The Australian Taxation Office (ATO) has its eyes on you if you’re one of the millions of Aussies working from home.
The ATO has reminded people not to make the mistake of “double dipping” their deductions in their tax return.
“Around 8.4 million Australians claimed nearly $19.8 billion in work-related expenses in 2021,” assistant commissioner Tim Loh said.
“That’s a lot of deductions, so we want to make sure you get it right the first time. It’s important you claim what you’re entitled to – no more, no less.”
The ATO said when people prepared their tax return, it was important to remember the rules for claiming different types of work-related expenses.
What can be claimed depends on the type of job, individual circumstances, and whether there are the required records to support the claim.
“While some people make genuine mistakes, we do see people trying to gain an unfair advantage by claiming incorrect or false expenses,” Loh said.
“A mistake that we often see in tax returns is people claiming expenses twice.
“You wouldn’t double dip your chip, so don’t double dip your deductions.”
Loh warned that the ATO had sophisticated methods to monitor for incorrect information and said Aussies risked being audited or penalised for deliberately providing false information.
Here are some of the “double-dipping” mistakes the ATO is looking out for this tax time.
“One in three Aussies claimed working-from-home expenses in their tax return last year and we expect this trend to continue,” Loh said.
“A common mistake we see is people using the working-from-home shortcut method to claim their working-from-home expenses and then double dipping – claiming additional amounts in their return for expenses such as their mobile phone and internet bills, as well as the decline in value of equipment and furniture.”
When the working-from-home shortcut method is used to claim working-from-home expenses, it is all-inclusive.
There are three methods available to claim a deduction for working-from-home expenses, depending on individual circumstances: the shortcut, fixed rate and actual cost methods.
The method that provides the best outcome can be used, as long as the eligibility and record-keeping requirements for the chosen method are observed.
Taxpayers can use the home office expenses calculator to help them work out which method will give them the best outcome.
“While the traditional methods require receipts, paperwork and other record keeping, the shortcut method only requires a record of hours worked – diary entries or timesheets will suffice,” Loh said.
When claiming working-from-home expenses using the shortcut method, the amount needs to be included at the other work-related-expenses question in tax returns with ‘COVID-hourly rate’ in the description field.
If a method other than the shortcut method is used in later years and you want to claim depreciation for an expensive purchase such as a laptop, the correct records for that item must be kept.
Nearly 3 million people claimed work-related car expenses in 2021.
One of the most common mistakes was people using the cents-per-kilometre method to make their claim, and then double dipping by separately claiming expenses, such as fuel, car insurance and registration.
The cents-per-kilometre rate is all-inclusive and covers decline in value, registration, insurance, maintenance, repairs and fuel costs.
These expenses can’t be added on top of the rate when calculating deductions.
The ATO will also be taking a closer look at claims calculated using the logbook method, to ensure they reflect people’s circumstances coming out of the pandemic.
“You must choose your preferred method when calculating car expenses, the cents-per-kilometre or the logbook method,” Loh said.
“Just because there is a dip in the road, doesn’t mean you can double-dip your car expenses.”
Finally, the ATO is making sure taxpayers aren’t claiming expenses where they have already been reimbursed by their employer.
“If your boss has reimbursed your dry-cleaning costs for your uniform, but you then claim laundry deductions on your tax return, well you’re picking your neighbours’ pockets,” Loh said.