce the amount of tax payable. “We will also look closely at anyone with significant working from home expenses, that maintains or increases their claims for things like car, travel or clothing expenses. Don’t consider just cutting and pasting what you claimed last year into this year’s return,” Loh said. Work-related expenses
Many people do not realise but the ATO has sophisticated software that can compare everyone’s expenses against other people working in the same industry. If one person has an expense that falls outside of the ATO’s deemed parameters as to what is considered reasonable to claim, then expect a ‘please explain’ from the ATO.
To claim a deduction for a work-related expense:
As an accountant, I remember receiving one of these phones calls a few years back because one of our clients was lecturing and it was his second income. As such, the client did not nominate the tax-free threshold and elected to pay
If the expense was for both work and private purposes, you only claim a deduction for the work-related part. Work expenses your employer reimburses you for are not deductible.
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you must have spent the money yourself and weren't reimbursed the expenses must directly relate to earning your income you must have a record to prove it (usually a receipt).
If the ATO thinks your employer has reimbursed you for your expenses, they might decide to ask them. You may be able to claim a deduction for expenses you incur that relate to your work, including: • • • • • •
Vehicle and travel expenses Clothing, laundry and dry-cleaning expenses Working from home expenses Self-education expenses Tools, equipment and other assets Other work-related deductions
Employees (including casuals) can claim work-related expenses in the income year you incur them. This means if you start employment in June you can claim deductions for work-related expenses you incur in June. Even if you don’t receive your employment income until the next income year. If you employ someone to assist you in your employment, generally you can't claim a deduction for employing that person. (Source: ato.gov.au) At Find Accountant, we provide SMSF tax advice. Our senior accountant is also an award-winning financial advisor. If you require SMSF advice or are considering whether or not to wind up your SMSF, then speak to Warren Strybosch at Find Accountant Pty Ltd.
Warren Strybosch You can call them on 1300 88 38 30 or email info@findaccountant.com.au www.findaccountant.com.au
JULY 2021 | FIND SURFCOAST
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