The new financial year is just around the corner, and that means it’s time to think about taxes.
As we approach July 1, the Australian Taxation Office (ATO) is gearing up to crack down on dodgy deduction claims. So, what can you expect?
What’s Under the Microscope This Year?
The ATO has announced that it will be keeping a close eye on work-related expenses, working from home (WFH) deductions, and side hustles.
These areas are known to produce “frequent errors,” so it’s essential to get it right. According to RMIT University finance professor Angel Zhong, “For WFH deductions, the revised fixed rate method allows you to claim 70 cents per hour covering electricity, internet, phone, and office consumables.
However, you must keep detailed records of your hours worked and ensure you’re not double-dipping by claiming additional expenses already included in the fixed rate.”
The Three Golden Rules for Claiming Deductions
To avoid any issues with your tax return, remember the ATO’s “three golden rules” for claiming a deduction for a work-related expense:
- You must have spent the money yourself.
- The expense must directly relate to earning your income.
- You must have a record (usually a receipt) to prove it
What Can You Claim?
Deductions must be related to purchases made before June 30, and what you can claim depends on your job.
For example, if you work outdoors, you can claim sunscreen as a legitimate protective equipment expense. Other surprising expenses that you can claim include:
- Handbags (to carry work items)
- Smartwatches (if you require specific functions for work)
- Home office expenses (like a computer desk and chair)
- Identity checks (like a blue card for childcare workers)
- Cleaning supplies (like gloves and hand sanitiser for customer-facing jobs)
What Happens If You Lodge a Dodgy Return?
If you make a mistake or intentionally provide false information, you could face penalties. The ATO uses sophisticated data analytics to detect errors and inconsistencies.
To avoid an audit, keep clear records and only claim what you’re entitled to.
Key Dates to Remember
- October 31: Deadline for lodging your tax return if you’re doing it yourself.
- May the following year: Deadline for lodging your tax return if you’re using a registered tax agent.
- November: Make sure you’ve reached out to your tax agent and have the ball rolling to avoid missing the deadline.
Don’t Get Caught Out
If you fail to lodge your tax return by the deadline, you could face a $330 fine. The longer you leave it, the more you could owe. So, make sure you take reasonable care when lodging your tax return, and don’t hesitate to ask for help if you need it.
Remember, the ATO is here to help you meet your tax obligations, so don’t be afraid to reach out if you have any questions or concerns.